The Discount Partnership is being liquidated. The current balance sheet is shown here

Discount Partnership

Balance Sheet

January 14, 2008

Assets

Cash $ 25,000

Other assets 120,000

Total assets $145,000

Liabilities and Partners’ Equity

Accounts payable $ 40,000

Dawson, capital 31,000

Feeney, capital 65,000

Hardin, capital 9,000

Total liabilities and partners’ equity $145,000

Dawson, Feeney, and Hardin share profits and losses in a 30:40:30 ratio

Required:

A. Prepare a schedule of partnership liquidation for each of the following three independent cases.

(1) The noncash assets are sold for $60,000, and any partner with a deficit is unable to eliminate any of the deficits.

(2) The noncash assets are sold for $60,000, and any partner with a deficit is able to invest cash equal to the amount of the deficit.

(3) The noncash assets are sold for $50,000, and any partner with a deficit is able to invest up to $8,000 cash in the partnership.

B. Prepare all necessary journal entries for case 2 above