esA partnership is currently holding $400,000 in assets and $234,000 in liabilities. The partnership is to be liquidated, and $20,000 isthe best estimation of the expenses that will be incurred during this process. The four partners share profits and losses as shown.Capital balances at the start of the liquidation follow:Berzina, capital (40%)Horvath, capital (30%)Markov, capital (10%)Petronis, capital (20%)$ 59,00039,00034,00034,000Required:Prepare a predistribution plan to determine which partner will be the first to receive cash from the liquidation and what amount thatpartner will receive before other partners receive any cash.Note: Amounts to be deducted should be entered with a minus sign.Beginning balancesAssumed lossBalancesAssumed lossBalancesAssumed lossBalances$$$$$Berzina59,000 $59,000 $59,000 $(7,000)52,000 $Horvath39,000 $39,000 $39,000 $39,000 $Markov34,000 $(17,000)17,000 $(2,250)14,750 $(1,750)13,000 $Petronis34,00034,000(4,500)29,500(3,500)26,000

The objective of this question is to prepare a predistribution plan for the liquidation of a partnership. This involves determining which partner will be the first to receive cash from the liquidation and the amount that partner will receive before other partners receive any cash.First, we need to calculate the total capital of the partnership. This is done by adding up the capital balances of all the partners. In this case, the total capital is $59,000 (Berzina) + $39,000 (Horvath) + $34,000 (Markov) + $34,000 (Petronis) = $166,000.Next, we need to calculate the total assets available for distribution. This is done by subtracting the total liabilities and liquidation expenses from the total assets. In this case, the total assets available for distribution is $400,000 (total assets) - $234,000 (total liabilities) - $20,000 (liquidation expenses) = $146,000.The predistribution plan is prepared by distributing the available assets in the order of the partners' capital balances. The partner with the highest capital balance receives the cash first, followed by the partner with the next highest capital balance, and so on. In this case, Berzina has the highest capital balance ($59,000), followed by Horvath ($39,000), Petronis ($34,000), and Markov ($34,000).However, the question also provides information about assumed losses. These losses are deducted from the partners' capital balances in the order of their profit and loss sharing ratios. In this case, Markov has an assumed loss of $17,000, which reduces his capital balance to $17,000. Berzina, Horvath, and Petronis have no assumed losses.The next round of assumed losses are $7,000 for Berzina, $0 for Horvath, $2,250 for Markov, and $4,500 for Petronis. These losses are deducted from the partners' capital balances, resulting in new balances of $52,000 for Berzina, $39,000 for Horvath, $14,750 for Markov, and $29,500 for Petronis.The final round of assumed losses are $0 for Berzina, $0 for Horvath, $1,750 for Markov, and $3,500 for Petronis. These losses are deducted from the partners' capital balances, resulting in final balances of $52,000 for Berzina, $39,000 for Horvath, $13,000 for Markov, and $26,000 for Petronis.Based on the final capital balances, Berzina will be the first to receive cash from the liquidation, followed by Horvath, Petronis, and Markov. The amount each partner will receive will depend on the total assets available for distribution and the partners' final capital balances.In the liquidation of a partnership, the partner with the highest capital balance after deducting assumed losses receives cash first. In this case, Berzina will be the first to receive cash, followed by Horvath, Petronis, and Markov. The amount each partner will receive will depend on the total assets available for distribution and the partners' final capital balances.