Reference no: EM13513615
Jason, Kelly, and Becky, who share partnership profits 50 percent, 30 percent, and 20 percent, respectively, decide to liquidate their partnership. They need the cash from the partnership as soon as possible but do not want to sell the assets at fire-sale prices, so they agree to an installment liquidation. A summary balance sheet on January 1, 2011, is as follows:
Cash is distributed to the partners at the end of each month, with $5,000 retained for possible contingencies in the liquidation process.
During January 2011, Jason agreed to offset his capital balance with his loan from the partnership, $25,000 was collected on the accounts receivable, and the balance is determined to be uncollectible. Liquidation expenses of $2,000 were paid.
During February 2011, $18,000 was collected from the sale of inventories and $90,000 collected from the sale of equipment. Additional liabilities of $3,000 were discovered, and $2,000 of liquidation expenses were paid. All cash was then distributed in a final liquidation.
REQUIRED
Prepare a statement of partnership liquidation with supporting safe payments schedules for each cash distribution.
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