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Partners Dodge, Edsel, Ford and Harley share income in a ratio of respectively On January l, 2014, they decide to terminate operations and begin a process of liquidation The partnership

Partners Dodge, Edsel, Ford and Harley share income in a ratio of 8:5:4:3, respectively. On January l, 2014, they decide to terminate operations and begin a process of liquidation. The partnership s trial balance on that date shows the following: To maximize proceeds, assets were sold over a three-month period. At the end of each month, available cash, less an amount retained to cover estimated future expenses, was distributed to the partners. The liquidation proceeded as follows: January 2014: 1. Returned inventory costing $10,000 to the supplier, who granted a credit of $8,500 against the open accounts payable. 2. Collected $45,000 of the accounts receivable; collection of the remainder is uncertain. 3. Sold the remaining inventory to a competitor for $30,000. 4. Sold the equipment for $80,000. 5. Paid liquidation expenses of $5,500. 6. Paid the bank loan and the remaining accounts payable in full. 7. Retained $20,000 of cash for potential future obligations and liquidation expenses. February 2014: 1. Collected $ 15,000 of the accounts receivable, and the remainder is determined to be uncollectible. 2. Transferred the truck to Dodge in exchange for a $30,000 reduction in the partnership s loan obligation to Dodge. 3. Paid liquidation expenses of $3,000. 4. Retained $10,000 of cash for potential future obligations and liquidation expenses. March 2014: 1. Sold the land for $125,000. 2. Paid liquidation expenses of $8,000. 3. Distributed all

Apr 21 2020 View more View Less

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