On January 1, 20X1, partners Art, Bru, and Chou, who share profits and losses in the ratio of 6:3:1, respectively, decide to liquidate their partnership. The partnership trial balance at this date follows: Cash Accounts Receivable Inventory Machinery and Equipment (net) Accounts Payable Art, Capital Bru, Capital Chou, Capital Total Debit $ 20,600 Credit 72,500 58,500 195,500 $ 55,600 94,500 116,500 80,500 $ 347,100 $ 347,100 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 $56,200 on accounts receivable; the balance is uncollectible. 2. Received $41,900 for the entire Inventory. 3. Paid $3,300 liquidation expenses. 4. Paid $52,200 to creditors, after offset of a $3,400 credit memorandum received on January 11, 20X1. 5. Retained $12,600 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses. February 20X1 6. Paid $5,300 liquidation expenses. 7. Retained $7,300 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses. March 201 8. Received $151,800 on sale of all items of machinery and equipment. 9. Paid $6,300 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. 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 Safe payments to partners February transactions: Liquidation expenses paid Safe payments to partners March transactions: Sale of Machinery and Equipment at a loss Liquidation expenses paid Payments to partners ABC PARTNERSHIP Statement of Partnership Realization and Liquidation For the period from January 1, 20X1, through March 31, 20X1 Cash Other Assets Accounts Payable Capital Balances Art Bru Chou $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Balances at end of liquidation, March 31, 20X1 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ABC PARTNERSHIP Schedule of Safe Payments to Partners Art 60% Bru 30% Chou 10% Schedule 1: January 31, 20X1 Capital balances Potential Losses and Expenses S 0 $ 0 $ 0 Allocation of potential deficit Safe payment, January 31, 20X1 Schedule 2: February 27, 20X1 Capital balances Potential Losses and Expenses Allocation of potential deficit S 0 $ 0 $ 0 S 0 $ 0 $ 0 Safe payment, February 27, 20X1 S 0 $ 0 $ 0