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The partnership of L, N, S, and H 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	L, capital (20%)		15,000
Inventory		39,000	N, capital (30%)		60,000
Land and buildings		23,000	S, capital (20%)		75,000
Equipment		104,000	H, 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.

Prepare the loss allocation table. Partner Maximum Capital Balance Loss Allocation Loss That Can Be Absorbed Schedule 1 Larson Norris Spencer Harrison Schedule 2 Larson Norris Spencer Harrison Schedule 3 Larson Norris Spencer Harrison Prepare the table showing partner balances. Larson Norris Spencer Harrison Beginning balances Assumed loss Schedule 1 Step one balances Assumed loss Schedule 2 Step two balances Assumed loss Schedule 3 Step three balances