Several years ago, Ann Dennis, Jill Edwards, Lee Lacy, and Sarah Ingram formed a

Question

Several years ago, Ann Dennis, Jill Edwards, Lee Lacy, and Sarah Ingram formed a partnership to operate the Deli Sisters Cafe. Rerouting of bus lines caused declines in patronage to the extent that the partners have agreed to dissolve the partnership and liquidate the assets. The November 2, 2020, balance sheet of the Deli Sisters Cafe and other data appear below. Partnership income and losses are shared in a 2:3:1:4 ratio.

Additonal information:

During November, sold half of the fixtures for $18,000. Sold equipment with a book value of $30,000 for $21,000.

During December, paid all outside creditors. A neighboring restaurant bought Deli Sisters Cafe's supplies at 80 percent of cost. Sold the remaining fixtures for $8,000.

During January, sold equipment with a book value of $40,000 for $25,000.

Required

Following the safe payment approach, specify how cash is to be distributed at the end of November, December, and January.

DELI SISTERS CAFÉ
Balance Sheet
November 2, 2020 Cash $25,000 Liabilities $60,700 Supplies 20,000 Loan-Ingram 15,000 Equipment 175,000 Capital-Dennis 62,000 Fixtures 50,000 Capital-Edwards 54,000 Capital-Lacy 22,000 Capital-Ingram 56,300 Total assets $270,000 Total liabilities and capital $270,000

Explanation / Answer

NOVEMBER Loss Sold fixtures worth 25000 for 18000 7000 Sold equipment worth 30000 for 21000 9000 Total Loss to be deducted out of capital in the ratio 2:3:1:4 16000 DELI SISTERS CAFÉ Cash 64,000 Liabilities $60,700 Supplies 20,000 Loan-Ingram 15,000 Equipment 1,45,000 Capital-Dennis 58,800 Fixtures 25,000 Capital-Edwards 49,200 Capital-Lacy 20,400 Capital-Ingram 49,900 Total assets 254000 Total liabilities and capital 254000 DECEMBER Loss Paid all outside creditors 60700 Supplies sold worth 20000 at 16000 4000 Sold the remaining fixtures of 25000 for $8,000 17000 Total Loss to be deducted out of capital in the ratio 2:3:1:4 21000 DELI SISTERS CAFÉ Cash 27,300 Liabilities - Supplies - Loan-Ingram 15,000 Equipment 1,45,000 Capital-Dennis 54,600 Fixtures - Capital-Edwards 42,900 Capital-Lacy 18,300 Capital-Ingram 41,500 Total assets 172300 Total liabilities and capital 172300 JANUARY Loss Sold equipment with a book value of $40,000 for $25,000 15000 Total Loss to be deducted out of capital in the ratio 2:3:1:4 15000 DELI SISTERS CAFÉ Cash - Liabilities - Supplies - Loan-Ingram - Equipment 1,05,000 Capital-Dennis 44,140 Fixtures - Capital-Edwards 27,210 Capital-Lacy 13,070 Capital-Ingram 20,580 Total assets 105000 Total liabilities and capital 105000 Dennis Edwards Lacy Ingram November 0 0 0 0 December 0 0 0 0 January 7460 11190 3730 29920

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