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INSTALLMENT LIQUIDATION EXAMPLE: 1. Assume that A and B are partners sharin pr!"it #$: %$ respe&ti'e(). *inan&ia( p!siti!n as O&t!+er 1, -$1. is as "!((!

/: A and B Ba(an&e sheet O&t, 1, -$1. Assets Lia+i(ities and &apita( 0ash 1 12,$$$ Lia+i(ities 1 -$,$$$ Other assets 1$2,$$$ A, &apita( 32,$$$ B, &apita( -2,$$$ T!ta( assets 1 1-$,$$$ T!ta( (ia+i(ities and &apita( 1 1-$,$$$ The partners de&ide t! (i4uidate. Durin O&t!+er, assets /ith a +!!5 'a(ue !" 1 3$,$$$ rea(i6e 122,$$$. In N!'em+er assets /ith a +!!5 'a(ue 1-2,$$$ s!(d "!r 11$,$$$ and in De&em+er remainin assets !" 11$,$$$ are s!(d 11-,2$$. Prepare a statement !" (i4uidati!n /ith supp!rtin s&hedu(e7s &ash distri+uti!n. A(s! the ne&essar) 8!urna( entries t! re&!rd !" rea(i6ati!n and (i4uidati!n -. X,9 and : are partners sharin pr!"its in the rati! 2$:.$:-$. *inan&ia( p!siti!n prepared 8ust pri!r t! (i4uidati!n "!((!/s: X,9 and : Ba(an&e sheet Sept, 1, -$1. Assets Lia+i(ities and &apita( 0ash 1 1$,$$$ Lia+i(ities 1 2-,2$$ Other assets -.$,$$$ X, (!an 1-,2$$ 9, (!an 1$,$$$ X, &apita( #2,$$$ 9, &apita( 2$,$$$ :, &apita( 2$,$$$ T!ta( assets 1 -%$,$$$ T!ta( (ia+i(ities and &apita( 1 -%$,$$$ Assets are s!(d, and &ash "r!m assets rea(i6ati!n is distri+uted at the end !" ea&h m!nth. Assets rea(i6ati!n ta5es p(a&e as "!((!/s: Septem+er O&t!+er N!'em+er De&em+er assets B; !" 1 3$,$$$ are s!(d "!r 12$,$$$ assets B; !" 1 .$,$$$ are s!(d "!r 1-$,$$$ assets B; !" 1 -2,$$$ are s!(d "!r 11-,2$$ assets B; !" 1 1$2,$$$ are s!(d "!r 12$,$$$

$$$ is t! +e a((!/ed t! A and the +a(an&e !" the pr!"it is t! +e di'ided in the rati! !" the partners in'estment. A distri+uted &ash in "ina( sett(ement !" the 8!int 'entures . 12$. at a reed &urrent 'a(ue 11$$... <.3. 0 trans"erred &ash t! A "!r <.$$ . The (!t /ere s!(d "!r t!ta( 1-2$. A paid ad'ertisin and se((in e=penses 1.$$$ /as re&ei'ed in &ash and +a(an&e in insta((ment n!tes #. (ands&apin . A is desi ned as mana in partner. transa&ti!ns *!((!/: 1. spe&ia( &!mpensati!n !" 12. up!n the terminati!n !" <. A trans"erred (and t! the <. The insta((ment n!tes /ere s!(d /ith!ut re&!urse at a 1$> dis&!unt 3. B and 0 enter int! a 8!in 'enture "!r the pur&hase. the (and &!st A 132. de'e(!pment and sa(e !" a par&e( !" (and.$$$. Net in&!me !" 8!int 'enture /as summari6ed and &(!sed int! the partners a&&!unt: ?.$$$. 1%$.2$$ 2. B made sett(ement !n &!ntra&t "!r radin . purp!ses.<.$$$ -. A. /ater and !ther (and impr!'ement 1#$.$$$ %.