
Installment liquidation: takes place for several months to complete, and periodic or installment payments are made to the partners during the liquidation period because they require funds for personal purposes. Most
Instalment liquidations involve a distribution of cash to partners before complete liquidation of assets occurs, they are two methods for ensuring fairness and equality in making cash distributions (1) safe payment schedule and (2) cash distribution plan.
A safe payment schedule determines what amounts may be safely distributed to which partner without violating any of the principles of liquidation.
the statement of partnership realization and liquidation with a safe payment schedule for the two month liquidation period.

Explanation of Solution
ABC partnership
Statement of realization and liquidation
From January 1, 20X1 to March 31, 20X1
Capital | ||||||
Cash | Assets | liabilities | A 50% | B 30% | C 20% | |
Balance before liquidation | 18,000 | 307,000 | 53,000 | 88,000 | 110,000 | 74,000 |
Transaction in January | ||||||
Collection of receivable at loss $15,000 | 51,000 | (66,000) | (7,500) | (4,500) | (3,000) | |
Sale of inventory at loss $14,000 | 38,000 | (52,000) | (7,000) | (4,200) | (2,800) | |
Liquidation expenses | (2,000) | (1,000) | (600) | (400) | ||
Share of credit memo | (3,000) | (1,500) | (900) | (600) | ||
Payments to creditors | (50,000) | (50,000) | ||||
55,000 | 189,000 | 0 | 74,000 | 101,600 | 68,400 | |
Safe payment schedule 1 | (45,000) | (26,600) | (18,400) | |||
10,000 | 189,000 | 0 | 74,000 | 75,000 | 50,000 | |
Transactions February | ||||||
Liquidation expenses | (4,000) | (2,000) | (1,200) | (800) | ||
6,000 | 189,000 | 0 | 72,000 | 73,800 | 49,200 | |
Safe payment schedule 2 | 0 | 0 | 0 | 0 | 0 | 0 |
Balance February | 6,000 | 189,000 | 0 | 72,000 | 73,800 | 49,200 |
March transactions | ||||||
Sale of M&Eq at loss | 146,000 | (189,000) | (21,500) | (12,900) | (8,600) | |
Liquidation expenses | (5,000) | (2,500) | (1,500) | (1,000) | ||
147,000 | 0 | 0 | 48,000 | 59,400 | 39,600 | |
Payment to partners | (147,000) | 0 | 0 | (48,000) | (59,400) | (39,600) |
Balance March 31 | 0 | 0 | 0 | 0 | 0 | 0 |
Safe payment schedule for the month:
A 50% | B 30% | C 20% | |
Schedule 1 January | |||
Capital balances | 74,000 | 101,600 | 68,400 |
Possible losses: | |||
Other assets and liquidation cost (189,000 + 10,000) | (99,500) | (59,700) | (39,800) |
25,500 | 41,900 | 28,600 | |
Absorption of A’s potential deficit | (25,500) | ||
B $25,500 x 3/5 | 15,300 | ||
C 25,500 x 2/5 | 10,200 | ||
0 | 26,600 | 18,400 | |
Schedule 2 February | |||
Capital balances | 72,000 | 73,800 | 49,200 |
Possible loss | |||
Other assets and liquidation cost (189,000 + 6,000) | (97,500) | (58,500) | (39,000) |
(25,500) | 15,300 | 10,200 | |
Absorption of A’s potential deficit | 25,500 | ||
B 25,500 x 3/5 | (15,300) | ||
C 25,500 x 2/5 | (10,200) | ||
Safe payment February | 0 | 0 | 0 |
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