On January 1, 20X1. partners Art, Bru, and Chou, who share profits and losses in the ratio of 5:3:2, respectively, decide to liquidate their partnership. The partnership trial balance at this date follows: Credit Debit $ 22,00 76,280 62,000 199,000 Cash Accounts Receivable Inventory Machinery and Equipment (net) Accounts Payable Art, Capital Bru, Capital Chou, Capital Total $ 57.000 98,888 120,000 84.000 $ 359, eee $359,00 The partners plan a program of plecemeal 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 $59,000 on accounts receivable; the balance is uncollectible. 2. Received $44.000 for the entire Inventory. 3. Pald $4.000 liquidation expenses. 4. Pald $52,500 to creditors, after offset of a $4.500 credit memorandum received on January 11, 20X1. 5. Retained $11,000 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses. February 20X1 6. Pald $6.000 liquidation expenses. 7. Retained $5,000 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses. March 20X1 8. Received $156,000 on sale of all items of machinery and equipment. 9. Pald $4.500 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 Cash 2 2.000 Other Assets Accounts Payable 57.000 Capital Balances Art Bru 98.000 120.000 Chou 84.000 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 | | | $ 22,000 $ 0 $ 57,000 $ 98,000 $ 120,000 $ 84,000 Safe payments to partners $ 22.000 $ 0 $ 57,000 $ 98,000 $ 120,000 $ 84,000 February transactions: Liquidation expenses paid $ 22,000 $ 0 $ 57,000 $ 98,000 $ 120,000 $ 84,000 Safe payments to partners Safe payments to partners $ 22,000 $ 57,000 $ 98.000 $ 120,000 $ 84,000 March transactions Sale of M8Ea at a loss Liquidation expenses paid $ 22,000 $ 0 $ 57,000 $ 98.000 $ 120,000 $ 34.000 Payments to partners Balances at end of liquidation, March 31, 20X1 $ 22,000 $ 0 $ 67,000 $ 98,000 $ 120,000 $ 84,000 ABC PARTNERSHIP Schedule of Safe Payments to Partners Art 50% Chou 20% 30% Schedule 1: January 31, 20X1 Capital balances Potential Loss on noncash assets Allocation of potential deficit Safe payment, January 31, 20X1 $ 0 $ 0 $ Schedule 2: February 27, 20X1 Capital balances Potential Loss on noncash assets Allocation of potential deficit Safe payment, February 27, 20X1 $ 0 $ 0 $
