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 $ 41,000 Cash Accounts receivable 112,000 98,000 235,000 76,000 Inventory Machinery and equipment, net Van, loan Accounts payable Bakel, loan Van, capital Bakel, capital Cox, capital $ 97,000 66,000 189,000 113,000 97,000 $ 562,000 $ 562,000 Totals The partners plan a program of piecemeal conversion of the partnership'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 liquidation transactions follows: Collected $74,000 of the accounts receivable; the balance is deemed January uncollectible. Received $61,000 for the entire inventory. Paid $9,000 in liquidation expenses Paid $89,000 to the outside creditors after offsetting a $8,000 credit memorandum received by the partnership on January 11 Retained $33,000 cash in the business at the end of January to cover any unrecorded liabilities and anticipated expenses. The remainder is distributed to the partners Paid $10,000 in liquidation expenses Retained $21,000 cash in the business at the end of the month to cover February

Answer 1

Please see below answer based on partnership basis . All numbers are available in the Question . Potential loss + Actual loss number Month wise - calculation mentioned ( Working 1,2, 3 )  

As on 31st jan
	Van	Bakel	Cox	Total
Profit/ Loss- Ratio	50%	30%	20%
Capital Balance - Opening Bal	1,89,000	1,13,000	97,000	3,99,000
Add/( deduct) Loan( as per Question)	(76,000)	66,000		(10,000)
Adjusted capital Bal	1,13,001	1,79,000	97,000	3,89,000
Actual Loss( workings 2)	(46,000)	(27,600)	(18,400)	(92,000)
Capital Balance - 31st Jan(a)-Derived	67,001	1,51,400	78,600	2,97,000
Potential Loss(b) ( Working 2)	(1,34,000)	(80,400)	(53,600)	(2,68,000)
Subtotal(a-b)	(67,000)	71,000	25,000	29,000
Allocation of Deficit	67,000	(42,000)	(25,000)	(0)
Safe payments to Partner	1	29,000	-	29,000
( after allocation of Deficit)
Working 2	Amnt($)	Amnt($)
Collection of Account receivable	38,000
(112000-74000)
Received of Inventory	37,000
(98000-61000)
Paid Liquidation Expenses	9,000
Credit memorandum received	8,000
Actual Loss	92,000
Machinery		2,35,000
Retained( unrecorded Liability)		33,000
Potential Loss		2,68,000

As on Feb
	Van	Bakel	Cox	Total
Profit/ Loss- Ratio	50%	30%	20%
Capital Balance - Opening Bal	1,89,000	1,13,000	97,000	3,99,000
Safe payments to Partner		29,000		29,000
Capital Balance - Feb( as above)	67,001	1,51,400	78,600	2,97,001
Allocation of loss( working 3)	(5,000)	(3,000)	(2,000)	(10,000)
Capital Balance - Feb 28th(a)	62,001	1,48,400	76,600	2,87,001
Potential Loss(b)( working 3)	(1,23,500)	(74,100)	(49,400)	(2,47,000)
Subtotal(a-b)	(61,500)	74,300	27,200	40,001
Allocation of Deficit	61500	-34300	-27200	-
Safe payments to Partner	1	40,000	0	40,001
Working 3	Amount ($)	Amount ($)
Paid Liquidation Expenses	10,000
Machinery		2,35,000
Retained( unrecorded Liability)		12,000
Potential Loss		2,47,000

As on 31st March
	Van	Bakel	Cox	Total
Profit/ Loss- Ratio	50%	30%	20%
Capital Balance - february 28$	1,89,000	1,13,000	97,000	3,99,000
Safe payment - feb 28 $		40,000	(800)	39,200
Capital Balance - March 1$( as above)	62,001	1,48,400	76,600	2,87,001
Allocation of March loss( working 1)$	(39,000)	(23,400)	(15,600)	(78,000)
Capital Balance 31st March$	23,001	1,25,000	61,000	2,09,001
Safe partner to payments$	23,001	1,25,000	61,000	2,09,001
Ending Balance as on 31st March$	-	-	-	-
Working 1
Paid in Liquidation $		12,000
Machinery & Equipment( net)$	2,35,000
Received on sale of Equipment$	1,69,000	66,000
Net loss $		78,000