Maurice Tutor
$15/per page/Negotiable
Schedule of Safe Payments
After working for In the Kitchen remodeling business for several years, Terry and Phyllis decided
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to go into business for themselves and formed the Kitchens Just for You Partnership. Three years
ago, they admitted Connie as a partner and recognized goodwill at that time because of her
good client list for planned kitchen makeovers. However, they were not able to gain a sufficient
market for new customers and on September 1, 20X9, they agreed to dissolve and liquidate
the business. They decided on an installment liquidation to complete the projects already initi-
ated. The balance sheet, with profit and loss–sharing percentages at the beginning of liquidation,
is as follows:
KITCHENS JUST FOR YOU Balance Sheet September 1, 20X9
|
Assets |
 |
Liabilities and Equities |
 |
|
Cash |
$ 12,000 |
Accounts Payable |
$ 43,000 |
|
Receivables |
63,000 |
Connie, Loan |
15,000 |
|
Terry, Loan |
9,000 |
Terry, Capital (30%) |
12,000 |
|
Inventory |
48,000 |
Phyllis, Capital (50%) |
36,000 |
|
Goodwill |
28,000 |
Connie, Capital (20%) |
54,000 |
|
Total Assets |
$160,000 |
Total Liabilities & Equities |
$160,000 |
Connie’s loan was for working capital; the loan to Terry was for his unexpected personal medical bills.
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|
Cash |
$ 25,000 |
Accounts Payable |
$15,000 |
|
Inventory |
120,000 |
Maness, Capital |
65,000 |
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Joiner, Capital |
65,000 |
|
Cash |
$ 17,000 |
Accounts Payable |
$ 12,000 |
|
Noncash Assets |
190,000 |
Nelson, Capital |
15,000 |
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Osman, Capital |
75,000 |
| Â | Â |
Peters, Capital |
75,000 |
| Â | Â |
Quincy, Capital |
30,000 |
|
Total Assets |
$207,000 |
Total Liabilities & Equities |
$207,000 |
During September 20X9, the f irst month of liquidation, the partnership collected $41,000 in
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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. |
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Required Prepare a schedule of safe payments to partners as of September 30, 20X9, to show how the avail- |
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able cash should be distributed to the partners |
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