The partnership of Butler, Osman, and Ward was formed several years as a local t

Question

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

Explanation / Answer

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.

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