PIC: INSTALLMENT LIQUIDATIONA.The assets and equities of the NSW Partnership at the end of its fiscal year, October 31, 2020, are as follows: Profit and loss agreement is 30:50:20. CashP 150,000 Accounts receivable -net200,000 Inventory400,000 Plant Assets - net
TOPIC: INSTALLMENT LIQUIDATION
A.
The assets and equities of the NSW
Cash
P 150,000
200,000
Inventory
400,000
Plant Assets - net
700,000
Loan to South
50,000
Liabilities
P 500,000
West, Loan
100,000
North, Capital
450,000
South, Capital
300,000
West, Capital
150,000
The partners decide to liquidate the partnership. They estimate that the non-cash assets other than the loan to South can be realized into P 1,000,000 over the two-month period ending December 31, 2020. Cash is to be distributed to the appropriate parties as it becomes available during the liquidation process.
Required:
1. Assuming that P 650,000 is available for the first distribution, show how the available cash would be distributed.
2. Assuming that a total amount of P 75,000 is available for distribution to partners after liabilities to outside creditors have been paid, show how the cash will be distributed to the partners. PLEASE PROVIDE FURTHER EXPLANATION
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