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.