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: Cash Accounts receivable. Inventory Machinery and equipment, net Van, loan Accounts payable Bakel, loan Van, capital Bakel, capital Cox, capital Totals Debit $ 30,000 Credit 90,000 76,000 213,000 54,000 $ 81,000 44,000 150,000 102,000 86,000 $ 463,000 $ 463,000 The partners plan a program of piecemeal conversion of the partnership's 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 Collected $63,000 of the accounts receivable; the balance is deemed uncollectible. Received $50,000 for the entire inventory. Paid $6,000 in liquidation expenses. Paid $74,000 to the outside creditors after offsetting a $7,000 credit memorandum received by the partnership on January 11. Retained $22,000 cash in the business at the end of January to cover liquidation The partners plan a program of piecemeal conversion of the partnership's 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 February March Collected $63,000 of the accounts receivable; the balance is deemed uncollectible. Received $50,000 for the entire inventory. Paid $6,000 in liquidation expenses. Paid $74,000 to the outside creditors after offsetting a $7,000 credit memorandum received by the partnership on January 11. Retained $22,000 cash in the business at the end of January to cover liquidation expenses. The remainder is distributed to the partners. Paid $7,000 in liquidation expenses. Retained $10,000 cash in the business at the end of the month to cover additional liquidation expenses. Received $158,000 on the sale of all machinery and equipment. Paid $9,000 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 January 31 Van, Bakel, Capital Capital Cox, Cash Noncashi Assets Liabilities and and Capital Loan Loan 20% 50% 30% Balances-January 1 $30,000 $379,000 81,000 96,000 146,000 86,000 Collected accounts receivable 63,000 ( (90,000) 0 (13,500) ( (8,100) (5,400) Sold inventory 50,000 (76,000) ( 0 (13,000) ( (7,800) (5,200) Paid liquidation expenses Paid accounts payable Subtotal (actual balances) (6,000) 00 09 (3,000) ( (1,800) (1,200) (74,000) 0 (81,000) ( 3,500 2,100 1,400 63,000 213,000 0 70,000 130,400 75,600 Maximum loss on assets $ (213,000) $ 0(106,500) 6 (63,900) ( (42,600) C Maximum liquidation expenses Subtotal (potential balances) (22,000) 41,000 0 0(11,000) (6,600) (4,400) 0 $ 0 (47,500) 59,900 28,600 Allocation of deficit capital balance 0 0 Safe payments to partners - January 31 $ 41,000 $ 0 $ 0 $ (47,500) $ 59,900 $ 28,600 20 Prepare proposed schedule of liquidation to determine the safe payments made to the partners at the end of February. (Amounts to be entered with a minus sign.) VAN, BAKEL, AND COX PARTNERSHIP Proposed Schedule of Liquidation February 28 Van, Noncash Cash Liabilities Capital and Bakel, Capital Cox, Assets and Loan Capital Loan 50% 20% 30% Balances before January 31 safe $ 63,000 $ 213,000 S 0 $ 70,000 $ 130,400 S 75,600 payments Safe payments to partners January 31 0 0 Balances February 1 63,000 213,000 0 70,000 130,400 75,600 Paid liquidation expenses (7,000) 0 0 (3,500) (2,100) (1,400) Subtotal (actual balances) Maximum loss on assets 56,000 213,000 0 66,500 128,300 74,200 0 (213,000) 00 (106,500) (63,900) (42,600) Maximum liquidation expenses (10,000) 0 0 (5,000) (3,000) (2,000) Subtotal (potential balances) 46,000 0 0 (45,000) 61,400 29,600 Allocation of deficit capital balance 0 0 Safe payments to partners February 28 $ 46,000 S 0 0 $ (45,000) S 61,400 $ 29,600 January February March Prepare proposed schedule of liquidation to determine the safe payments made to the partners at the end of March. (Amounts should be entered with a minus sign.) VAN, BAKEL, AND COX PARTNERSHIP Proposed Schedule of Liquidation March 31 Van, Capital Cash Noncash Assets Liabilities and Loan Bakel, Capital and Loan 30% Cox, Capital 20% 50% Balances before February 28 safe payments: $213,000 Safe payments to partners February 28 0 0 Balances - March 1 0 213,000 0 0 0 Sold machinery 158,000 (213,000) 0 (27,500) (16,500) ( (11,000) Paid liquidation expenses (9,000) 0 0 (4,500) 6 (2,700) Subtotal (actual balances). 149,000 0 0 (32,000) (19,200) (1,800) (12,800) Safe payments to partners March 31 Ending balances - March 31 $ S S 0 S 0 149,000 (32,000) $ (19,200) $ (12,800)