Jax, Kya, and Bud, who share partnership profits 50 percent, 30 percent, and 20 percent, respectively, decide

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Jax, Kya, and Bud, who share partnership profits 50 percent, 30 percent, and 20 percent, respectively, decide to liquidate their partnership. They need the cash from the partnership as soon as possible but do not want to sell the assets at fire-sale prices, so they agree to an installment liquidation. A summary balance sheet on January 1, 2011, is as follows:
Jax, Kya, and Bud, who share partnership profits 50 percent,

Cash is distributed to the partners at the end of each month, with $5,000 retained for possible contingencies in the liquidation process.
During January 2011, Jax agreed to offset his capital balance with his loan from the partnership, $25,000 was collected on the accounts receivable, and the balance is determined to be uncollectible. Liquidation expenses of $2,000 were paid.
During February 2011, $18,000 was collected from the sale of inventories and $90,000 collected from the sale of equipment. Additional liabilities of $3,000 were discovered, and $2,000 of liquidation expenses were paid. All cash was then distributed in a final liquidation.
REQUIRED
Prepare
a statement of partnership liquidation with supporting safe payments schedules for each cash distribution.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Advanced Accounting

ISBN: 978-0133451863

12th edition

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

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