The partnership of Butler, Osman, and Ward was formed several
years as a local tax preparation firm. Two partners have reached
retirement age and the partners have decided to terminate
operations and liquidate the business. Liquidation expenses of
$38,000 are expected. The partnership balance sheet at the start of
liquidation is as follows:
|
|
|
|
|
|
|
|
| Cash |
$ |
34,000 |
|
Liabilities |
$ |
174,000 |
|
| Accounts receivable |
|
64,000 |
|
Butler, loan |
|
34,000 |
|
| Office equipment (net) |
|
54,000 |
|
Butler, capital (25%) |
|
70,000 |
|
| Building (net) |
|
130,000 |
|
Osman, capital (25%) |
|
34,000 |
|
| Land |
|
120,000 |
|
Ward, capital (50%) |
|
90,000 |
|
| Total assets |
$ |
402,000 |
|
Total liabilities and
capital |
$ |
402,000 |
|
|
Prepare a predistribution plan for this partnership.
|
|
|
|
Butler, Loan and Capital |
Osman, Capital |
Ward, Capital |
| Beginning
balances |
|
|
|
| Loss |
|
|
|
| Step one
balances |
|
|
|
| Loss |
|
|
|
| Step two balances |
|
|
|
|