Jax, Kya, and Bud, who share partnership profits 50 percent, 30 percent, and 20 percent, respectively, decide to liquidate their partnership. They need the cash from the partnership as soon as possible but do not want to sell the assets at fire-sale prices, so they agree to an installment liquidation. A summary balance sheet on January 1, 2016, is as follows:

Cash is distributed to the partners at the end of each month, with $5,000 retained for possible contingencies in the liquidation process.
During January 2016, Jax agreed to offset his capital balance with his loan from the partnership,
$25,000 was collected on the accounts receivable, and the balance is determined to be uncollectible. Liquidation expenses of $2,000 were paid.
During February 2016, $18,000 was collected from the sale of inventories and $90,000 collected from the sale of equipment. Additional liabilities of $3,000 were discovered, and $2,000 of liquidation expenses were paid. All cash was then distributed in a final liquidation.
REQUIRED:
Prepare a statement of partnership liquidation with supporting safe payments schedules for each cash distribution.

Transcribed Image Text:

Cash Accounts receivable Inventory Equipment-net Loan to Jax 16,500 28,000 Jax capital 20,500 Kya capital 101,000 Bud capital 14,000 Accounts payable $21,000 69,000 47,000 43,000 $180,000 $180,000