The partnership of Ready, Willing and Able is to be liquidated as soon as possible after December 31, 2019. All cash on hand except for a $10,000 contingency balance is to be distributed at the end of each month until the liquidation is completed. Profits and losses are shared 25%, 45% and 30% by Ready, Willing and Able, respectively. The partnership balance sheet at December 31, 2019 contains the following.
Assets Liabilities and Capital
Cash 120.000 Accounts payable 140,000
Accounts receivable 136,000 Note payable 130,000
Loan to Willing 28,000
Inventories 190,000 Ready Capital (25%) 196,000
Land 134,000 Willing Capital (45%) 147,000
Equipment – net 135,000 Able Capital (30%) 220,000
A summary of liquidation events is as follows
Goodwill is written off, $100,000 is collected on account, inventory items that cost $125,000 are sold for $75,000. The accounts payable and notes payable are paid and cash is distributed.
Equipment with a book value of $90,000 is sold for $50,000, the remaining inventory items are sold for $75,000, liquidation expenses of $6,000 are paid and cash is distributed.
The land is sold for $150,000, remaining accounts receivable are written off, the remaining equipment is sold for $25,000 and cash is distributed.
REQUIRED: Prepare a statement of liquidation including safe payment schedules as required.