E 17-1 Simple liquidation—Schedule of cash availableThe partnership of Flo and Fay is in the process of liquidation. On January 1, 2016, the ledger shows account balances as follows:Cash$10,000Accounts payable$25,000Accounts receivable45,000Flo capital45,000Lumber inventory50,000Fay capital35,000On January 10, 2016, the lumber inventory is sold for $40,000, and during January, accounts receivable of $41,000 is collected. No further collections on the receivables are expected. Profits are shared 60 percent to Flo and 40 percent to Fay.RequiredPrepare a schedule showing how the cash available on February 1, 2016, should be distributed.

Liquidation: Liquidation is a process of dissolving the business, realizing the assets, repaying the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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E 17-1 Simple liquidation—Schedule of cash available

The partnership of Flo and Fay is in the process of liquidation. On January 1, 2016, the ledger shows account balances as follows:

Cash	$10,000	Accounts payable	$25,000
Accounts receivable	45,000	Flo capital	45,000
Lumber inventory	50,000	Fay capital	35,000

On January 10, 2016, the lumber inventory is sold for $40,000, and during January, accounts receivable of $41,000 is collected. No further collections on the receivables are expected. Profits are shared 60 percent to Flo and 40 percent to Fay.

Required

Prepare a schedule showing how the cash available on February 1, 2016, should be distributed.

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