Question

On January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to liquidate their partnership. The trial balance at this date follows:

  

	Debit	Credit
Cash	$ 42,000
Accounts receivable	114,000
Inventory	100,000
Machinery and equipment, net	237,000
Van, loan	78,000
Accounts payable		$ 96,000
Bakel, loan		68,000
Van, capital		195,000
Bakel, capital		114,000
Cox, capital		98,000
Totals	$ 571,000	$ 571,000

The partners plan a program of piecemeal conversion of the business’s 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	Collected $75,000 of the accounts receivable; the balance is deemed uncollectible.
	Received $62,000 for the entire inventory.
	Paid $2,000 in liquidation expenses.
	Paid $74,000 to the outside creditors after offsetting a $3,000 credit memorandum received by the partnership on January 11.
	Retained $34,000 cash in the business at the end of January to cover any unrecorded liabilities and anticipated expenses. The remainder is distributed to the partners.
February	Paid $3,000 in liquidation expenses.
	Retained $22,000 cash in the business at the end of the month to cover unrecorded liabilities and anticipated expenses.
March	Received $170,000 on the sale of all machinery and equipment.
	Paid $5,000 in final liquidation expenses.
	Retained no cash in the business.

Prepare a schedule to compute the safe installment payments made to the partners at the end of each of these three months. (Do not round intermediate calculations. Amounts to be deducted should be indicated by a minus sign.)

VAN, BAKEL, AND COX PARTNERSHIP Safe Installment Payments to Partners January 31 Van Bakel Cox Total Profit and loss ratio % % % 0 % Capital balances - January 1 $0 Add (deduct) loans 0 Adjusted capital balances - January 1 $0 $0 $0 $0 Allocation of January net loss 0 Capital balances - January 31 $0 $0 $0 $0 Potential loss 0 Subtotal $0 $0 $0 $0 Allocation of deficit balances 0 Safe payments to partners - January 31 $0 $0 $0 $0

VAN, BAKEL, AND COX PARTNERSHIPSafe Installment Payments to PartnersFebruary 28VanBakelCoxTotalProfit and loss ratio%%%0%Capital balances - January 31$0Safe payments - January 310Capital balances - February 1$0$0$0$0Allocation of February net loss0Capital balances - February 28$0$0$0$0Potential loss0Subtotal$0$0$0$0Allocation of deficit balances0Safe payments to partners - February 28$0$0$0$0

VAN, BAKEL, AND COX PARTNERSHIPSafe Installment Payments to PartnersMarch 31VanBakelCoxTotalProfit and loss ratio%%%0%Capital balances - February 28$0Safe payments - February 280Capital balances - March 1$0$0$0$0Allocation of March net loss0Capital balances - March 31$0$0$0$0Final payments to partners - March 310Ending balances - March 31$0$0$0$0

Answer 1

Van Bakel Cox Total Profillon 50 % 2017 Cap Bal 195.000 114,000 98,000 407,000 Safe pay to prother 44,000 44,000 Cap. Bal. feb. 129,000 157, 400 81600_368,000 Briocahontas (5000) $3,000) (2,000 10,000) Cap Lelo feb 2002) 194,000 154,400 79,606 358,000 'Potention is Rooo (72,600] (48,4003942,000) Subtotal (a-6) 3,000 81,800 31,200 116,080 Allocation deficit 3.000 (4200) (37,200) Sate Pay to paustier 116000 116000 Westeing, Paid Liquidation Eup 10,000 237,000 Retard Onrecorded 5,000 folential loss 249,000 As on 31 Mar

79,600 358,000 Van Bated Cox Profit (loss Ratio 30% Capital Bat feb 28 195,000 114,060 98,000 407,000 Sale Payment feb28 116,000 (672300) 49,000 Cap Bal - March ! 126,000 154,400 Allocation March los 139500 23,700 15800 19.000 Cap. Bal 3. Har $4,500 130,700 63,800 79.00 Safe parhar to pay. (841500) 130, 70g (63,800 (3 79oto Ending Bal. 31 Mar. Working I Paid in Lequidation sous 5,000 Machinery & Eqbikmest (net) 232,000 Received on sale of equip. 170,000 67,000 Net less 72,000

(1029000) Anu Particular Van Bakel Cox To beel Pocoft / hou Rako 50% 304 20%. Capital Bal- opowing 195,000.114,000 98.000 4001000 Add/ les loan (78000) PACO Adj Capital Bali 110,000 182,000 98,600 397,000 Actual Law (2) working (41.000) (24,600) (16,400) ( 32,000) Cap. Balo - 31 Janca) 12 1.b 157, Yoo $1,600 315000 Potential lou (blueskelige! (133,50) (9/309) (34,200) (2 1,600 Subtotal (a b) (6500) 76,100 21,400 47,000 Allca Hoss of diferent 6500 (32,100) 27,400) D 44,900 Safe pay to parchers 44,000 (after allocation Deficit] Working Note 2 (sAmt () Bant Collection of Account Receivable 39,000 114,000 -75,000) Received of Inventouy (100,000-62070) 38,000 Paid liquidation Eup. 2,000 Credit memorand treceived Actual loss $ 82,000 237,000 Retained Unrecorded 34,000 Potential los $ 27,000) no on feb. 3,000 Machinery