Label each exercise or problem clearly. Use APA formatting and citation if needed.

Sand, Mell, and Rand are partners who share incomes and losses in a 1:4:5 ratio. After lengthy disagreements among the partners and several unprofitable periods, the partners decided to liquidate the partnership.

Before the liquidation, the partnership balance sheet showed the following:

Cash $10,000

Total “other assets,” $106,000

Total liabilities, $88,000

Sand, Capital, $1,200

Mell, Capital, $11,700

Rand, Capital, $15,100

The “other assets” were sold for $ 85,000. Proceeds from the sale of other assets were used to payoff existing liabilities.

Determine the following:

1. The gain (or loss) realized on the sale of the assets and recording of liabilities’ payment.

2. The balances in the partners’ capital accounts after the distribution of this gain or loss to the capital accounts.