Leverage Partnerships balance sheet as of July 31, 2014, follows. The partnersGauri, Tailor, and Pavelshare income and

Leverage Partnership’s balance sheet as of July 31, 2014, follows.

The partners—Gauri, Tailor, and Pavel—share income and losses in the ratio of 5:3:2. Because of a mutual disagreement, Gauri, Tailor, and Pavel have decided to liquidate the business. Assume that Gauri cannot contribute any additional personal assets to the company during liquidation and that the following transactions occurred during liquidation:
(a) Accounts receivable were sold for 60 percent of their book value.
(b) Inventory was sold for $552,000.
(c) Equipment was sold for $600,000.
(d) Accounts payable were paid in full.
(e) Gain or loss from realization was distributed to the partners’ Capital accounts.
(f) Gauri’s deficit was transferred to the remaining partners in their new income and loss ratio.
(g) The remaining cash was distributed to Tailor and Pavel.

Required
1. Prepare a statement of liquidation.
2. Prepare journal entries to liquidate the partnership and distribute any remainingcash.

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Leverage Partnership Balance Sheet July 31, 2014 Assets Liabilities Cash Accounts receivable Inventory Equipment (net) s 12,000 Accounts payable 960,000 240,000 528,000 924,000 Partners' Equity Gauri, capital Tailor, capital Pavel, capital Total partners' equity Total liabilities and partners equity 144,000 360,000 240,000 744,000 $1,704,000 Total assets $1,704,000