Installment liquidation
Account balances for the Rob, Tom, and Val partnership on October 1, 2011, are as follows:
|
Cash |
$ 21,000 |
Accounts payable |
$ 80,000 |
|
Accounts receivable |
63,000 |
Note payable |
50,000 |
|
Inventory |
120,000 |
Rob capital (30%) |
43,600 |
|
Equipment |
150,000 |
Tom capital (50%) |
150,000 |
|
Rob loan |
15,000 |
Val capital (20%) |
45,400 |
|
$369,000 |
$369,000 |
The partners have decided to liquidate the business. Activities for October and November are as follows:
October
1 Rob is short of funds, and the partners agree to charge her loan to her capital account.
2 $40,000 is collected on the accounts receivable; $4,000 is written off as uncollectible.
3 Half the inventory is sold for $50,000.
4 Equipment with a book value of $55,000 is sold for $60,000.
5 The $50,000 bank note plus $600 accrued interest is paid in full.
6 The accounts payable are paid.
7 Liquidation expenses of $2,000 are paid.
8 Except for a $5,000 contingency fund, all available cash is distributed to partners at the end of October.
November
9 The remaining equipment is sold for $38,000.
10 Val accepts inventory with a book value of $20,000 and a fair value of $10,000 as payment for part of her capital balance. The rest of the inventory is written off.
11 Accounts receivable of $10,000 are collected. The remaining receivables are written off.
12 Liquidation expenses of $800 are paid.
13 Remaining cash, including the contingency fund, is distributed to the partners.
REQUIRED: Prepare a statement of partnership liquidation for the period October 1 through November 30.