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Cash Distribution Schedule The ABC Partnership is in the process of liquidation. The account balances prior to liquidation are given below: Debits Credits Cash $72,000

Cash Distribution Schedule

The ABC Partnership is in the process of liquidation. The account balances prior to liquidation are given below:

Debits

Credits

Cash

$72,000

Liabilities

$40,000

Amos, Drawing

10,000

Boone, Loan

8,000

Boone, Drawing

15,000

Childs, Loan

25,000

Childs, Drawing

20,000

Amos, Capital

49,000

Operating Loss

21,000

Boone, Capital

18,000

Liquidation Loss

12,000

Childs, Capital

10,000

Total

150,000

Total

150,000

The partners share profits in the following ratio: Amos, 1/5; Boone, 2/5; Childs, 2/5.

Required:

Prepare a schedule showing the calculations of the distribution of cash under the Uniform Partnership Act, assuming that all three partners have personal liabilities in excess of their personal assets.

Installment Liquidation

Hann, Murphey, and Ryan have operated a retail furniture store for the past 30 years. Their business has been unprofitable for several years, since several large discount furniture stores opened in their sales territory. The partners recognize that they will be unable to compete with the larger chain stores and decide that since all the partners are near retirement, they should liquidate their business before it is necessary to declare bankruptcy. Account balances just before the liquidation process began were as follows:

Cash

10,000

Liabilities

110,000

Other Assets

218,000

Hann Capital 50%

50,000

Murphey, Capital 30%

42,000

Ryan, Capital 20%

26,000

Total

228,000

Total

228,000

Asset realization is accomplished in four stages as follows:

March 15, 2019: During liquidation sale, noncash assets with a book value of $90,000 were sold for $80,000.

March 16, 2019: Sold accounts receivable with a book value of $30,000 to a factory for $26,000.

March 16, 2019: Paid all recorded partnership creditors.

March 18, 2019: Distributed all but $1,000 of available cash to partners.

March 19, 2019: Murphey withdrew from inventory furniture with a book value of $10,000 and a market value of $13,000 to satisfy part of his capital interest.

March 21, 2019: Sold remainder of inventory with a book value of $50,000 to a discount furniture store for $30,000 cash.

March 25, 2019: Assigned for $12,000 cash the remaining term of the lease on the warehouse. The lease was accounted for as an operating lease.

March 25, 2019: Distributed all available cash to partners.

April 1, 2019: Hann agreed to accept two vehicles with a book value of $10,000 and a market value of $8,000 in partial settlement of his capital interest.

April 5, 2019: All remaining assets were sold for $4,000.

April 6, 2019: Received additional cash from partners with debit capital balances.

April 6, 2019: Distributed available cash to partners.

The partners prefer that cash be distributed as soon as it is available.

Required:

Prepare a summary in columnar form of the partnership realization and liquidation. You should prepare supporting schedules of safe payments before each cash distribution.

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