Question

The partnership of Larson, Norris, Spencer, and Harrison has decided to terminate operation 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	Larson, capital (20%)	15,000
Inventory	39,000	Norris, capital (30%)	60,000
Land and buildings	23,000	Spencer, capital (20%)	75,000
Equipment	104,000	Harrison, 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

Loss Allocation:

Partner	Capital Balance	Loss Allocation	Maximum Loss That Can Be Absorbed
Schedule 1
Larson
Norris
Spencer
Harrison
Schedule 2
Larson
Norris
Spencer
Harrison
Schedule 3
Larson
Norris
Spencer
Harrison

Partner Balances:

		Larson	Norris	Spencer	Harrison
Beginning Bal
Assumed Loss
Schedule 1
Step one Bal
Assumed Loss
Schedule 2
Step two Bal
Assumed Loss
Schedule 3
Step three Bal

Answer 1