1. K, C, and M share income and loss in a 3:2:1 ratio. The partners have decided to liquidate their partnership. On the day of liquidation their balance sheet appears as follows.

K, C, AND M

Balance Sheet

May 31

Assets Liabilities and Equity

Cash . . . . . . . . . . . . $199,100 Accounts payable . . . . . . . . . . . . . $258,000

Inventory . . . . . . . . . 548,400 K, Capital . . . . . . . . . . . . . . . 97,900

C, Capital . . . . . . . . . . . . . . . 220,275

M, Capital . . . . . . . . . . . . . . . . . 171,325

Total assets . . . . . . . $747,500 Total liabilities and equity . . . . . . . $747,500

Required

1. Prepare the liquidation statement for each as separate cases, Inventory is sold for (1) $625,200; (2) $452,400; (3) $321,000 and any partners with capital deficits pay in the amount of their deficits; and (4) $249,000 and the partners have no assets other than those invested in the partnership.
2. Prepare journal entries for (a) the sale of inventory, (b) the allocation of its gain or loss, (c) the payment of liabilities at book value, and (d) the distribution of cash in each of the above separate cases :