Question:
The Nice, Rice, and Dice Partnership has not been successful. The partners have determined they must liquidate their partnership. The partners have agreed to liquidate the partnership and anticipate that liquidation expenses will total $1,000. Prior to the liquidation, the partnership balance sheet reflects the following book values:
|
Cash
|
$18,000
|
|
Noncash assets
|
51,000
|
|
Note receivable-Nice
|
3,000
|
|
Other liabilities
|
20,000
|
|
Capital, Nice
|
6,000
|
|
Capital, Rice
|
30,000
|
|
Capital, Dice
|
16,000
|
Profits and losses are shared 45% to Nice, 35% to Rice, and 20% to Dice. A review of the individual partner's personal net worth reveals the following:
|
Assets
|
Liabilities
|
|
Nice
|
165,000
|
162,000
|
|
Rice
|
200,000
|
110,000
|
|
Dice
|
185,000
|
90,000
|
The following transactions occur:
|
a.
|
Assets having a book value of $40,000 are sold for $22,000 cash
|
|
b.
|
Liabilities are paid, where possible
|
|
c.
|
Partners contribute from their personal net worth, according to RUPA requirements
|
Required:
Prepare liquidation schedule and determine how the available assets will be distributed using a schedule of safe payments.