Question
Problem 15-22 (Static) (LO 15-7) The partnership of Larson, Norris, Spencer, and Harrison has decided to terminate operations and liquidate all business property. During this
Problem 15-22 (Static) (LO 15-7)
The partnership of Larson, Norris, Spencer, and Harrison has decided to terminate operations and liquidate all business property. During this process, the partners expect to incur $8,000 in liquidation expenses. All partners are currently solvent.
The balance sheet reported by this partnership at the time that the liquidation commenced follows. The percentages indicate the allocation of profits and losses to each of the four partners.
| Cash | $ | 28,250 | Liabilities | $ | 47,000 |
| Accounts receivable | 44,000 | Larson, capital (20%) | 15,000 | ||
| Inventory | 39,000 | Norris, capital (30%) | 60,000 | ||
| Land and buildings | 23,000 | Spencer, capital (20%) | 75,000 | ||
| Equipment | 104,000 | Harrison, capital (30%) | 41,250 | ||
| Total assets | $ | 238,250 | Total liabilities and capital | $ | 238,250 |
Based on the information provided, prepare a predistribution plan for liquidating this partnership.
Loss Allocation
Prepare the loss allocation table.
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Partner Balances
Prepare the table showing partner balances.
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