On October 1, 2008, the firm of Allen, Dee, and Ito decided to liquidate their partnership. The partners have capital balances of $55,000, $75,000, and $12,000, respectively. The cash balance is $13,000, the book values of noncash assets total $179,000, and liabilities total $50,000. The partners share income and losses in the ratio of 2:2:1.

Instructions

Prepare a statement of partnership liquidation, covering the period October 1 through October 30 for each of the following independent assumptions:

1. All of the noncash assets are sold for $224,000 in cash, the creditors are paid, and the remaining cash is distributed to the partners.

2. All of the noncash assets are sold for $109,000 in cash, the creditors are paid, the partner with the debit capital balance pays the amount owed to the firm, and the remaining cash is distributed to the partners.