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    Mims Chiii
    The 3T Partnership is liquidating and distributing assets and capital to partners Tik, Tak, and Toe in a 4:4:2 ratio. Upon liquidating other assets for $700,000, distributing cash and paying liabilities, there is a deficiency in Tik and Tak's capital accounts of $90,000 and $160,000 respectively. Tik and Tak contribute additional cash of $250,000 total which is used to clear their deficiencies and make a second distribution of cash to the partners.

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    Assignment Answer

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    Mims Chiii
    347 views2 pages
    The 3T Partnership is liquidating and distributing assets and capital to partners Tik, Tak, and Toe in a 4:4:2 ratio. Upon liquidating other assets for $700,000, distributing cash and paying liabilities, there is a deficiency in Tik and Tak's capital accounts of $90,000 and $160,000 respectively. Tik and Tak contribute additional cash of $250,000 total which is used to clear their deficiencies and make a second distribution of cash to the partners.

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    The 3T Partnership is liquidating and distributing assets and capital to partners Tik, Tak, and Toe in a 4:4:2 ratio. Upon liquidating other assets for $700,000, distributing cash and paying liabilities, there is a deficiency in Tik and Tak's capital accounts of $90,000 and $160,000 respectively. Tik and Tak contribute additional cash of $250,000 total which is used to clear their deficiencies and make a second distribution of cash to the partners.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    347 views2 pages

    Assignment Answer

    Uploaded by

    Mims Chiii
    The 3T Partnership is liquidating and distributing assets and capital to partners Tik, Tak, and Toe in a 4:4:2 ratio. Upon liquidating other assets for $700,000, distributing cash and paying liabilities, there is a deficiency in Tik and Tak's capital accounts of $90,000 and $160,000 respectively. Tik and Tak contribute additional cash of $250,000 total which is used to clear their deficiencies and make a second distribution of cash to the partners.

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    of 2

    A.

    Tik, Tak and Toe, who share profits and losses in the ratio of 4:4:2, respectively, decide to
    liquidate their partnership on December 31, 2019. The condensed statement of financial position
    is presented below just prior to liquidation.

    3T Partnership
    Statement of Financial Position
    December 31, 2019
    ASSETS LIABILITIES AND EQUITY
    Cash P 40,000 Liabilities P 224,000
    Other Assets 680,000 Tak, Loan 10,000
    Toe, Loan 16,000
    Tik, Capital 190,000
    Tak, Capital 120,000
    Toe, Capital 160,000

    Total Assets P 720,000 Total Liabilities and Equity P 720,000

    Instruction: Prepare a statement of Liquidation and the required journal entries for each of the following cases and supporting schedule of cash distribution, if
    necessary assuming cash is immediately distributed to the proper parties. Assume also that the deficient partner/s will invest cash which is then distributed as
    second payment to the proper parties.

    Case A P 700,000 Case C P 370,000 Case E P 250,000


    Case B 500,000 Case D 340,000 Case F 180,000
    CASE A: The other assets were sold for P 700,000. Additional cash investment of deficient partner is considered as second cash
    distribution to partners requiring a schedule to accompany the statement of liquidation to determine amounts paid to proper parties.

    Tik, Tak and Toe


    Statement of Liquidation
    December 31, 2019

    Other Loan Capital


    Cash Assets Liabilities Tak Toe Tik Tak Toe
    Profit and loss ratio 4 4 2
    Balances before liquidation 40,000 680,000 224,000 10,000 16,000 190,000 120,000 160,000
    Realization and distribution of loss 700,000 (680,000) (280,000) (280,000) (140,000)
    Balances 740,000 224,000 10,000 16,000 (90,000) (160,000) 20,000
    Payment of liabilities (224,000) (224,000)
    Balances 516,000 10,000 16,000 (90,000) (160,000) 20,000
    Payment to partners (see schedule) (516,000) (16,000) (20,000)
    Balances - (90,000) (160,000)
    Additional investment of Tik & Tak 250,000 90,000 160,000 (250,000)
    Balances 250,000
    Payment to partners 250,000 (1,600) (800)

    King, Jolly and Donald


    Schedule To Accompany Statement of Liquidation
    October 1-31, 2019

    Tik Tak Toe


    Capital balances (P 90,000) (P 160,000) P 20,000
    Add: loan balances 16,000
    Total partners’ Interest (P 90,000) (P 160,000) P 36,000
    Restricted interests – possible loss to P 2,400 to King and
    Donald in the ratio of 4:2 if Jolly fails to pay his deficiency (P 90,000) (P 160,000) (800)
    Free interest – amount to be paid to partner P 20,000 P 42,400

    Payment to apply on:


    Loan P 6,400
    Capital P 20,000 36,000
    Cash settlement P 20,000 P 42,400

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