Liquidation-Cash distribution computation, safe payments schedule
Jan, Kim, and Lee announce plans to liquidate their partnership immediately. The assets, equities, and profit and loss sharing ratios are summarized as follows.
|
Loan to Kim
|
$ 20,000
|
Accounts payable
|
$ 60,000
|
|
Other assets
|
180,000
|
Jan capital (50%)
|
59,000
|
|
$200,000
|
Kim capital (30%)
|
29,000
|
|
|
Lee capital (20%)
|
52,000
|
|
|
|
$200,000
|
The other assets are sold for $120,000, and an overlooked bill for landscaping services of $5,000 is discovered. Kim cannot pay her partnership debt at the present time, but she expects to have the money in a month or two.
REQUIRED: Determine how cash should be distributed to creditors and partners.