Part A

Sch-I

Maximum loss
that can be
Partner Capital Balance/loss allocation absorbed
Frick 117000/60% 195000
Wilson 32000/20% 160000 (most vulnerable to loss)
Clarke 69000/20% 345000

Sch-II

Maximum loss
that can be
Partner Capital Balance/loss allocation absorbed
Frick 21000/(60/80) 28000 most vulnerable to loss
Clarke 37000/(20/80) 148000

Frick Wilson Clarke

Beginning balances 117000 32000 69000
Loss 160000 assumed -sch I
(allocated on 60:20:20 basis) -96000 -32000 -32000
Step one balances 21000 0 37000
Loss 28000 assumed -sch II
(allocated on 60:20 basis) -21000 -7000
Step two balances 0 0 30000
Loss of 30000 assumed -30000
Final balances 0

PREDISTRIBUTION PLAN

• First, payment of liabilities and liquidation expenses must be assured.

• Next $30,000 goes to Clarke.
• Next $28,000 is split between Frick and Clarke on a 60:20 basis.
• Any further cash is split among Frick, Wilson, and Clarke on a 60:20:20 basis.

Part B Statement of partnership liquidation

Non cash
Cash assets Liabilities

beginning balances $ 60,000 $ 201,000 $ 43,000

1 Distriburion of 8000 in accordance of
 predistribution plan $ (8,000)
updated balances $ 52,000 $ 201,000 $ 43,000
2 Non cash assets sold $ 60,000 $ (88,000)
updated balances $ 112,000 $ 113,000 $ 43,000
3 Liabilities paid $ (43,000) $ (43,000)
updated balances $ 69,000 $ 113,000 $ -
4 distribution of $60000 in accordance with plan
first 22000 (remainder of first $30000) $ (22,000)
Next 28000 $ (28,000)
next 8000 $ (10,000)
updated balances $ 9,000 $ 113,000 $ -
5 Non cash assets sold $ 48,000 $ (113,000)
updated balances $ 57,000 $ - $ -
6 Liquidation expenses $ (7,000)
updated balances $ 50,000 $ - $ -
7 Final distribution based on ending capital
balances $ (50,000)
ending balances $ - $ - $ -

* $8,000 in cash is immediately available for distribution: Cash of $60,000 less Liabilities of $43,000 and Estimated Liquidation
** $60,000 in cash is available for distribution: Cash of $69,000 less Estimated Liquidation Expenses of $9,000.
Part c
1 Clarke capital 8000
cash 8000

2 Cash $ 60,000
Frick capital (60% of 28000 loss) $ 16,800
Wilson capital(20%) $ 5,600
Clarke capital(20%) $ 5,600
Non cash asset $ 88,000

3 Liabiltiies 43000
cash 43000

4 Frick capital $ 27,000

Wilson capital $ 2,000
Clarke capital $ 31,000
Cash 60000

5 Cash $ 48,000
Frick capital (60% ) $ 39,000
Wilson capital(20%) $ 13,000
Clarke capital(20%) $ 13,000
Non cash asset $ 113,000

6 Frick capital $ 4,200

Wilson capital $ 1,400
Clarke capital $ 1,400
Cash 7000

7 Frick capital $ 30,000

Wilson capital $ 10,000
Clarke capital $ 10,000
Cash 50000
tion

Frick Wilson Clarke

60% 20% 20%
$ 117,000 $ 32,000 $ 69,000
 $ (8,000)
$ 117,000 $ 32,000 $ 61,000
$ (16,800) $ (5,600) $ (5,600)
$ 100,200 $ 26,400 $ 55,400

$ 100,200 $ 26,400 $ 55,400

$ (22,000)
$ (21,000) $ (7,000)
$ (6,000) $ (2,000) $ (2,000)
$ 73,200 $ 24,400 $ 24,400
$ (39,000) $ (13,000) $ (13,000)
$ 34,200 $ 11,400 $ 11,400
$ (4,200) $ (1,400) $ (1,400)
$ 30,000 $ 10,000 $ 10,000

$ (30,000) $ (10,000) $ (10,000)

$ - $ - $ -

00 and Estimated Liquidation Expenses of $9,000.

es of $9,000.
 1 Clarke, Capital 12,000
Cash
Cash payments are made to partners in accordance with predistribution pla

2 Cash
Frick, Capital (60% of $34,000 loss) 20,400
Wilson, Capital (20%) 6,800
Clarke, Capital (20%) 6,800
Noncash Assets
Noncash assets are sold with losses allocated to partners.

3 Liabilities 40,000
Cash
All liabilities are paid.

4 Frick, Capital 28,800

Wilson, Capital 1,600
Clarke, Capital 29,600
Cash
Cash payments are made to partners in accordance with predistribution pla

5 Cash 51,000
Frick, Capital (60% of $74,000 loss) 44,400
Wilson, Capital (20%) 14,800
Clarke, Capital (20%) 14,800
Noncash Assets
Noncash assets are sold with losses allocated to partners.

6 Frick, Capital 3,600

Wilson, Capital 1,200
Clarke, Capital 1,200
Cash
Liquidation expenses are paid.

7 Frick, Capital 31,800

Wilson, Capital 10,600
Clarke, Capital 10,600
Cash
Final cash payments are made to partners based on ending capital balance
 12,000
nce with predistribution plan.

60,000

94,000
o partners.

40,000

60,000
nce with predistribution plan.

125,000
o partners.

6,000

53,000
d on ending capital balances.