Question
On January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2,respectively) decide to terminate operations and
On January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2,respectively) decide to terminate operations and liquidate their partnership. The trial balance at this date follows:
The partners plan a program of piecemeal conversion of the partnerships 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:
JanuaryCollected $72,000 of the accounts receivable; the balance is deemed uncollectible.Received $59,000 for the entire inventory.Paid $7,000 in liquidation expenses.Paid $87,000 to the outside creditors after offsetting a $8,000 credit memorandum received by the partnership on January 11.Retained $31,000 cash in the business at the end of January to cover liquidation expenses. The remainder is distributed to the partners.FebruaryPaid $8,000 in liquidation expenses.Retained $19,000 cash in the business at the end of the month to cover additional liquidation expenses.MarchReceived $167,000 on the sale of all machinery and equipment.Paid $10,000 in final liquidation expenses.Retained no cash in the business.Prepare proposed schedules of liquidation on January 31, February 28, and March 31 to determine the safe payments made to the partners at the end of each of these three months.
VAN, BAKEL, AND COX PARTNERSHIP Proposed Schedule of Liquidation March 31 Balances before February 28 safe payments Safe payments to partners - February 28 Balances - March 1 Sold machinery Paid liquidation expenses Subtotal (actual balances) Safe payments to partners - March 31 Ending balances - March 31 \begin{tabular}{|l|l|l|l|l|l|} \hline Cash & NoncashAssets & Liabilities & Van,CapitalandLoan50% & Bakel,CapitalandLoan30% & Cox,Capital20% \\ \hline & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline \end{tabular}Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started