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Partnerships: Termination & Liquidation 20 points On January 1, 2018, the partners of Won, Cadel, and Dax (who shared profits and losses in the ratio of 5:3:2, respectively) decided to liquidate their partnership. The trial balance at this date was as follows: Debit Credit Cash Accounts Receivable Inventory Machinery and equipment, net Accounts payable S 30,000 70,000 50,000 250,000 60, 000 120,000 130,000 90,000 S 400,000 400,000 Cadel, capital Dax, capital Totals The partners planned an installment program to dispose of the business assets and to mi liquidation losses. All available cash, less an amount retained to provide for future expenses was to be distributed to the partners at the end of each month. A summary of liquidation transactions in January follows anuary $60,000 was collected on the accounts receivable; the balance was deemed to uncollectible. $40,000 was received for the entire inventory. $60,000 was paid to outside creditors. Cash of $10,000 was retained at the end of the month to cover unrecorded liabilities and anticipated expenses. The balance of cash was distributed to the partners. . Required: Calculate the safe payments to be made to Won, Cadel, and Dax at the end of January.

Answer 1

Safe Installment Payments to Partners
	Total	WON	CADEL	DAX
Profit and Loss ratio	100%	50%	30%	20%
Pre Liquidation Capital Balance	$340,000	$120,000	$130,000	$90,000
Loss as per Schedule 1	-$20,000	-$10,000	-$6,000	-$4,000
Balance After Loss Adjustment	$320,000	$110,000	$124,000	$86,000
Potential Loss as per Schedule 1	-$260,000	-$130,000	-$78,000	-$52,000
Balance After Adjustment of Potential Loss	$60,000	-$20,000	$46,000	$34,000
Potential Loss-Won's Balance	$0	$20,000	-$12,000	-$8,000
( Cadel @ 3/5 AND DAX @ 2/5)
Safe Payments to Partners	$60,000	$0	$34,000	$26,000
Schedule-1
Computation of Actual and Potential Liquidation Loses
		Actual Loss		Potential Loses
Collection of Accounts receivable ($70000-$60000)		$10,000
Sale of Inventory($50000-$40000)		$10,000
Machinery & Equipment				$250,000
Unrecorded Liabilities and Anticipated Expenses				$10,000
		$20,000		$260,000