1. The partnership of Undoy, Vennie and Wally was dissolved on June 30, 2005 and account balances after non-cash assets were converted into cash on
September 1, 2005 are:
Cash
P 50,000
Accounts payable
120,000
Undoy, capital (30%)
90,000
Vennie, capital (30%)
( 60,000)
Wally, capital (40%)
( 100,000)
Personal assets and liabilities of the partners at September 1, 2004 are:
Partners
Personal
assets
P 80,000
P 100,000
P 190,000
Undoy
Vennie
Wally
Personal liabilities
P 90,000
P 61,000
P 80,000
Undoy – insolvent (10,000) Vennie – solvent (39,000)
Wally – solvent (110,000)
If Wally contributes P70,000 to the partnership to provide cash to pay creditors, what amount of Undoy’s P90,000 partnership equity would appear to be
recoverable?
a. P 90,000
b. P 79,000
c. P 81,000
d. P 75,000
CASH
WALLY(40%)
50
39
89
70
159
(120)
39
=
=
=
=
=
=
=
=
30/70
UNDOY(30%)
LIABILITIES
120
90
120
(9)
(2)
79
120
(120)
-
79
79
(60)
39
21
0
-
40/70
VENNIE (30%)
(100)
(12)
2
(110)
70
(40)
(40)
2. W,X,Y and Z are partners sharing earnings in the ratio of 3/21, 4/21, 6/21 and 8/21, respectively. The balances of their capital accounts on December
31, 2006 are as follows:
W
P
1,000
X
25,000
Y
25,000
Z
9,000
P
60,000
The partners decide to liquidate, and they accordingly convert the non-cash assets into P23,200 of cash After paying the liabilities amounting to P3,000,
they have P22,200 to divide. Assume that the debit balance of any partner’s capital is uncollectible. After the P22,200 was divided, the capital balance of X
was:
a. P3,200
b. P3,920
c. P4,500
d. P17,800
Schedule of Safe payments
3/21
4/21
6/21
8/21
CASH
NCA
=
LIABILITIES
W
X
Y
Z
Beg.
2,000
61,000
=
3,000
1,000
25,000
25,000
9,000
Realization 23,200
(61,000)
(5,400)
(7,200)
(10,800)
(14,400)
Payment
(3,000)
(3,000)
Ending
22,200
=
(4,400)
17,800
14,200
(5,400)
TL
4,400
(3,920)
(5,880)
5,400
22,200
=
13,880
8,320
BALANCE SHEET
CASH
W
Distribution
22,200
(22,200)
-
=
=
(4,400)
(4,400)
CAPITAL STATEMENT:
X
17,800
(13,880)
3,920
CASH RECOVERABLE AMOUNT
 SCHEDULE OF Safe payments
THEORETICAL LOSS – 9,800
Proceeds – 23,200
CA
- (61,000)
VS.
Y
14,200
(8,320)
5,880
Z
(5,400)
(5,400)
CAPITAL BALANCE
-> ADJUSTED CAPITAL STATEMENT
(37,800)
CASH PRIORITY PROGRAM
4/10
6/10
3/21
4/21
6/21
8/21
PRIORITY PAYMENTS
W
X
Y
Z
W
X
Y
Z
NI
1,000
25,000
25,000
9,000
3/21
4/21
6/21
8/21
LAA 7,000
131,250
87,500
23,625
1st
(43,750)
1st
8,333
87,500
2nd
(63,875)
(63,875)
2nd
12,167
18,250
23,625
23,625
3rd
__-_______________(16,625)______(16,625)________(16,625)________3rd_______________3,167
4,750
6,333
7,000
7,000
7,000
7,000
total
23,667
23,000 6,333
(7,000)
(7,000)
(7,000)
(7,000)
TOTAL
8,333
30,417
14,250
53,000
In excess of 53,000, cash is to be distributed based on their P/L RATIO
40,000
90,000-53,000 =37,000 x 3/21
W
1st priority payments
2nd priority payments
Cash distribution:
0
X
8,333
5,547
13,880
Y
Z
8,320
8,320
-
= 5,286
22,200 available cash
(8,333)
(13,867)
1. Evaluation
Answer the following questions:
1. As of December 31, 2004, the books Ton Partnership showed capital balances of: T, P40,000; O, P25,000; N, P5,000. The partners’ profit and loss ratio
was 3:2:1, respectively. The partners decided to liquidate and they sold all non-cash assets for P37,000. After settlement of all liabilities amounting
P12,000, they still have cash of P28,000 left for distribution. Assuming that any capital debit balance is uncollectible, the share of T in the distribution of
the P28,000 cash would be:
a. P17,800
b. P18,000
c. P 19,000
d. P17,000
2. A, B and C are partners in textile distribution business,
drawings were as follows:
A
B
C
Capital
P100,000
P 80,000
P300,000
Drawing
60,000
40,000
20,000
sharing profits and losses equally. On December 31, 2004 the partnership capital and partners
Total
P480,000
120,000
The partnership was unable to collect on trade and was forced to liquidate. Operating profit in 2004 amounted to P72,000 which was all exhausted
including the partnership assets. Unsettled creditors’ claims at December 31, 2004 totaled P84,000. B and C have substantial private resources but A has
no personal assets. Final cash distribution to C was:
a. P78,000
b. P84,000
c. P108,000
d. P162,000
SOLVENT
SOLVENT
(1/3)
(1/3)
(1/3)
ASSETS
=
LIABILITIES
A
B
C
40,000
40,000
280,000
24,000
24,000
24,000
516,000
=
84,000
64,000
64,000
304,000
(516,000)
=
(172,000)
(172,000)
(172,000)
=
84,000
(108,000)
(108,000)
132,000
108,000
(54,000)
(54,000)
=
84,000
(162,000)
78,000
162,000
=
162,000
(84,000)
=
(84,000)
78,000
=
78,000
3. Gardo and Gordo formed a partnership on July 1, 2004 to operate two stores to be managed by each of them. They invested P30,000 and P20,000 and
agreed to share earnings 60% and 40%, respectively. All their transactions were for cash, and all their subsequent transactions were handled through their
respective bank accounts as summarized below:
Gardo
Gordo
Cash receipts ……………………………………. P79,100
P65,245
Cash disbursements……………………………… 62,275
70,695
On October 31, 2004, all remaining noncash assets in the two stores were sold for cash of P60,000. The partnership was dissolved, and cash settlement was
effected. In the distribution of the P60,000 cash, Gardo received:
a. P24,000
b. P26,000
c. P34,000
d. P36,000
4. The condensed balance sheet of JKL Partnership as of December 31, 2008 follows:
Asset
Cash
P 28,000
Non-cash asset
265,000
Total Assets
P 293,000
Liabilities
J, capital
K, capital
L, capital
Total liabilities and Capital
P 48,000
95,000
80,000
70,000
P 293,000
Profit and loss ratio is ½: ¼:¼, respectively. The partners voted to dissolve the partnership and liquidate by selling assets in installments. P70,000 was
realized on the first cash sale of other non-cash assets which has a book value of P150,000. After settlement with creditors, all cash available was
distributed to partners. How much did L receive?
a. P10,500
b. P20,000
c. P32,500
d. P21,250
5. The balance sheet of D, E and F who share in the profits and losses in the ratio of 5:3:2, respectively, is as follows:
Assets
Liabilities and capital
Cash
P 30,000
Liabilities
P 50,000
Other assets
320,000
D, capital
80,000
E, capital
115,000
F, capital
105,000
Total
P 350,000
Total
P 350,000
The partners agreed to liquidate the partnership by installment. Immediately there was a realization of P100,000 cash in selling other assets with book value
of P150,000. On the cash available, priority is the payment of the liabilities and the balance is to be distributed to the partners. How should the remaining
cash be distributed to D, E and F, respectively?
a. P50,000; P30,000; P20,000
c. P0; P48,000; P32,000
b. P40,000; P24,000; P16,000
d. P0; P31,000; P49,000
6. On December 31, 2008, the accounting records of Armand, Bernard and Carlos Partnership included the following information:
Armand, drawings (debit balance)
P( 24,000)
Carlos, drawings (debit balance)
( 9,000)
Bernard, Loan
30,000
Armand, capital
123,000
Bernard, capital
100,500
Carlos, capital
108,000
Total assets amounted to P478,500, including P52,500 cash and liabilities totaled P150,000. The partnership was liquidated on December 31, 2008 and
Carlos received P83,250 cash pursuant to the liquidation. Armand, Bernard and Carlos share net income and losses in a 5:3:2, respectively. How much will
Armand receive?
a. P65,625
b. P83,250
c. P59,000
d. P59,625
50%
R
P
CASH
NCA
=
LIABILITIES
52,500
347,250
(150,000)
426,000
(426,00)
-
=
=
=
150,000
249,750
-
=
-
(150,000)
30%
20%
ARMAND
123,000
(24,000)
99,000
(39,375)
-
BERNARD
100,500
30,000
130,500
(23,625)
-
59,625
106,875
CARLOS
108,000
(9,000)
99,000
(15,750)
_______
83,250
Carlos’ share in the loss:
Divided by p/l ratio
TOTAL LOSS:
BOOK VALUE
NET PROCEEDS-
15,750
20%
78,750
426,000
347,250
7. A, B and C are partners sharing profits and losses in the ratio of 4:3:3, respectively. The condensed balance sheet of ABC Partnership as of December
31, 2006 is:
Cash P
50,000
Other assets
130,000
Total assets P
180,000
Liabilities
A, Capital
B, Capital
C, Capital
Total assets
P
P
40,000
60,000
40,000
40,000
180,000
Assume instead that the ABC Partnership is dissolved and liquidated by installments, and the first realization of P40,000 cash is on the sale of other assets
with book value of P80,000. After the payment of liabilities, the available cash shall be distributed to A, B and C, respectively, as follows:
a. P36,000; P27,000; P27,000
c. P16,000; P12,000; P12,000
b. P44,000; P28,000; P28,000
d. P24,000; P13,000; P13,000
8. After operating for 5 years, the books of the partnership of A and B showed the following balances:
Net assets
P
169,000
A, Capital
110,500
B, Capital
58,500
If liquidation take place at this point and the net assets are realized at book value, the partners are entitled to:
a. A to receive P117,000 and B to receive P52,000
c. A to receive P84,500 and B to receive P84,500
b. A to receive P126,750 and B to receive P42,250
d. A to receive P110,500 and B to receive P58,500