The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation: Cash $ 56,000 Liabilities $ 57,500 Noncash assets 304,000 Drysdale, loan 32,500 Drysdale, capital (50%) 100,000 Koufax, capital (30%) 90,000 Marichal, capital (20%) 80,000 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. a-2. Liquidation expenses are estimated to be $16,000. Prepare a predistribution schedule to guide the distribution of cash. Further, modify the tags in explanation as well. b. Assume that assets costing $94,000 are sold for $70,000. 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	$132,500	50	%	$265,000
Koufax	$90,000	30	%	$300,000
Marichal	$80,000	20	%	$400,000
Step 2
Koufax	$10,500	60	%	$17,500
Marichal	$27,000	40	%	$67,500

Liquidation expenses are estimated to be $16,000. 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
Next				%
Next				%
				%
All remaining cash				%
				%
				%

Assume that assets costing $94,000 are sold for $70,000. How is the available cash to be divided?

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