E 17-11 Installment liquidation—Various situations The assets and equities of the Sam, Red, and Sal partnership at the end of its fiscal year on October 31, 2016, are as follows:

Assets Equities Cash $ 15,000 Liabilities $ 50,000 Receivables—net 20,000 Loan from Sal 10,000 Inventory 40,000 Sam capital (30%) 45,000 Plant assets—net 70,000 Red capital (50%) 30,000 Loan to Red 5,000 Sal capital (20%) 15,000

$150,000 $150,000 The partners decide to liquidate the partnership. They estimate that the noncash assets, other than the loan to Red, can be converted into $100,000 cash over the two-month period ending December 31, 2016. Cash is to be distributed to the appropriate parties as it becomes available during the liquidation process.

1. The partner most vulnerable to partnership losses on liquidation is:

a Sam b Red c Red and Sam equally d Sal Partnership Liquidation 585