The partnership of Sole, Pan, & Melendez has experienced operating losses for three consecutive years. The partners-who have shared profits and losses in the ratio of Sole, 10%; Pan, 70%; and Melendez, 20%-are liquidating the business. They ask you to analyze the effects of liquidation. They present the following condensed partnership balance sheet at December 31, 2016:
1. Assume the non-cash assets are sold for $135,000. Journalize the liquidation transactions.
2. Assume the non-cash assets are sold for $90,000. Journalize the liquidation transactions.