Marta, Barta and Carta formed a partnership with profit ratios of 3:3:4. The partnership agrees to dissolve at year-end. The current balance sheet shows cash = $50,000; A/R = $75,000; inventory = $125,000; Note receivable from Marta for $10,000; Equipment (net) = $200,000; Bldg = 50,000; A/P = $175,000; Note Payable to Carta = $20,000. Capital balances are Marta = $85,000; Barta = $100,000; Carta = $130,000. During the year, the following activity occurred:

• Oct: sold $100,000 of inventory for $80,000; paid liquidation expenses of $5,000; collected A/R of $60,000; paid creditors as possible, reserving $5000
• Nov: sold remaining inventory for $5,000; collected $5,000 more in A/R and wrote off balance; sold all equipment for $220,000; paid $3,000 in liquidation expenses; paid creditors as possible, reserving $5,000
• Dec: sold building for $15,000; paid $3,000 in liquidation expenses, then dissolved partnership distributing any remaining cash
• Situation 1: Assume that partners are personally insolvent