Installment Liquidation
Refer to the facts in Problem 16-15. The partners have decided to liquidate their partnership by installments instead of accepting the offer of $100,000. Cash is distributed to the partners at the end of each month. A summary of the liquidation transactions follows:
July
1. $16,500 collected on accounts receivable; balance is uncollectible.
2. $10,000 received for the entire inventory.
3. $1,000 liquidation expense paid.
4. $17,000 paid to creditors.
5. $8,000 cash retained in the business at the end of the month.
August
6. $1,500 in liquidation expenses paid.
7. As part payment of his capital, Torves accepted an item of special equipment that he developed, which had a book value of $4,000. The partners agreed that a value of $10,000 should be placed on this item for liquidation purposes.
8. $2,500 cash retained in the business at the end of the month.
September
9. $75,000 received on sale of remaining plant and equipment.
10. $1,000 liquidation expenses paid. No cash retained in the business.
Required
Prepare a statement of partnership realization and liquidation with supporting schedules of safe payments to partners.
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