Question

Several years ago, Ann Dennis, Jill Edwards, Lee Lacy, and Sarah Ingram formed a partnership to operate the Deli Sisters Cafe. Rerouting of bus lines caused declines in patronage to the extent that the partners have agreed to dissolve the partnership and liquidate the assets. The November 2, 2014, balance sheet of the Deli Sisters Cafe and other data appear below. The partnership agreement did not specify how profits and losses were to be shared.

DELI SISTERS CAFÉ Balance Sheet November 2, 2014
Cash	$24,000		Liabilities	$40,080
Supplies	12,000		Loan-Ingram	16,000
Equipment	120,000		Capital-Dennis	41,600
Fixtures	32,000		Capital-Edwards	36,000
			Capital-Lacy	15,920
			Capital-Ingram	38,400
Total assets	$188,000		Total liabilities and capital	$188,000

During November, sold half of the fixtures for $4,000. Sold equipment with a book value of $24,000 for $17,600.

During December, paid all outside creditors. A neighboring restaurant bought Deli Sisters Cafe's supplies at 80 percent of cost. Sold the remaining fixtures for $6,400.

During January, sold equipment with a book value of $32,000 for $22,400.

Following the safe payment approach, specify how cash is to be distributed at the end of November, December, and January.

	Dennis	Edwards	Lacy	Ingram
November	$Answer	$Answer	$Answer	$Answer
December	Answer	Answer	Answer	Answer
January	Answer	Answer	Answer	Answer

Answer 1

NOVEMBER
	Loss
Sold fixtures worth 25000 for 18000	7000
Sold equipment worth 30000 for 21000	9000
Total Loss to be deducted out of capital in the ratio 2:3:1:4	16000
DELI SISTERS CAFÉ
Cash	64,000		Liabilities	$60,700
Supplies	20,000		Loan-Ingram	15,000
Equipment	1,45,000		Capital-Dennis	58,800
Fixtures	25,000		Capital-Edwards	49,200
			Capital-Lacy	20,400
			Capital-Ingram	49,900
Total assets	254000		Total liabilities and capital	254000
DECEMBER
	Loss
Paid all outside creditors 60700
Supplies sold worth 20000 at 16000	4000
Sold the remaining fixtures of 25000 for $8,000	17000
Total Loss to be deducted out of capital in the ratio 2:3:1:4	21000
DELI SISTERS CAFÉ
Cash	27,300		Liabilities	-
Supplies	-		Loan-Ingram	15,000
Equipment	1,45,000		Capital-Dennis	54,600
Fixtures	-		Capital-Edwards	42,900
			Capital-Lacy	18,300
			Capital-Ingram	41,500
Total assets	172300		Total liabilities and capital	172300
JANUARY
	Loss
Sold equipment with a book value of $40,000 for $25,000	15000
Total Loss to be deducted out of capital in the ratio 2:3:1:4	15000
DELI SISTERS CAFÉ
Cash	-		Liabilities	-
Supplies	-		Loan-Ingram	-
Equipment	1,05,000		Capital-Dennis	44,140
Fixtures	-		Capital-Edwards	27,210
			Capital-Lacy	13,070
			Capital-Ingram	20,580
Total assets	105000		Total liabilities and capital	105000
	Dennis	Edwards	Lacy	Ingram
November	0	0	0	0
December	0	0	0	0
January	7460	11190	3730	29920