1.4 Partnership Liquidation - 1

ADVANCED ACCOUNTING 1 - PARTNERSHIP LIQUIDATION13
PROBLEM 1: The statement of Financial Position of JJJ Partnership just before liquidation is as follows:
ASSETS LIABILITIES AND CAPITAL

Cash P50,000 Liabilities P70,000
Other assets 140,000 Loan - January 20,000
Loan - July 10,000 January, Capital (50%) 30,000
June, Capital (30%) 50,000
July, Capital (20%) 30,000
TOTAL P200,000 TOTAL P200,000
Partners January and June are personally insolvent. The percentage in parenthesis are their P%L ratio.
Situation 1: If non cash assets are sold for P150,000 and all liabilities are paid and
liquidation expense of P5,000 are also paid:
1. How much cash should January receive?
2. How much cash should June receive?
3. How much cash should July receive?
Situation 2: If non cash assets are sold for P 50,000, liquidation expense of P5,000 and all
liabilities are paid:
Situation 3: If non cash assets are sold for P40,000, liquidation expense of P10,000 and
all liabilities are paid:
Situation 4: If July received a total of P 8,000:

2, How much cash should June receive?
3. How much is the amount of gain or loss on realization of other assets?
4. How much is the total proceeds on sale of other assets
Situation 5: If June received a total of P 35,000 and liquidation expenses of 5,000 were
paid:
3. How much is the amount of gain or loss on realization of other assets?
4. How much is the total proceeds on sale of other assets
PROBLEM 2: Partners A, B, C are partners of ABC partnership and decided to liquidate the business.
Below is their condense statement of financial position dated December 31, 2012.
ASSETS LIABILITIES AND CAPITAL

Cash 15,000 Liabilities 75,000
Non cash assets 110,000 A, Capital (35%) 5,000
B, Capital (45%) 15,000
C, Capital (20%) 30,000
TOTAL 125,000 TOTAL 125,000
The personal assets and liabilities of the partners on this date apart from their equities in the
partnership are as follows:
PARTNER Personal Assets Personal Liabilities
A 100,000 25,000
B 50,000 50,000
C 5,000 60,000
Assume that the non-cash assets are sold for P40,000 and liquidation expenses of P13,500 are incurred
and paid.
1. How much is the total cash paid to partners?

A. 14,366 B. 22,575 C. 5,091 D. 8,209
PROBLEM 3: GYLIN, MARIA, and CARLA decided to liquidate their partnership on November 30, 2017.
Their capital balances and profit and loss ratio are as follows:
Capital P&L
GYLIN 800,000 40%
MARIA 960,000 30%
CARLA 320,000 30%
The net income from January 1, 2017 to November 30, 2017 is P704,000. On November 30, 2017, the
cash balance is P640,000, and that of liabilities is P1,440,000. GYLIN is to receive P883,200 in the
settlement of her interest.
1. Calculate: (1) The loss on realization, and (2) the amount be realized from the sale of non-cash assets?
(1) (2)
a 496,000 3,088,000
b 248,000 5,100,000
c 620,000 3,860,000
d 552,000 3,860,000
PROBLEM 4: The accounts of the Partnership of R, S, and T at the end of its fiscal year On November 30,
2017 are as follows:
Cash P166,000 Loan from S P32,000
Non cash assets 1,132,000 R, Capital (30) 426,000
Loan to R 24,000 S, Capital (50) 218,000
Liabilities 420,000 T, Capital (20) 226,000
1. If in the first cash distribution, S received P80,000, which of the following statements is incorrect?
a. Total amount distributed to partners is P538,000.
b. Total amount paid to creditors is P420,000.
c. Total amount realized from the non-cash assets is P958,000
d. R received an amount equal to P300,000.
PROBLEM 5: The following condensed balance sheet is prepared for SAMMY and JOKER, who share
profits and losses in the ratio of 60:40, respectively;
Other assets 720,000 Accounts payable 192,000

Sammy, loan 32,000 Sammy, capital 312,000
Joker, capital 248,000
Total 752,000 Total 752,000
1. The partners have decided to liquidate the partnership. If the Other assets are sold tor P770,000,
what amount of the available cash should be distributed to Sammy?
a. P310,000 c. P342,000
b. P312,000 d. P390,000
PROBLEM 6: The accounts of the partnership of PBA at December 31, 2017 are as follows:
Non-cash assets 1,166,000 Loan from B 32,000
Loan to P 24,000 P, capital 330,000
B, capital 586,000
A, capital 274,000
TOTAL 1,322,000 TOTAL 1,322,000
They divide profits and losses 3:5:2 to P, B, and A respectively. They have decided to liquidate the
partnership at this date.
1. Determine the amount payable to partner A if cash is paid just before the start of
liquidation on December 31, 2017.
a. P 28,286 C. P 35,357
b. P 35,300 d. P 35,120
2. Determine the amount Partner P and Partner B would have received by the time Partner A
would have received cumulative amount of P72,000.
a. R, P3,000 and S, P113,000
b. R, P3,516 and S, P140,530
c. R, P3,750 and S, P141,250
d. R, P3,516 and S, P145,200
PROBLEM 7: On January 1, 2017, the partners CARLO, DIEGO, and EDGAR, who share profits and losses
in the ratio of 5:3:2, respectively, decided to liquidate their partnership. On this date the partnership
condensed balance sheet was as follows:

Non cash assets 400,000 Carlo, Capital 128,000
Diego, Capital 144,000
Edgar, Capital 112,000
TOTAL 480,000 TOTAL 480,000
On January 15, 2017, the first cash sale of other assets with a carrying amount of P240,000 realized
P192,000. Safe installment payments were made the same date.
1. How much cash should be distributed to each partner?

CARLO DIEGO EDGAR
a P 30,000 P102,000 P 88,000
b P 80,000 P 90,000 P 70,000
c P 24,000 P 81,600 P 70,400
d P120,000 P 72,000 P 48,000
PROBLEM 8: The partnership ABC is currently liquidating and on February 15, 2017, their balances in
capital and their profit and loss ratio are shown below:
(P&L) ratios are shown below:
Ariston, capital (P&L 50%) 19,000
Bernardo, capital (P&L 30%) 18,000
Conrado, capital (P&L 20%) (12,000)
Assume non-cash assets have been all disposed and Conrado has promised to pay his deficiency in a
week's time.
1. Calculate the amount to be received by one of the partners if cash is paid immediately on February
15, 2017.
a. Ariston, P13,000 c. Bernardo, P14,000
b. Bernardo, P12,000 d. Ariston, P11,500
PROBLEM 9: Claudia, Petra, Mona, and Hilda are partners who share profits and losses at 40%, 30%, 20%,
and 10%, respectively. Since two of them have given intention to withdraw, they have decided to liquidate
the partnership instead, At this point, the capital balances of the partners are as follows:
Claudia P48,000
Petra 21,600
Mona 34,400
Hida 16,000
1. Which of the following statement is true?

a. The first available P1,600 will go to Hilda
b. Claudia will be the last to receive cash.
c. The first available P2,400 will go to Mona.
d. Claudia will collect a portion of any available cash before Hilda receives anything.
PROBLEM 10: ASSER, JING, and TONY are in the process of liquidating their partnership. They have the
following capital balances and profit and loss percentages;
Capital Balance P&L %

ASSER 8,000 debit 20%
JING 28,800 credit 50%
TONY 9,600 credit 30%
1. The partnership balance sheet shows cash of P8,000, non-cash assets of P22,400, and no liabilities:
Assuming no liquidation expenses, what safe payments could be made?
a. P8,000 split between JING and TONY by a ratio of 5:3, respectively.
b. P8,000 to JING only
c. P1,600 to ASSER, P4,000 to JING and P2,400 to TONY
d. P28,800 to JING only.
*** END ***

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ADVANCED ACCOUNTING 1 - PARTNERSHIP LIQUIDATION13

ASSETS LIABILITIES AND CAPITAL

Situation 4: If July received a total of P 8,000:

ASSETS LIABILITIES AND CAPITAL

1. How much is the total cash paid to partners?

Other assets 720,000 Accounts payable 192,000

Cash 80,000 Liabilities 96,000

1. How much cash should be distributed to each partner?

1. Which of the following statement is true?

Capital Balance P&L %

* END *

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