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 18,000 66,000 52.000 189,000 Cash Accounts Receivable Inventory Machinery and Equipment (net) Accounts Payable Art, Capital Bru, Capital Chou, Capital Total $ 53,000 88,000 110.000 74,000 $325,000 $325,000 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 $51,000 on accounts receivable; the balance is uncollectible. 2. Received $38,000 for the entire inventory. 3. Paid $2,000 liquidation expenses. 4. Pald $50,000 to creditors, after offset of a $3,000 credit memorandum received on January 11, 20X1. 5. Retained $10,000 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses. February 20X1 February 20X1 6. Paid $4,000 liquidation expenses. 7. Retained $6,000 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses. March 20X1 8. Received $146,000 on sale of all items of machinery and equipment 9. Paid $5,000 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. ABC PARTNERSHIP Statement of Partnership Realization and Liquidation For the period from January 1, 20x1, through March 31, 20X1 Capital Balances Bru Cash Other Assets Accounts Payable Art Chou Balances before liquidation, January 1, 20X1 January transactions Collection of accounts receivable at a loss Sale of inventory at a loss Liquidation expenses paid I ' T ABC PARTNERSHIP Statement of Partnership Realization and Liquidation For the period from January 1, 20X1, through March 31, 20X1 Capital Balances Bru Cash Other Assets Accounts Payable Art Chou 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 0 $ o $ 0 0 $ 0 $ Safe payments to partners 0 $ 0 $ 0 $ 0 $ 0 $ February transactions: Liquidation expenses paid 0 $ $ 0 $ 0 $ 0 $ Safe payments to partners 0 $ 0 $ 0 $ March transactions Sale of M&Eq, at a loss Liquidation expenses paid OS $ 0 $ 0 $ 0 $ 0 Safe payments to partners lol lol 0 $ 0 $ 0 $ March transactions: Sale of M&Eq. at a loss Liquidation expenses paid $ 0S 0S 0S Payments to partners Balances at end of liquidation, March 31, 20X1 lol lol $ 0 $ 0 $ 1 ABC PARTNERSHIP Schedule of Safe Payments to Partners 50% 30% Chou 20% Schedule 1: January 31, 20X1 Capital balances Potential LORS on nonrash assets