Question

Liquidation schedule—positive capital accounts
The ABC partnership reports the following condensed balance sheet:

Cash	$200,000		Liabilities	$300,000
Noncash assets	600,00		Partner A, capital	125,000
			Partner B, capital	125,000
			Partner C, capital	250,000
Total assets	$800,000		Total liabilities and partner capital	$800,000

The partners wish to liquidate the partnership. The noncash assets are sold for $450,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The liabilities are paid in full. Prepare a schedule detailing the liquidation of the assets, repayment of the liabilities, and distribution of the remaining cash to the partners.

HINT: Use a negative sign with answers that reduce account balances.

Liquidation Schedule of ABC Partnership

-----Capital Accounts----- CashNoncash AssetsLiabilities ABCCapital account, prior to liquidation$Answer$Answer$Answer $Answer$Answer$AnswerSale of noncash assetsAnswerAnswerAnswer AnswerAnswerAnswer AnswerAnswerAnswer AnswerAnswerAnswerPayment of creditorsAnswerAnswerAnswer AnswerAnswerAnswer AnswerAnswerAnswer AnswerAnswerAnswerDistribution to partnersAnswerAnswerAnswer AnswerAnswerAnswerPost-liquidation balances$Answer$Answer$Answer $Answer$Answer$Answer

Answer 1

				30%	30%	40%
				Partners' Capital Accounts
Debit (Credit)	Cash	Noncash Assets	Liabilities	A	B	C
Balance prior to liquidation	200000	600000	300000	125000	125000	250000
Sale of noncash assets	450000	-600000	0	-45000	-45000	-60000
	650000	0	300000	80000	80000	190000
Payment of creditors	-300000	0	-300000	0	0	0
	350000	0	0	80000	80000	190000
Distribution to partners	-350000	0	0	-80000	-80000	-190000
Post-liquidation balances	0	0	0	0	0	0