The partnership of Butler Osman and Ward was formed several

The partnership of Butler, Osman, and Ward was formed several years as a local tax preparation firm. Two partners have reached retirement age and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $56,000 are expected. The partnership balance sheet at the start of liquidation is as follows Cash Accounts receivable Office equipment (net) Building (net) Land Total assets $ 52,000 82,000 72,000 220,000 210,000 $636,000 Liabilities Butler, loan Butler, Osman, capital (25%) Ward, capital (50%) 192,000 52,000 160,000 52,000 180,000 $636,000 capital (25%) Total liabilities and capital Prepare a predistribution plan for this partnership Butler, Loan Osman, and Capital Capital Ward Capital $212,000 $ 52.000 180,000 104,000 0 $ 76,000 76,000 0 Beginning balances 52,000 $ 160,000$ 38,000 $ 122,000$ Loss 52,000 Step one balances Loss Step two balances

Solution

Answer -

BUTLER, OSMAN AND WARD
Statement of Partnership Liquidation
Event	Transaction	Cash	Acounts Receivable	Office Equipmet	Building	Land	Liabilities	Butler, Loan	Butler, capital 25%	Osman, capital 25%	Ward, capital 50%
	Beginning Balances	52,000	82,000	72,000	220,000	210,000	192,000	52,000	160,000	52,000	180,000
1	Colection of Accounts Receivable	73,800	(82,000)						(2,050)	(2,050)	(4,100)
	Updated balances	125,800	-	72,000	220,000	210,000	192,000	52,000	157,950	49,950	175,900
2	Non-cash assets sold	405,000		(72,000)	(220,000)	(210,000)			(24,250)	(24,250)	(48,500)
	Updated balances	530,800		-	-	-	192,000	52,000	133,700	25,700	127,400
3	Distribution of safe cash	(230,800)							(57,700)	(57,700)	(115,400)
	Updated balances	300,000	-	-	-	-	192,000	52,000	76,000	(32,000)	12,000
4	Payment of liabilities	(244,000)					(192,000)	(52,000)
	Updated balances	56,000	-	-	-	-	-	-	76,000	(32,000)	12,000
5	Lquidation Expenses	(41,000)							(10,250)	(10,250)	(20,500)
	Updated balances	15,000	-	-	-	-	-	-	65,750	(42,250)	(8,500)
6	Final distribution	(15,000)							(65,750)	42,250	8,500
	Updated balances	-	-	-	-	-	-	-	-	-	-
	1. Los on accounts receivable of $8,200 (10% of $82,000) distributed to the partners as $2,050, $2,050 and $4,100.
	2. Los on sale of non-cash assets of $97,000 ($72,000+$220,000+$210,000 - $31,000 - $166,000 - $208,000) distributed to the partners as $24,250, $24,250 and $48,500
	3. safe Cash = $530,800 - $192,000 - $52,000 - $56,000 = $230,800 distributed as $57,700, $57,700 and $115,400.