Question 4 CHM Co. is a successful company that has been in operation for many years. The company provides management training programmes to junior and middle managers in many large corporations. The partners, Charlton, Hurst and Moore have decided to retire and are therefore liquidating the partnership. The balances in the partnership accounts on December 31, 2020, the date of liquidation are as follows: Cash Accounts receivable Equipment Accumulated depreciation Accounts payable Charlton, capital Hurst, capital Moore, capital $30,000 45,000 64,000 (14,000) 22,000 59,000 34,000 10,000 The partners share profit and loss in a 5:3:2 ratio for Charlton, Hurst and Moore respectively. The partnership agreement also has a clause that stipulates that at the time of dissolution of the partnership any deficiencies in a partner's capital account will be absorbed by the other partner(s) Required: Assume the following independent situations: 1. Assume that the non-cash assets were sold for $102,000. Record the appropriate journal entries for the liquidation of the partnership and the distribution of cash. 2. Assume the economic conditions have deteriorated dramatically and the non-cash assets were sold for $32,000. Record the appropriate journal entries for the liquidation of the partnership and the distribution of cash. 3. Explain why many partnership agreements include an interest allowance in their profit and loss sharing arrangements