On January 1, the partners of Van, Bakel, and Cox (who share profits and losses
ID: 2514783 • Letter: O
Question
On January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to liquidate their partnership. The trial balance at this date follows:
The partners plan a program of piecemeal conversion of the partnership’s assets to minimize liquidation losses. All available cash, less an amount retained to provide for future expenses, is to be distributed to the partners at the end of each month. A summary of the liquidation transactions follows:
Prepare a schedule to compute the safe installment payments made to the partners at the end of each of these three months. (Do not round intermediate calculations.)
Debit Credit Cash $ 43,000 Accounts receivable 116,000 Inventory 102,000 Machinery and equipment, net 239,000 Van, loan 80,000 Accounts payable $ 98,000 Bakel, loan 70,000 Van, capital 198,000 Bakel, capital 115,000 Cox, capital 99,000 Totals $ 580,000 $ 580,000Explanation / Answer
CAPITAL A/CS ( $ 000’S)
VAN
BAKEL
COX
JAN 1, BAL C/D
198
115
99
LOSS DIVIDED
163.5
98.1
65.4
BAL
34.5
16.9
33.6
CASH PAID
25
15
10
FEB LOSS DIV
4
2.4
1.6
5.5
(.5)
22
MAR
CASH PAID
85.5
51.3
34.2
80
50.6
12.2
TRF FROM COX TO BAKEL
12.2
(12.2)
0
0
CASH BOOK JANUARY
$
$
JAN 1 BALANCE
43000
LIQ EXP
3000
ACC REC
76000
Accounts payable
94000
INVENTORY
63000
VAN
25000
BAKEL
15000
COX
10000
BAL C/D
35000
182000
182000
FEB
BAL C/D
35000
LIQ EXP
4000
VAN
4000
BAKEL
2400
COX
1600
BAL C/D
23000
35000
35000
MAR
BAL C/D
23000
LIQ EXP
6000
MACH
171000
MACH
171000
DIS TO VAN
94000
BAKEL
56400
COX
37600
194000
194000
REALISATION JANUARY
$
$
Accounts receivable
116000
ACC REC
76000
Inventory
102000
INVENTORY
63000
LIQ EXP
3000
Accounts payable
98000
ACC PAY PAID
94000
BAKEL LOAN
70000
MACH
239000
LOSS DIVIDED VAN
163.5
VAN
80000
BAKEL
98.1
COX
65.4
634
634
REALISATION FEB
LIQ EX
8
LOSS DIVIDED VAN
4
BAKEL
2.4
COX
1.6
MAR
VAN
85500
MACH REALISATION
171000
BAKEL
51300
COX
34200
CAPITAL A/CS ( $ 000’S)
VAN
BAKEL
COX
JAN 1, BAL C/D
198
115
99
LOSS DIVIDED
163.5
98.1
65.4
BAL
34.5
16.9
33.6
CASH PAID
25
15
10
FEB LOSS DIV
4
2.4
1.6
5.5
(.5)
22
MAR
CASH PAID
85.5
51.3
34.2
80
50.6
12.2
TRF FROM COX TO BAKEL
12.2
(12.2)
0
0