Question

Partners in the ABCD Partnership decided to dissolve their partnership. On that date, the partners had the following pre-liquidation capital balances:

Partner A	$28,000
Partner B	41,000
Partner C	18,000
Partner D	12,000

A, B, C, and D share residual profits and losses in a 4:3:2:1 ratio.

Liabilities at the date of dissolution total $100,000, and noncash assets equal $105,000. During the first month of liquidation, assets having a book value of $55,000 were sold for $31,000. During the second month, assets having a book value of $32,000, were sold for $28,000. During the third month, the remaining unsold assets were determined to be worthless. The partners receive the maximum allowable payment at the end of each month. Prepare an installment liquidation schedule along with supporting safe payment schedule

				40%	30%	20%	10%
Debit (Credit)		Noncash		Partners' Capital Accounts
	Cash	Assets	Liabilities	A	B	C	D
Balance prior to liquidation
Sale of noncash assets in month #1
Installment distrib to Partners #1
Sale of noncash assets in month #2
Installment distrib to Partners #2
Write off noncash assets in month #3
Pay creditors
Post-liquidation balances	0	0	0	0	0	0	0

Answer 1

				40%	30%	20%	10%
				Partners' Capital Accounts
Debit (Credit)	Cash	Noncash assets	Liabilities	A	B	C	D
Balance prior to liquidation	94000	105000	(100000)	(28000)	(41000)	(18000)	(12000)
Sale of noncash assets in month #1	31000	(55000)		9600	7200	4800	2400
	125000	50000	(100000)	(18400)	(33800)	(13200)	(9600)
Installment distrib to Partners #1	(25000)				18000	2667	4333
	100000	50000	(100000)	(18400)	(15800)	(10533)	(5267)
Sale of noncash assets in month #2	28000	(32000)		1600	1200	800	400
	128000	18000	(100000)	(16800)	(14600)	(9733)	(4867)
Installment distrib to Partners #2	(28000)			9600	9200	6133	3067
	100000	18000	(100000)	(7200)	(5400)	(3600)	(1800)
Write off noncash assets in month #3		(18000)		7200	5400	3600	1800
	100000	0	(100000)	0	0	0	0
Pay creditors	(100000)		100000
Post-liquidation balances	0	0	0	0	0	0	0

Safe Payment #1				40%	30%	20%	10%
				Partners' Capital Accounts
Debit (Credit)	Cash	Noncash assets	Liabilities	A	B	C	D
Partners' Capital				(18400)	(33800)	(13200)	(9600)
		Assumed Losses
ASSUME that noncash sold for Zero		50000		20000	15000	10000	5000
				1600	(18800)	(3200)	(4600)
ASSUME that A deficit is allocated				(1600)	800	533	267
					(18000)	(2667)	(4333)