The Pen, Evan, and Torves Partnership has asked you to assist in winding-up its business affairs. You compile the following information:

1. The partnerships trial balance on June 30, 20X1, is

	Debit				Credit
Cash		$	7,300
Accounts Receivable (net)			40,000
Inventory			28,000
Plant and Equipment (net)			98,300
Accounts Payable						$	11,100
Pen, Capital							68,000
Evan, Capital							57,500
Torves, Capital							37,000
Total		$	173,600			$	173,600

2. The partners share profits and losses as follows: Pen, 50 percent; Evan, 25 percent; and Torves, 25 percent.
3. The partners are considering an offer of $113,000 for the firms accounts receivable, inventory, and plant and equipment as of June 30. The $113,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated.

Required: Prepare a cash distribution plan as of June 30, 20X1, showing how much cash each partner will receive if the partners accept the offer to sell the assets.

X Answer is complete but not entirely correct. PET PARTNERSHIP Cash Distribution Plan June 30, 20X1 Loss Absorption Potential Pen Evan Torves Torves P en 50 68,000 % Capital Accounts Evan 25 % $ 57,500 0 $ $ Profit and loss percentages Preliquidation capital balances Loss absorption potential capital balances / loss percent) Decrease highest LAP to next highest: 37,000 0 $ (26,650) 0 13,325 0 13,325 % $ $ Evan 0 (26,650) (13,325) 0 0 13,325 0 68,000 7,200 % 50,300 $ $ $ $ $ 37,000 Decrease LAPs to next highest: Evan Torves 0 0 $ (26,650) 22,000 0 $ (22,000) 0 0 22,0000 (8,675) $ 68,000 6,600 % 0 43,700 0 23,675 13,325 $ $ $