On January 1, 20X1, partners Art, Bru, and Chou, who share profits and losses in the ratio of 6:2:2, respectively, decide to liquidate their partnership. The partnership trial balance at this date follows:

	Debit		Credit
Cash	$	19,000
Accounts Receivable		68,500
Inventory		54,500
Machinery and Equipment (net)		191,500
Accounts Payable			$	54,000
Art, Capital				90,500
Bru, Capital				112,500
Chou, Capital				76,500
Total	$	333,500	$	333,500

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 $53,000 on accounts receivable; the balance is uncollectible.
2.	Received $39,500 for the entire inventory.
3.	Paid $2,500 liquidation expenses.
4.	Paid $51,500 to creditors, after offset of a $2,500 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.	Paid $4,500 liquidation expenses.
7.	Retained $6,500 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses.

March 20X1

8.	Received $148,000 on sale of all items of machinery and equipment.
9.	Paid $5,500 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.)

Required:

Prepare a statement of partnership liquidation for the partnership with schedules of safe payments to partners. (Round your answers to nearest whole dollar.)

Answer:

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	Art	Bru	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
Safe payments to partners
February transactions:
Liquidation expenses paid
Safe payments to partners
March transactions:
Sale of M&Eq. at a loss
Liquidation expenses paid
Payments to partners
Balances at end of liquidation, March 31, 20X1

APB PARTNERSHIP
Schedule of Safe Payments to Partners
	Art 60%	Bru 20%	Chou 20%
Schedule 1: January 31, 20X1
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