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

Cash	$	52,000	Liabilities	$	59,000
Noncash assets		284,000	Drysdale, loan		25,000
			Drysdale, capital (50%)		94,000
			Koufax, capital (30%)		84,000
			Marichal, capital (20%)		74,000

a) Liquidation expenses are estimated to be $12,000. Prepare a predistribution schedule to guide the distribution of cash.

b) Assume that assets costing $90,000 are sold for $68,000. How is the available cash to be divided?

Req A1 Req A2 Req B 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 Koufax % % Marichal % Step 2 Koufax Marichal % % Reg A1 Reg A2 Reg B Liquidation expenses are estimated to be $12,000. Prepare a predistribution schedule to guide the distribution of cash. DRYSLADE, KOUFAX, AND MARICHAL Distribution of Available Cash First Liabilities Liquidation expenses Next % Next % % All remaining cash % % % Reg A1 Req A2 Reg B Assume that assets costing $90,000 are sold for $68,000. How is the available cash to be divided? Cash available for distribution: Beginning cash balance Sale of noncash assets Subtotal Payment of liabilities Payment of estimated liquidation expenses Cash available for distribution Koufax Marichal Total Cash distribution to partners: Drysdale First $18,000 Next $21,000 Next $10,000 Total