After 25 years of operations, the Starke, Lannister, and Targaryen partnership has decided to liquidate. At that time, 1/1/20x2, the partnership balance sheet is as follows:

Starke, Lannister, and Targaryen, Partners
Balance Sheet
as of 12/31/20x1
Assets		Liabilities and Partners’ Capital
Cash	$100,000	Liabilities	$175,000
Noncash assets	350,000	Starke, Capital	50,000
		Lannister, Capital	100,000
		Targaryen, Capital	125,000
Total assets	$450,000	Total Liabs & Capital	$450,000

In accordance with the Articles of Partnership, the partners agreed to share profits and losses as follows:

Starke, Capital	30%
Lannister, Capital	30%
Targaryen, Capital	40%

During the liquidation process, the following transactions take place:

• March 1, 20x1 - Noncash assets are sold for $125,000.

• March 15, 20x1 - Liquidation expenses of $25,000 are paid. No further expenses are expected.

• March 30, 20x1 – All business liabilities paid.

• April 1, 20x1 – Partnership is dissolved, and any remaining cash is allocated to the partners, as appropriate.

Required

1. Prepare the formal Schedule of Liquidation for the partnership. (Note: Assume that a deficit balance in a partner’s capital account will be uncollectible).

2. Prepare the related journal entries associated with liquidating the partnership.

Optional Bonus Questions #2 (8 points)

1. Explain the purpose of the formal Articles of Partnership.

2. List at least 8 provisions that should be discussed in the Articles of Partnership

3. If the Articles of Partnership fails to discuss the partners’ income/loss sharing ratios, how must income/losses be allocated among the partners?

4. What are the risks to the partners, if the partnership is formed without a formal written Articles of Partnership agreement? (Please be brief, no more than 4 sentences)