# CHAPTER 4 LIQUIDATION PARCOR ACTIVITY ANS

```Problem #7
Distribution of 820,000 cash shall be:
Capital balance 340,000
*Share on gain on realization (120,000/2) 60,000
Cash to be distributed 400,000
Domingo Ungria Jr.
Capital balance 360,000
*Share on gain on realization (120,000/2) 60,000
Cash to be distributed 420,000
Computation of gain on realization:
Available cash 820,000
Capital Balances:
Domingo Ungria Jr. (360,000)
*Gain on realization 120,000
Problem #8
1. Loss on realization is 60,000
Solution:
Capital balance:
Romulo Soria 150,000
Elizabeth Paras 70,000
Total capital 220,000
Less:
Cash available (160,000)
Loss on realization (60,000)
2. Losses shall be divided equally as per agreement amounting to a loss of 30,000 each
partner.
3. Available Cash of 160,000 shall be distributed as follows:
Romulo Soria:
Capital Balance 150,000
Share on loss (60,000/2) (30,000)
Cash to be distributed 120,000
Elizabeth Paras:
Capital Balance 70,000
Share on loss (60,000/2) (30,000)
Cash to be distributed 40,000
PROB 12: Case 1 - Selisana is personally insolvent Sarabia Selisana Gevera Total Capital balances
before liquidation 600,000.00 (240,000.00) 360,000.00 720,000.00 Absorption of deficiency (120,000.00)
240,000.00 (120,000.00) Balances after absorption 480,000.00 240,000.00 720,000.00 Payment to
partners (480,000.00) (240,000.00) (720,000.00) Balances after payment Case 2 - Selisana is personally
solvent Sarabia Selisana Gevera Total Capital balances before liquidation 600,000.00 (240,000.00)
360,000.00 720,000.00 Additional investment 240,000.00 240,000.00 Balances after investment
600,000.00 360,000.00 960,000.00 Payment to partners (600,000.00) (360,000.00) (960,000.00)
Balances after payment Case 3 - Selisana is personally solvent up to 60% Sarabia Selisana Gevera Total
Capital balances before liquidation 600,000.00 (240,000.00) 360,000.00 720,000.00 Additional
investment (60% only) 144,000.00 144,000.00 Balances after investment 600,000.00 (96,000.00)
360,000.00 864,000.00 Absorption of deficiency (48,000.00) 96,000.00 (48,000.00) Balances after
absorption 552,000.00 312,000.00 864,000.00 Payment to partners (552,000.00) (312,000.00)
(864,000.00) Balances after payment
PROB 13
Answer Journal Entries for Partnership Liquidation1.
Jan. 6
Cash
151,500
AUA
11,100
T, Cap.
10,800
M, Cap.
10,800
B, Cap.
5,400
A/R
189,600
(To record the collection of A/R and to right off the AUA.)
2.
Jan 9
Cash
160,500
T, Cap.
53,040
M, Cap.
53,040
B, Cap.
26,520
M. Inventory
293,100
(To record the sale of inventory.)
3.
Jan 11
Cash
T, Cap.
M, Cap.
B, Cap.
3,000
2,400
2,400
1,200
Prepaid Insurance
9,000
(To record the refund of prepaid insurance.)
4.
Jan 14
Cash
111,000
M/P
240,000
A/D-O. E.
10,500
A/D-Machinery 32,100
A/D-Bldg.
112,500
T, Cap.
40,800
M, Cap.
40,800
B, Cap.
20,400
Land
120,000
Eqpt.
31,500
Machinery
81,600
Bldg.
375,000
(To record the sale of property and equipment and transfer of M/P to Sibug.)
1.
Jan 20
N/P
A/P
120,000
220,500
Cash
(Payment of liabilities)
T,Cap.
31,360
B, Cap.
15,680
M. Cap.
(To record the deficit.)
B, Cap.
3,400
T, Cap.
(To record the deficit.)
6. Jan 24
B, Cap.
127,500
Cash
(To record the distribution of cash.)
40,500
47,040
3,400
127,500
PROB 15
1. Ceballus is the most vulnerable because he has the highest P&amp;L ratio.
2. 65,000 is the available cash. 50,000 for priority creditors, and 15,000 will be divided among
the partners based on their priority.
Priority 1 is Perdales (7500)
Prioritu 2 is Perdales ( 22,500) and Bundonell (15,000)
Since 15,000 is insufficient. The first 7500 will be given to Prio 1 (Pendales). The remaining
7500 will be divided pro rata between prio 2 ( pendales and bundonell) by using 22500 and
15000 respectively. Therefore, 15000 is for Pendales (12,000) and Bundonell (3,000)
3. Since, 7500 is available cash after payment of priority creditors. Pendales got the 7500.
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