On January 1, 20X1, partners Art, Bru, and Chou, who share profits and losses in the ratio of 4:3:3, respectively, decide to liquidate their partnership. The partnership trial balance at this date follows: Credit Debit $ 19,600 70,000 56,000 193,000 Cash Accounts Receivable Inventory Machinery and Equipment (net) Accounts Payable Art, Capital Bru, Capital Chou, Capital $54,600 92,000 114,000 78,000 Total $338,600 $338,600 The partners plan a program of piecemeal conversion of assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January 20X1 1. Collected $54,200 on accounts receivable; the balance is uncollectible. 2. Received $40,400 for the entire inventory. 3. Paid $2,800 liquidation expenses. 4. Paid $51,900 to creditors, after offset of a $2,700 credit memorandum received on January 11, 20X1. 5. Retained $11,600 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses. February 20X1 6. Paid $4,800 liquidation expenses. 7. Retained $6,800 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses. March 20X1 8. Received $149,200 on sale of all items of machinery and equipment. 9. Paid $5,800 liquidation expenses. 10. Retained no cash in the business. Required: Prepare a statement of partnership liquidation for the partnership with schedules of safe payments to partners. (Round your answers to nearest whole dollar.) ABC PARTNERSHIP Statement of Partnership Realization and Liquidation For the period from January 1, 20x1, through March 31, 20X1 Capital Balances Bru Chou Art Cash 19,600 Other Assets Accounts Payable 319,000 (54,600) Balances before liquidation, January 1, 20X1 January transactions: Collection of accounts receivable at a loss Sale of inventory at a loss Liquidation expenses paid Share of credit memorandum Payments to creditors 01 0 54,200 40,400 (2,800) 0 (51,900) 59,500 (47,900) 11,600 (70,000) (56,000) 0 0 0 193,000 $ $ $ 2,700 51,900 (54,600) $ 0 0 0 0 IT (54,600) $ 0 $ 0 $ 0 Safe payments to partners $ $ 193,000 $ February transactions: Liquidation expenses paid 0 (54,600) $ $ $ 0 $ 0 $ 0 (4,800) 6,800 01 6,800 0 193,000 01 193,000 Safe payments to partners $ $ $ (54,600) $ 0 0 0 March transactions: Sale of M&Eq. at a loss Liquidation expenses paid (193,000) $ 149,200 (5,800) 150,200 (149,400)| 800 $ $ (54,600) $ 0 $ 0 $ Payments to partners Balances at end of liquidation, March 31, 20X1 0 01 0 0 | 0 $ $ $ (54,600) $ 0 0 APB PARTNERSHIP Schedule of Safe Payments to Partners Art Bru 40% 30% Schedule 1: January 31, 20X1 Chou 30% Capital balances Potential Loss on noncash assets Allocation of potential deficit Safe payment, January 31, 20X1 Schedule 2: February 27, 20X1 Capital balances Potential Loss on noncash assets Allocation of potential deficit Safe payment, February 27, 20X1
