The partnership of Larson, Norris, Spencer, and Harrison has decided to terminate operations and liquidate all business property. During this process, the partners expect to incur $8,000 in liquidation expenses. All partners are currently solvent.

The balance sheet reported by this partnership at the time that the liquidation commenced follows. The percentages indicate the allocation of profits and losses to each of the four partners.

Cash	$	28,250	Liabilities	$	47,000
Accounts receivable		44,000	Larson, capital (20%)		15,000
Inventory		39,000	Norris, capital (30%)		60,000
Land and buildings		23,000	Spencer, capital (20%)		75,000
Equipment		104,000	Harrison, capital (30%)		41,250
Total assets	$	238,250	Total liabilities and capital	$	238,250

Based on the information provided, prepare a predistribution plan for liquidating this partnership.

Complete this question by entering your answers in the tabs below.

• Loss Allocation
• Partner Balances

Prepare the table showing partner balances.

		Larson	Norris	Spencer	Harrison
Beginning balances		$15,000	$60,000	$75,000	$41,250
Assumed loss	$75,000
Schedule 1
Step one balances
Assumed loss
Schedule 2
Step two balances
Assumed loss
Schedule 3
Step three balances