Question 4: Liquidation: (10 Points)

A1, B1, C1 & C2 Following is the balance sheet of Prem Partnership at the end of 2014:

Other information:

1. The partnership sold the inventories of $100,000 cash; plant assets of $210,000 and collect $120,000 of Account receivable balance.
2. The partnership paid all its liabilities.
3. The partners agreed to absorb of Saras capital deficiency.
4. Capital and income ratio: 5:2:3 respectively.

Prepare a cash distribution schedule OR record the necessary journal entry for each step of partnership liquidation. (10 marks)

Prem partnership Balance Sheet at 31 December 2014
Cash	$50,000
Account receivables	$140,000
Inventories	$110,000
Net Plant Assets	$200,000
Total Assets	$500,000
Account payable	$150,000
Accruals	$50,000
Sara, capital	($20,000)
Reem, capital	$70,000
Rami, capital	$250,000
Total Liabilities and Owners Equity	$500,000