E 17-4 Liquidation—Cash distribution computation, safe payments scheduleJan, 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$ 20,000Accounts payable$ 60,000Other assets180,000Jan capital (50%)59,000 $200,000Kim capital (30%)29,000 Lee capital (20%) 52,000 $200,000The 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.RequiredDetermine how cash should be distributed to creditors and partners.

Partnership Liquidation: It is the process of closing down the business of partnership firm. Thus,…

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 17-4 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.

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