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    Case A

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    Mary Ann Lubao
    The other assets of the 3T partnership were sold for $340,000, resulting in a loss. This caused capital account deficiencies for two partners. However, one deficient partner is solvent and able to cover their deficiency, so the partnership is able to fully liquidate and pay all remaining capital balances and liabilities.

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    Case A

    Uploaded by

    Mary Ann Lubao
    31 views8 pages
    The other assets of the 3T partnership were sold for $340,000, resulting in a loss. This caused capital account deficiencies for two partners. However, one deficient partner is solvent and able to cover their deficiency, so the partnership is able to fully liquidate and pay all remaining capital balances and liabilities.

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    Exercises on FAR 1

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    The other assets of the 3T partnership were sold for $340,000, resulting in a loss. This caused capital account deficiencies for two partners. However, one deficient partner is solvent and able to cover their deficiency, so the partnership is able to fully liquidate and pay all remaining capital balances and liabilities.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    31 views8 pages

    Case A

    Uploaded by

    Mary Ann Lubao
    The other assets of the 3T partnership were sold for $340,000, resulting in a loss. This caused capital account deficiencies for two partners. However, one deficient partner is solvent and able to cover their deficiency, so the partnership is able to fully liquidate and pay all remaining capital balances and liabilities.

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    Case A: Other assets were sold for P 680,000. There is a gain on realization.

    3T Partnership
    Statement of Liquidation
    December 31, 2019

    Cash Other Liabilities Loan Capital


    Assets

    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 gain 700,000 (680,000) 8,000 8,000 4,000
    Balances 740,000 224,000 10,000 16,000 198,000 128,000 164,000
    Payment of liabilities 224,000 (224,000)
    Balances 516,000 10,000 16,000 198,000 128,000 164,000
    Payment to partners (516,000) (10,000) (16,000) (198,000) (128,000) (164,000)
    Journal Entries:

    a) Sale of other assets and distribution of gain

    Cash 700,000
    Other Assets 680,000
    Tik, Capital 8,000
    Tak, Capital 8,000
    Toe, Capital 4,000

    b) Payment of liabilities

    Liabilities 224,000
    Cash 224,000

    c) Payment to partners

    Tak, Loan 10,000


    Toe, Loan 16,000
    Tik, Capital 198,000
    Tak, Capital 128,000
    Toe, Capital 164,000
    Cash 516,000
    Case B: Other assets were sold for P 500,000. There is a loss on realization but no capital deficiency.

    3T Partnership
    Statement of Liquidation
    December 31, 2019

    Cash Other Liabilities Loan Capital


    Assets

    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 500,000 (680,000) (72,000) (72,000) (36,000)
    Balances 540,000 224,000 10,000 16,000 118,000 48,000 124,000
    Payment of liabilities 224,000 (224,000)
    Balances 316,000 10,000 16,000 118,000 48,000 124,000
    Payment to partners (316,000) (10,000) (16,000) (118,000) (48,000) (124,000)
    Journal Entries:

    a) Sale of other assets and distribution of loss

    Cash 500,000
    Tik, Capital 72,000
    Tak, Capital 72,000
    Toe, Capital 36,000
    Other Assets 680,000

    b) Payment of liabilities

    Liabilities 224,000
    Cash 224,000

    c) Payment to partners

    Tak, Loan 10,000


    Toe, Loan 16,000
    Tik, Capital 118,000
    Tak, Capital 48,000
    Toe, Capital 124,000
    Cash 316,000
    Case C: Other assets were sold for P 370,000. There is a loss on realization with capital deficiency, right of offset is exercised.

    3T Partnership
    Statement of Liquidation
    December 31, 2019

    Cash Other Liabilities Loan Capital


    Assets

    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 370,000 (680,000) (124,000) (124,000) (62,000)

    Balances 410,000 224,000 10,000 16,000 66,000 (4,000) 98,000


    Payment of liabilities 224,000 (224,000)
    Balances 186,000 10,000 16,000 66,000 (4,000) 98,000
    Offset Tak, loan to Tak (4,000) 4,000
    capital deficiency
    Balances 186,000 6,000 16,000 66,000 98,000
    Payment to partners (186,000) (6,000) (16,000) (66,000) (98,000)
    Journal Entries:

    a) Sale of other assets and distribution of loss

    Cash 370,000
    Tik, Capital 124,000
    Tak Capital 124,000
    Toe, Capital 62,000
    Other Assets 680,000

    b) Payment of liabilities

    Liabilities 224,000
    Cash 224,000

    c) Offset loan to capital deficiency

    Tak, Loan 4,000


    Tak, Capital 4,000

    d) Payment to partners

    Tak, Loan 6,000


    Toe, Loan 16,000
    Tik, Capital 66,000
    Toe, Capital 98,000
    Cash 186,000
    Case D: Other assets were sold for P 340,000. There is a loss on realization with capital deficiency, deficient partner is solvent.

    3T Partnership
    Statement of Liquidation
    December 31, 2019

    Cash Other Liabilities Loan Capital


    Assets

    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 340,000 (680,000) (136,000) (136,000) (68,000)
    Balances 380,000 224,000 10,000 16,000 54,000 (16,000) 92,000
    Payment of liabilities 224,000 (224,000)
    Balances 156,000 10,000 16,000 54,000 (16,000) 92,000
    Offset Tak, loan to Tak (10,000) 10,000
    capital deficiency
    Balances 156,000 16,000 54,000 (6,000) 92,000
    Payment to partners (156,000) (16,000) (50,000) (90,000)
    (see schedule)
    Balances - 4,000 (6,000) 2,000
    Additional investment of Tak 6,000 6,000
    Balances 6,000 4,000 2,000
    Payment to Partners (6,000) (4,000) (2,000)
    3T Partnership
    Schedule to Accompany Statement of Liquidation
    December 31, 2019

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