Installment Liquidation
The DSV Partnership decided to liquidate the partnership as of June 30, 20X5. The balance sheet of the partnership as of this date is presented as follows:
DSV PARTNERSHIP Balance Sheet At June 30, 20X5 | ||
Assets |
|
|
Cash |
| $ 50,000 |
Accounts Receivable (net) |
| 95,000 |
Inventories |
| 75,000 |
Property, Plant, and Equipment (net) |
| 500,000 |
Total Assets |
| $720,000 |
Liabilities and Partners’ Capital |
|
|
Liabilities: |
|
|
Accounts Payable |
| $405,000 |
Partners’ Capital: |
|
|
D, Capital | $100,000 |
|
S, Capital | 140,000 |
|
V, Capital | 75,000 |
|
Total Capital |
| 315,000 |
Total Liabilities and Capital |
| $720,000 |
Additional Information
1. The personal assets (excluding partnership loan and capital interests) and personal liabilities of each partner as of June 30, 20X5, follow:
| D | S | V |
Personal assets | $250,000 | $450,000 | $300,000 |
Personal liabilities | (270,000) | (420,000) | (240,000) |
Personal net worth | $ (20,000) | $ 30,000 | $ 60,000 |
2. The DSV Partnership was liquidated during the months of July, August, and September. The assets sold and the amounts realized follow:
Month | Assets Sold | Carrying Amount | Amount Realized |
July | Inventories | $ 50,000 | $ 45,000 |
| Accounts receivable (net) | 60,000 | 40,000 |
| Property, plant, and equipment | 400,000 | 305,000 |
August | Inventories | $ 25,000 | $ 18,000 |
| Accounts receivable (net) | 10,000 | 4,000 |
September | Accounts receivable (net) | $ 25,000 | $ 10,000 |
| Property, plant, and equipment | 100,000 | 45,000 |
Required
Prepare a statement of partnership realization and liquidation for the DSV Partnership for the three-month period ended September 30, 20X5. D, S, and V share profits and losses in the ratio 50:30:20. The partners wish to distribute available cash at the end of each month after reserving $10,000 of cash at the end of July and August to meet unexpected liquidation expenses. Actual liquidation expenses incurred and paid each month amounted to $2,500. Support each cash distribution to the partners with a schedule of safe installment payments.
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