Problem 15-23 (Algo) (LO 15-7)

The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation:

Cash	$	55,000	Liabilities	$	58,500
Noncash assets		299,000	Drysdale, loan		30,000
			Drysdale, capital (50%)		98,500
			Koufax, capital (30%)		88,500
			Marichal, capital (20%)		78,500

1. a-1. Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2.
2. a-2. Liquidation expenses are estimated to be $15,000. Prepare a predistribution schedule to guide the distribution of cash. Further, modify the tags in explanation as well.
3. b. Assume that assets costing $93,000 are sold for $69,500. How is the available cash to be divided?

Partner	Capital Balance	Loss Allocation		Maximum Loss That Can Be Absorbed
Step 1
Drysdale		50	%
Koufax		30	%
Marichal		20	%
Step 2
Koufax			%
Marichal			%

DRYSDALE, KOUFAX, AND MARICHAL
Distribution of Available Cash
First		Liabilities
		Liquidation expenses
Next				%
Next				%
				%
All remaining cash				%
				%
				%

Cash available for distribution:
Beginning cash balance
Sale of noncash assets
Subtotal				$0
Payment of liabilities
Payment of estimated liquidation expenses
Cash available for distribution				$0
Cash distribution to partners:
	Drysdale	Koufax	Marichal	Total
First
Next
Next
Total	$0	$0	$0	$0