Question - Jason, Kelly , and Rice are partners who share profits 5:3:2, respectively, The partners mutually agree that their association should be dissolved. A condensed balance sheet before realization of assets following balances:
Assets Liabilities and Capital
Cash $16,500 Liabilities $21,000
A/R $28,000 Jason, Capital $69,000
Inventory $20,500 Kelly, Capital $47,000
Equipment-Net$101,000 Rice, Capital $43,000
Loan to Jason $14,000
Total $180,000 Total: $180,000
Cash is distributed at the end of each month, with $5,000 remained for possible contingencies.
Asset realization is accomplished as follows. Liquidation expense per month is $2.,000.
Date Asset Sold Book Value Sales Price
January Accounts Receivable 28,000 25,000
February Inventory 20,500 18,000
Equipment-net 101,000 90,000
Additional liabilities of $3,000 weqre discorevered in February. All cash was then distributed in a final liquidation.
Prepare a summary in columnar form of the partnership realization and liquidation. You should prepare supporting schedules of safe payments before each cash distribution.