During September 20X9, the first month of liquidation, the partnership collected $41,000 in receivables and decided to write off $12,000 of the remaining receivables. Sales of one-half of the book value of the inventory realized a loss of $4,000. The partners estimate that the costs of liquidating the business (newspaper ads, signs, etc.) are expected to be $6,000 for the remainder of the liquidation process.
Required
Prepare a schedule of safe payments to partners as of September 30, 20X9, to show how the available cash should be distributed to the partners.
Schedule of Safe Payments to Partners
Partners Maness and Joiner have decided to liquidate their business. The ledger shows the following account balances:
Cash
Inventory
$ 25,000
120,000
-7
Accounts Payable Maness, Capital Joiner, Capital
$15,000
65,000
65,000
Maness and Joiner share profits and losses in an 8:2 ratio. During the first month of liquidation, half the inventory was sold for $40,000, and $10,000 of the accounts payable was paid. During the second month, the rest of the inventory was sold for $30,000, and the remaining accounts payable were paid. Cash was distributed at the end of each month, and the liquidation was completed at the end of the second month.
Required
Prepare a statement of partnership realization and liquidation with a schedule of safe payments for the two-month liquidation period.