The Hylands Hotels are liquidating their partnership. Before selling the assets and paying liabilities, the capital balances for the partners are: Martha $45,000; Nathan $36,000 and Orin $26,000. The profit and loss sharing ratio has been 2:2:1 for Martha, Nathan and Orin respectively. The partnership has cash $50,000, $75,000 noncash assets and $36,000 Accounts payable.

Assume the partnership sells the non-cash assets and received $84,000 in cash.

Assume the partnership sells the noncash assets and received $35,000.

Instructions

Under both assumptions, prepare the entries to record:

(a) The sale of noncash assets.

(b) The allocation of the gain or loss on liquidation to the partners.

(c) Payment of creditors.

(d) Distribution of cash to the partners.