Partnership Liquidation (31 points)  The Braun Company at December 31 has cash P750,000, non-cash assets P5,500,000, liabilities P3,000,000, and the following capital balances: Ho P2,000,000 and Li P1,250,000

Partnership Liquidation (31 points)

 The Braun Company at December 31 has cash P750,000, non-cash assets P5,500,000, liabilities P3,000,000, and the following capital balances: Ho P2,000,000 and Li P1,250,000. The firm is liquidated, and P4,500,000 in cash is received for the non-cash assets. Ho's and Li's income ratios are 60% and 40%, respectively.

Requirements:

1.       Prepare cash distribution schedule. (20 points: 1 point for each correct amount used in the cash distribution schedule)

2.       Prepare the entries to record the following, assuming that The Braun Company decides to liquidate the company.

a.       The sale of non-cash assets (3 points: 1 point for each correct amount and account used)

b.       The allocation of the gain or loss on liquidation to the partners (3 points: 1 point for each correct amount and account used)

c.       Payment of creditors (2 points: 1 point for each correct amount and account used)

d.       Distribution of cash to the partners (3 points: 1 point for each correct amount and account used)