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

Cash	$	61,000	Liabilities	$	55,000
Noncash assets		329,000	Drysdale, loan		42,500
			Drysdale, capital (50%)		107,500
			Koufax, capital (30%)		97,500
			Marichal, capital (20%)		87,500

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 $21,000. Prepare a predistribution schedule to guide the distribution of cash. Further, modify the tags in explanation as well.
3. b. Assume that assets costing $99,000 are sold for $72,500. How is the available cash to be divided?

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. Partner Capital Balance Loss Allocation Maximum Loss That Can Be Absorbed Step 1 Drysdale $ % $ 0 Koufax $ 300,000 50 325,000 30 437,500 20 % Marichal $ % Step 2 Koufax 60 % Marichal 40 % Liquidation expenses are estimated to be $21,000. Prepare a predistribution schedule to guide the distribution of cash. Further, modify the tags in explanation as well. DRYSDALE, KOUFAX, AND MARICHAL Distribution of Available Cash First Liabilities $ Liquidation expenses 55,000 21,000 100 % Next Marichal Next Koufax 60 % Marichal 40% All remaining cash 501% Drysdale Koufax 30 % Marichal 20 % Assume that assets costing $99,000 are sold for $72,500. How is the available cash to be divided? Cash available for distribution: Beginning cash balance Sale of noncash assets $ 61,000 72,500 $ 133,500 Subtotal Payment of liabilities Payment of estimated liquidation expenses Cash available for distribution 55,000 21,000 $ 57,500 Cash distribution to partners: Drysdale Koufax Marichal Total First Next Next Total $ 0 $ 0 $ 0 $ 0