Business, 03.07.2020 20:01 Poohpooh8548

On January 1, 20X1, partners Art, Bru, and Chou, who share profits and losses in the ratio of 5:3:2, respectively, decide to liquidate their partnership. The partnership trial balance at this date follows: Debit Credit
Cash $ 18,000
Accounts Receivable 66,000
Inventory 52,000
Machinery and Equipment (net) 189,000
Accounts Payable $ 53,000
Art, Capital 88,000
Bru, Capital 110,000
Chou, Capital 74,000
Total $ 325,000 $ 325,000

The partners plan a program of piecemeal conversion of assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows:

January 20X1

Collected $51,000 on accounts receivable; the balance is uncollectible.
Received $38,000 for the entire inventory.
Paid $2,000 liquidation expenses.
Paid $50,000 to creditors, after offset of a $3,000 credit memorandum received on January 11, 20X1.
Retained $10,000 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses.

February 20X1

Paid $4,000 liquidation expenses.
Retained $6,000 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses.

March 20X1

Received $146,000 on sale of all items of machinery and equipment.
Paid $5,000 liquidation expenses.
Retained no cash in the business.

Required:
Prepare a statement of partnership liquidation for the partnership with schedules of safe payments to partners.

ABC PARTNERSHIP
Statement of Partnership Realization and Liquidation
For the period from January 1, 20X1, through March 31, 20X1
Capital Balances
Cash Other Assets Accounts Payable Art Bru Chou
Balances before liquidation, January 1, 20X1
January transactions:
Collection of accounts receivable at a loss
Sale of inventory at a loss
Liquidation expenses paid
Share of credit memorandum
Payments to creditors
$0 $0 $0 $0 $0 $0
Safe payments to partners
$0 $0 $0 $0 $0 $0
February transactions:
Liquidation expenses paid
$0 $0 $0 $0 $0 $0
Safe payments to partners
$0 $0 $0 $0 $0 $0
March transactions:
Sale of M&Eq. at a loss
Liquidation expenses paid
$0 $0 $0 $0 $0 $0
Payments to partners
Balances at end of liquidation, March 31, 20X1 $0 $0 $0 $0 $0 $0
ABC PARTNERSHIP
Schedule of Safe Payments to Partners
Art 50% Bru 30% Chou 20%
Schedule 1: January 31, 20X1
Capital balances
Potential Loss on noncash assets
$0 $0 $0
Allocation of potential deficit
Safe payment, January 31, 20X1 $0 $0 $0
Schedule 2: February 27, 20X1
Capital balances
Potential Loss on noncash assets
$0 $0 $0
Allocation of potential deficit
Safe payment, February 27, 20X1 $0 $0 $0

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On January 1, 20X1, partners Art, Bru, and Chou, who share profits and losses in the ratio of 5:3:2,...