| Exercise 2 Worksheet: Partnership Liquidation Schedule |
| Edmonds, Beatty, and Elder decided to dissolve their partnership and liquidate the business. The following balance sheet was created at that time showing current account balances: |
| Cash | $96,000 | Liabilities | $70,000 | This cell intentionally left blank. |
| Noncash assets | $354,000 | Capital Edmonds (60%) | $202,000 | This cell intentionally left blank. |
| Building and equipment (net) | $200,000 | Capital Beatty (20%) | $56,000 | This cell intentionally left blank. |
| | | Capital Elder (20%) | $122,000 | This cell intentionally left blank. |
| Total assets | $450,000 | Total Liabilites and Capital | $450,000 | This cell intentionally left blank. |
| The transactions listed below occurred during liquidation: Safe capital balances were distributed immediately to the partners. $18,000 in liquidation expenses were estimated as a basis for the computation. Noncash assets, with a $160,000 book value, were sold for $96,000. All liabilities were paid. Safe capital balances were once again distributed. $88,000 in remaining noncash assets were sold. $14,000 in liquidation expenses were paid. Cash remaining was distributed to the partners. Business financial records were closed permanently. Allocate income and prepare a partnership liquidation schedule, using a predistribution plan. Use the spaces below to enter your calculations. |
| Edmonds, Beatty, and Elder Schedule of Partnership Liquidation Final Balances |
| | Cash | Noncash Assets | Liabilities | Edmonds, Capital (60%) | Beatty, Capital (20%) | Elder, Capital (20%) |
| Beginning balances | $96,000 | $354,000 | $70,000 | $202,000 | $56,000 | $122,000 |
| Distribution of $8,000 (cash in excess of liabilities and estimated liquidation expenses) in accordance with predistribution plan Schedule 1 | | | | | | |
| Updated balances | | | | | | |
| Noncash assets sold | | | | | | |
| Updated balances | | | | | | |
| All liabilities are paid | | | | | | |
| Updated balances | | | | | | |
| Distribution of $96,000 (cash in excess of liabilities and estimated liquidation expenses) in accordance with predistribution plan Schedule 1 | | | | | | |
| First distribution | | | | | | |
| Next distribution | | | | | | |
| Next distribution | | | | | | |
| Updated balances | | | | | | |
| Noncash assets sold | | | | | | |
| Updated balances | | | | | | |
| Paid liquidation expenses | | | | | | |
| Updated balances | | | | | | |
| Final distribution based on ending capital account balances | | | | | | |
| Ending balance | | | | | | |
| This cell intentionally left blank. |
| | Edmonds, Capital | Beatty, Capital | Elder, Capital | This cell intentionally left blank. |
| Beginning balances | | | | This cell intentionally left blank. |
| | | | | This cell intentionally left blank. |
| Step 1 balances | | | | This cell intentionally left blank. |
| | | | | This cell intentionally left blank. |
| Step 2 balances | | | | This cell intentionally left blank. |
| This cell intentionally left blank. |
| Predistribution Plan |
| Schedule 2 | This cell intentionally left blank. |
| Partner | Capital Balance/ Loss Allocation | Maximum Loss That Can Be Absorbed | This cell intentionally left blank. |
| Edmonds | | | This cell intentionally left blank. |
| Beatty | | | This cell intentionally left blank. |
| Elder | | | This cell intentionally left blank. |
| This cell intentionally left blank. |
| Schedule 3 | This cell intentionally left blank. |
| Partner | Capital Balance/ Loss Allocation | Maximum Loss That Can Be Absorbed | This cell intentionally left blank. |
| Edmonds | | | This cell intentionally left blank. |
| Elder | | | This cell intentionally left blank. |
