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Chapter 5 Solution Manual - Partnership & Corporation (23rd
Edition) by Zenaida Manuel
Accountancy (Pamantasan ng Lungsod ng Maynila)
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CHAPTER 5
Ex. 1.a)
Cash
P 400,000
175,000
820,000
550,000
(12,000)
(700,000)
P1,233,000
Balances before liquidation
1) Sale of accts recble at a loss P25,000
2) Sale of inventories at a gain P20,000
3) Sale of equipments at a loss P50,000
4) Liquidation expenses paid P12,000
5) Payment to creditors
6) Payment to partners
Cash
Mary, Capital
Helga, Capital
Luz, Capital
Accum Depn
Accounts Receivable
Inventories
Furniture and Equipment
Mary,
Capital
700,000
(12,500)
10,000
(25,000)
(6,000)
________
P666,500
Helga,
Capital
400,000
(6,250)
5,000
(12,500)
( 3,000)
________
P383,250
Luz,
Capital
200,000
(6,250)
5,000
(12,500)
( 3,000)
_______
P183,250
1,545,000
27,500
13,750
13,750
100,000
200,000
800,000
700,000
Mary, Capital
Helga, Capital
Luz, Capital
Cash
Liquidation expenses paid.
6,000
3,000
3,000
12,000
Accounts Payable
Notes Payable
Cash
300,000
400,000
700,000
Mary, Capital
Helga, Capital
Luz, Capital
Cash
666,500
383,250
183,250
1,233,000
2)
Cash
Balances before liquidation
Sale of non-cash assets at a loss
liquidation expenses paid.of P12,000
Balances after sale
Payment of liabilities
Balances after payment of liabilities
Additional investment
4) Payment to Mary and Helga
a.Cash
Mary, Capital
Helga, Capital
Luz, Capital
Accum Depn
Accounts Receivable
Furniture and Equipt
Inventories
800,000
400,000
200,000
200,000
100,000
b.Mary, Capital
Helga, Capital
Luz, Capital
Cash
6,000
3,000
3,000
Non Cah
P 400,000 1,600,000
800,000 (1,600,000)
(12,000)
1,188,000
0
(700,000)
488,000
3,000
491,000
Liabilities
700,000
_______
700,000
(700,000)
0
c. Accounts Payable
Cash
Cash
Luz, Capital
100,000
700,000
800,000
d.
Mary, Capital
Helga, Capital
Cash
Mary,
Capital
Helga,
Capital
Luz,
Capital
700,000
(400,000)
( 6,000)
294,000
400,000
(200,000)
( 3,000)
197,000
200,000
(200,000)
( 3,000)
(3,000)
(294,000)
(197,000)
3,000
0
700,000
700,000
3,000
3,000
294,000
197,000
491,000
12,000
3)
Balances before liquidation
Sale of non-cash assets less liquid exp
Balances after sale
Payment of liabilities
Balances after payment of debts
Deficiency absorbed
Bal after absorption
Payment to Mary & Helga
Cash
Non-Cash
400,000 1,600,000
752,000 (1,600,000)
1152,000
(700,000)
452,000
Liabilities
700,000
700,000)
-____
(452,000)
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Mary,
Capital
700,000
(424,000)
276,000
_______
276,000
(8,000)
268,000
Helga,
Capital
400,000
(212,000)
188,000
_______
188,000
(4,0000
184,000
(268,000)
(184,000)
Luz,
Capital
200,000
(212,000)
(12.000)
_______
(12,000)
12,000
lOMoARcPSD|14631609
Ex 4
a.1)Total Liab + PE = Total Assets of P100,000 – Non cash Assets of P80,000 = Cash of P20,000
Cash after sale is P70,000 against cash beg of P20,000= Proceeds from Sale of P50,000.
Book value of other assets of P80,000 against the sale of P50,000= P30,000 Loss on sale
d. 1)
Balances
Sale at a loss
Balances
Payment of Accts Pay
Balances after payment
Investment by def partner
Cash to Jem
Cash
Other Assets
20,000
80,000
50,000
(80,000)
70,000
0
(60,000)
Acc.Payable
60,000
60,000
(60,000)
Jem, Capital
30,000
(10,000)
20,000
10,000
20,000
Roy, Capital
10,000
(20,000)
(10,000)
10,000
(20,000)
e)
Cash
Jem, Capital
Roy, Capital
Non-Cash Assets
50,000
10,000
20,000
Accounts Payable
Cash
60,000
Cash
Roy, Capital
10,000
Jem, Capital
Cash
20,000
80,000
60,000
10,000
20,000
5.
Cash
Balances after sale
Def absorbed by Jem
Other
Assets
0
70,000
70,000
(70,000)
Payment to creditors & Jem
Acc.Payable
60,000
60,000
(60,000)
Jem, Capital
Roy, Capital
10,000
Accounts Payable
Cash
Jem, Capital
Cash
60,000
Jem,
Capital
20,000
(10,000)
10,000
(10,000)
Roy,
Capital
(10,000)
10,000
10,000
60,000
10,000
10,000
6)
Balances before sale
Liabilities paid
Balances
Right of Offset
Balances
Payment to partners
for loan and capital
Cash
70,000
(45,000)
25,000
Accounts
Payable
45,000
(45.000)
0
Others
0
_______
(25,000)
0
Loan from Roy
Roy, Capital
10,000
Jem, Capital
Loan from Roy
Cash
20,000
5,000
Loan from
Roy
15,000
Jem
20,000
Roy
(10,000)
15,000
(10,000)
5,000
(5,000)
20,000
______
20,000
(20,000)
(10,000)
10,000
0
10,000
25,000
7. SOL Partnership- Table to update partners’ equity at point of liquidation:
Sid
Olga
Louie
Total
Salary allowances
10,000
10,000
10,000
30,000
Remainder 5:2:1
(22,500)
(13,500)
(9,000)
(45,000)
Share in Profit/Loss
(12,500)
( 3,500)
1,000
(15,000)
Capital balances
55,000
24,000
26,000
115,000
Revised equities
42,500
20,500
27,000
90,000
Cash
Balances
1) Sale of non-cash assets
Balances
2) Payment of Liabilities
Balances
3) Right of Offset
8,000
90,000
98,000
(98,000)
0
Statement of Partnership Liquidation
January 31, 2015
Other
Liabilities
Loan,
Assets
Olga
190,000
98,000
10,000
(190,000)
0
P98,000
5,000
(98,000)
0
0
5,000
(4,500)
500
Sid,
Capital
42,500
(50,000)
(7,500)
Olga,
Capital
20,500
(30,000)
(4,500)
Louie,
Capital
27,000
(20000)
7,000
(7,500)
_____
(7,500)
(4,500)
4,500
7,000
____
7,000
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3) Addtl investment
Balances for distribution
7,500
7,500
7,500
500
Cash
Sid Capital
Olga, Capital
Louie, Capital
Other Assets
90,000
50,000
30,000
20,000
Liabilities
Cash
98,000
Loan, Olga
Olga Capital
4,500
Cash
Sid, Capital
7,500
Louie, Capital
Olga, Loan
Cash
7,000
500
7,000
190,000
98,000
4,500
7,500
7,500
.
8.
Cash
Balances
Sale
Balances
Payment of liab
Balances
Def absorbed
Balances
Right of offset
Balances
Adtl investment
Paid to Mister
Non-Cash
80,000
700,000
780,000
(750,000)
30,000
Accts Pay
1,520,000
(1,520,000)
0
0
Loan PayMister
50,000
750,000
750,000
(750,000)
0
50,000
50,000
30,000
50,000
(8,000)
42,000
30,000
12,000
42,000
700,000
307,500
205,000
307,500
Liabilities
Cash
750,000
MasterCaptl
300,000
(307,500)
(7,500)
200,000
(205,000)
(5,000)
300,000
(307,500)
(7,500)
(7,500)
(4,500)
(12,000)
(5,000)
(3,000)
(8,000)
8,000
0
(7,500)
7,500
0
(12,000)
12,000
1,520,000
750,000
Miss, Capital
Mister, Capital
Master, Capital
4,500
3,000
Mister, Loan
Mister, Capital
8,000
7,500
8,000
Cash
Miss, Capital
12,000
Mister, Loan
Cash
42,000
12,000
42,000
Cash
70,000
Other
Assets
530,000
Liabilities
280,0000
Loan,
Pepe
30,000
200,000
270,000
(270,000)
0
_______
0
(530,000)
0
________
0
________
0
________
280,000
(280,000)
0
_______
0
_______
30,000
_______
30,000
(30,000)
0
9
Sale
Balances
Payment
Balances
Right of Offset
Balances
Mister,Captl
42,000
Cash
Miss, Capital
Mister, Capital
Master, Capital
Non Cash Assets
Balances
Miss,Captal
Pepe
65,000
(110,000)
(45,000)
_10,000__
(35,000)
30,000
( 5,000)
Pepe and Pilar pays Paz
a. Cash
Pepe, Capital
Pilar, Capital
Paz, Capital
Other Assets
200,000
110,000
110,000
110,000
b. Liabilities
280,000
530,000
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Pilar
90,000
Paz
135,000
(110,000)
(20,000)
(110,000)
25,000
_______
25,000
______
25,000
(20,000)
_______
(20,000)
lOMoARcPSD|14631609
Cash
Pepe, Capital
c. Loan, Pepe
Pepe, Capital
d. Paz, Capital
Pepe, Capital
270,000
10,000
30,000
30,000
25,000
5,000
Pilar, Capit
20,000
b. P25,000, not from the partnership cash but from the addtl cash given by the deficient but solvent partner.
Ex 10.
Cash
Balances after sale
270,000
Def of Pepe transferred
______
Balances
270,000
Payments made to creditors
(270,000)
Balances for settlement
0
Paz creditors collects from Pepe P2,500 more.
Ex 11,
a) Danny, Drawing
Arnel, Drawing
Floyd, Drawing
Income Summary
Other
Assets
0
Liabilities
280,000
________
280,0000
(280,000)
0
______
0
150,000
37,500
112,500
300,000
Loan,
Pepe
30,000
_______
30,000
(30,000)
0
b) Danny, Capital
Arnel, Capital
Floyd, Capital
Danny, Drawing
Arnel, Drawing
Floyd, Drawing
Pepe
(45,000)
45,000
0
Pilar
(20,000)
(22,500)
(42,500)
40,000
(2,500)
Paz
25,000
(22,500)
_______
2,500
240,000
37,500
232,500
240,000
37,500
232,500
Balances
Sale at a loss of P730
Balances
Addtl investment
Balances
Cash payment
Cash
240,000
370,000
610,000
245,000
855,000
(855,000)
Non-Cash
1,100,000
(1,100,000)
0
Danny (4)
120,000
( 365,000)
(245,000)
245,000
0
650,000
650,000
(650,000)
12. Amount Available
Add back Liabilities Paid
Total cash after sale
Proceeds
Cash beg
Total Liab. & PE= Total Assets
Non cash Assets (550-30)
Proceeds
Loss from sale of non cash assets
Sale at a Loss on realization
Liabilities paid
Balances
Cash distribution (refer to schedule)
Addtl investment by Blue
Balances for distribution
Schedule of Cash Distribution
Restricted interest Blue deficiency
Restricted interest White deficiency
Free interest
Exercise 13.
Cash
72,000
Sale with Loss on realization
228,000
300,000
Liabilities paid
(220,000)
80,000
Addtl investment
16,500
Balances
96,500
Payment to partners
(96,500)
Amount Available to partners
Liabilities Paid
Total cash after sale
Proceeds
Cash beg
Total Liab. & PE= Total Assets
Non cash
Liabilities
650,000
Arnel (1)
262,500
(91,250)
171,250
Floyd (3)
307,500
(273,750)
33,750
171,250
(171,250)
33,750
(33,750)
P 40,000
150,000
190,000
160,000
P 30,000
P550,000
P520,000
160,000
P360,000
Cash
P40,000
160,000
200,000
(160,000)
40,000
( 40,000)
15,000
P15,000
AP
220,000
220,000
(220,000)
0
Red
170,000
(120,000)
50,000
White
125,000
(120,000)
5,000
Blue
105,000
(120,000)
(15,000)
50,000
(40,000)
5,000
(15,000)
10,000
5,0000
Red
50,000
(7,500)
(2,500)
40,000
White
5,000
(7,500)
2,500
0
Greg
120,000
(28,500)
91,500
Oscar
40,000
(38,000)
2,000
Olivia
60,000
(57,000)
3,000
91,500
(91,500)
2,000
( 2,000)
3,000
( 3,000)
15,000
Blue
(15,000)
15,000
0
Donna
50,000
(66,500)
(16,500)
16,500
P 80,000
220,000
300,000
228,000
P 72,000
490,000
P 418,000
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Proceeds
Loss
228,000
P190,000
Partner Greg’s personal creditors may be paid in full P50,000 coming from partnership cash.
Partner Oscar’s personal creditors may be paid P2,252,000 only, P2,000 coming from the partnership cash.
Partner Olivia’s personal creditors may be paid in full P5,000. She is not insolvent.
Ex. 14-15.
Statement of Liquidation
June balances before liq
Sale at a loss
Liquidation expenses paid
Partial payment of liab
Cash Dist See Sch 1
July sale at a loss
Liquidation Expenses paid
Payment of liabilities
Cash dist see sch 2
Aug sale at a loss
Final cash distribution
Cash
40,000
90,000
130,000
(2,000)
128,000
(30,000)
98,000
(65,000)
33,000
37,000
70,000
(2,000)
(30,000)
38,000
(36,000)
2,000
48,000
50,000
(50,000)
Assets
210,000
(120,000)
90,000
_______
90,000
________
90,000
________
90,000
(45,000)
45,000
Acct Pay
60,000
_______
60,000
_______
60,000
(30,000)
30,000
_______
30,000
_______
30,000
________
45,000
________
45,000
(45,000)
0
0
(30,000)
0
_______
0
_______
0
0
Kuok
Tong
48,000
72,000
(15,000)
(9,000)
33,000
63,000
(1,000)
(600)
32,000
62,400
______ ________
32,000
62,400
_______
(25,800)
32,000
36,600
(4,000)
(2,400)
28,000
34,200
(1,000)
(600)
_______ _______
27,000
33,600
(3,500)
(19,500)
23,500
14,100
1,500
900
25,000
15,000
(25,000)
(15,000)
Alternative Schedules:
Schedule 1)
Cash balance
Add Proceeds net of liq exp
Total
Less: Restricted interest
Cash available to partners
P40,000
88,000
128,000
63,000
P65,000
Schedule
T
62,400
L
63,600
(27,900)
P34,500
(8,700)
P25,800
(18,600)
P45,000
( 5,800)
P39,200
2)
K
a. Capital balances
32,000
.
Possible loss if noncash assets of P90,000
will not be sold + 3,000
(46,500)
Balances
P(14,500)
Possible loss of 14,500 14,500
Free Interest
Lau
70,000
(6,000)
64,000
(400)
63,600
_______
63,600
(39,200)
24,400
(1,600)
22,800
(400)
_______
22,400
(13,000)
9,400
600
10,000
(10,000)
Schedule 3)
K
27,000
(23,500)
P 3,500
Balances
Possible loss of 47,000
Free Interest
T
33,600
(14,100)
P 19,500
L
22,400
(9,400)
P 13,000
Ex. 16 As an alternative, a priority program may be prepared, and cash payments applied against it.
Priority Program
Partners’ Interest
Profit and Loss Ratio
LAB
Priority 1
LAB balances
Priority 2
Balances
Further cash distribution to all based on
P and L ratio.
Loss Absorption Ability
K
T
L
48,000
72,000
70,000
50%
30%
20%
96,000
240,000
350,000
(110,000)
96,000
240,000
240,000
144,000)
(144,000)
96,000
96,000
96,000
Cash distribution for June based on the priority program:
Ava. Cash
K
T
Priority 1
22,000
Priority 2
43,000
25,800
Total
65,000
25,800
K
Payment Plan
T
L
22,000
43,200
43,200
28,800
50,800
L
22,000
17,200
39,200
Ex. 17.
Cash
10,000
Jan:Write off goodwill
Merchandise sold
Balances
Liabilities paid
Feb:Receivables sold
CSV of Prepaid Insurance
Balances
Balance of liabilities paid
Balamces
18,000
28,000
(15,000)
13,000
36,000
15,000
49,000
(13,000)
36,000
Other A
190,000
(20,000)
(20,000)
150,000
150,000
(40,000)
(20,000)
110,000
110,000
Liabilities
30,000
30,000
(15,000)
15,000
13,000
(13,000)
0
Pearl
60,000
(8,000)
( 800)
51,200
Apple
30,000
(6,000)
( 600)
23,400
Mao
60,000
(4,000)
( 400)
55,600
Sweet
20,000
(2,000)
( 200)
17,800
51,200
(1,600)
(2,000)
50,400
23,400
(1,200)
(1,500)
22,800
55,600
( 800)
(1,000)
55,200
17,800
( 400)
( 500)
16,900
50,400
22,800
55,200
16,900
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Sch 1 for cash dist
Balances
Mar:Sale of remaining assets
Liquidation expenses paid
Final Cash distribution
Restricted interest of 115,000
Restricted interest of 11,700
Restricted interest of 2,280
Free interest
(31,000)
5,000
102,000
(8,000)
99,000
Pearl
50,400
(46,000)
4,400
(6,686)
(2,286)
2,286
0
110,000
(110,000)
0
0
0
50,400
(3,200)
(3,200)
44,000
0
0
Apple
22,800
(34,500)
(11,700)
11,700
0
Mao
55,200
(23,000)
32,200
(3,343)
28,857
(1,524)
27,333
22,800
( 2,400)
(2,400)
18,000
(27,333)
27,867
(1,600)
(1,600)
24,667
(3,667)
13,933
( 800)
( 800)
12,333
Sweet
17,600
(11,500)
6,100
(1,671)
4,429
( 762)
3,667
18.
Pearl
1. Profit and Loss ratio
2. Capital Balances
3. LAB (2/1)
4. First Priority
5. 2nd Priority
6. 3rd Priority
4
60,000
150,000
Apple
3
30,000
100,000
( 50,000)
Mao
2
60,000
300,000
(100,000)
(50,000)
(50,000)
Sweet
Pearl
Apple
Mao
Sweet
20,000
10,000
10,000
5,000
5,000
1
20,000
200,000
(50,000)
(50,000)
20,000
Further distribution acc to P & L
To prove: If available cash is P31,000 using the priority program, distribution should be the same as free interest in no.14:
Mao
20,000 + 7,333 (11,000 x 10 divide by 15) = P27,333
Sweet
(11,000 x 5 divide by 15)
3,667
Legal Issue:
1. PNB
90,000
2. Ciel
20,000
3. Axel
10,000
4. Axel P90,000
Biel
90,000
Ciel
90,000 270,000
Total
390,000
Accounting Issue:
Gray
P55,000
50%
Capital balances, Dec 31, 2013
Profit and loss percentage
Loss on revaluation 140,000
Capital accounts will change to
Offer
(70,000)
(15,000)
10,000
Mayer
P115,000
30%
(42,000)
73,000
80,000
Jason
P60,000
20%
(28,000)
32,000
Gray stands to gain by P25,000.
Partnership 2015 edition
8.
Balances
Payment of Accts Pay
Balances
Cash to
partners(SchA*)
9..
Sale at a loss
Balances
Addtl investment
Balances
Final cash dist
Cash
300,000
(210,000)
90,000
(90,000)
440,000
440,000
30,000
470,000
(470,000)
Kate, Ren and Will Partnership
Statement of Partnership Liquidation
Other
Assets
A.P.
Ren, loan
Kate
800,000
210,000
50,000
150,000
(210,000
800,000
50,000
150,000
______
800,000
800,000
(800,000)
Ren
250,000
Will
440,000
250,000
440,000
50,000
150,000
250,000
(90,000)
350,000
50,000
180,000
(180,000)
(30,000)
30,000
0
250,000
(108,000)
142,000
______
142,000
(142,000)
350,000
(72,000)
278,000
______
278,000
(278,000)
50,000
(50,000)
Schedule A
Schedule of Safe Payment for Ex no. 8
Kate
Ren
Will
Total Interest(Captl and loan)
150,000
300,000
440,000
Restricted Interest of 800,000
(400,000) (((240,000)
(160,000)
(250,000)
60,000
280,000
Restricted interest of 250,000
250,000
(((150,000)
(100,000)
36
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lOMoARcPSD|14631609
Restricted interest of P90,000
Free interest for ex. 8*
(90,000)
90,000
180,000
(90,000)
90,000
37
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