CHAPTER 16, 2

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On January 1, 20X1, partners Art, Bru, and Chou, who share profits and losses in the ratio of 6:2:2, respectively, decide to liquidate their partnership. The partnership trial balance at this date follows Debit Credit Cash Accounts Receivable Inventory Machinery and Equipment (net) Accounts Payable Art, Capital Bru, Capital Chou, Capital Total $ 20,800 73,000 59,000 196,000 $55,800 95,000 117,000 81,000 $348,800 $348,800 The partners plan a program of piecemeal conversion of assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows: January 20x1 1. Collected $56,600 on accounts receivable; the balance is uncollectible 2. Received $42,200 for the entire inventory 3. Paid $3,400 liquidation expenses 4. Paid $52,300 to creditors, after offset of a $3,500 credit memorandum received on January 11, 20X1 5. Retained $12,800 cash in the business at the end of the month for potential unrecorded liabilities and anticipated expenses