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:

	Debit				Credit
Cash		$	18,000
Accounts Receivable			66,000
Inventory			52,000
Machinery and Equipment (net)			189,000
Accounts Payable						$	53,000
Art, Capital							88,000
Bru, Capital							110,000
Chou, Capital							74,000
Total		$	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. Paid $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

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 Cash Other Assets Accounts Payable Bru Chou Art Balances before liquidation, January 1, 20X1 January transactions: 74.000 18,000 307,000 110,000 53,000 88,000 (66,000) (52,000) 51,000 38,000 (2,000) (4,500) (4,200) Collection of accounts receivable at a loss (7,500) (3,000) Sale of inventory at a loss (7.000) (2,800) Liquidation expenses paid 1,000 600 400 (3,000) (50,000) Share of credit memorandum 1,500 900 600 (50,000) 55,000 S Payments to creditors 76,000 $ 102,800 S 189,000 $ 69,200 Safe payments to partners (45,000) 189,000 $ 76,000 S 10,000 S 102,800 $ 69,200 February transactions: Liquidation expenses paid 4,000 6.000 $ 76,000 $ 102,800 S 189,000 $ 69,200 Safe payments to partners 6,000 s 189,000 s $ 76,000 s 102,800 s 69,200 March transactions: Sale of M&Eq, at a loss 5,000 Liquidation expenses paid 189,000 $ 76,000 $ 102,800 S 1,000 S 2$ 69,200 Payments to partners Balances at end of liquidation, March 31, 20X 76,000 $ 102,800 s 1,000 S 189,000 $ 69,200 ABC PARTNERSHIP Schedule of Safe Payments to Partners Art 50% Bru Chou 20% 30% Schedule 1: January 31, 20X1 Capital balances Potential Loss on noncash assets 24 24 Allocation of potential deficit Safe payment, January 31, 20X1 2$ 24 Schedule 2: February 27, 20X1 Capital balances Potential Loss on noncash assets Allocation of potential deficit Safe payment, February 27, 20X1 2$