Lewis, Nance, and Otis operate the LNO Partnership. The partnership agreement provides that the partners share profits in the ratio of 40:40:20, respectively. Unable to satisfy the firm's debts, the partners decide to liquidate. Account balances just prior to the start of the liquidation process are as follows:

Debit Credit

Cash $ 90,000

Other Assets 330,000

Liabilities $165,000

Otis, Loan 36,000

Lewis, Capital 165,000

Nance, Capital 36,000

Otis, Capital 39,000

Otis, Drawing 21,000 _______

Totals $441,000 $441,000

During the first month of liquidation, other assets with a book value of $150,000 are sold for $165,000, and creditors are paid. In the following month unrecorded liabilities of $12,000 are discovered and assets carried on the books at a cost of $90,000 are sold for $36,000. During the third month the remaining other assets are sold for $42,000 and all available cash is distributed.

Required:

Prepare a schedule of partnership realization and liquidation. A safe distribution of cash is to be made at the end of the second and third months. The partners agreed to hold $30,000 in cash in reserve to provide for possible liquidation expenses and/or unrecorded liabilities. All of the partners are personally insolvent