Professional Documents
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Partnership Liquidation
EXERCISES
Exercise 3 - 1
Exercise 3 - 2
Exercise 3 - 3
Exercise 3 5
1. Book value of other assets (P459,000 P3,000) P456,000
Cash realized:
Accounts receivable [P180,000 (P60,000 x 20%)] P168,000
Merchandise inventory 75,000
Prepaid advertising 2,400
Machinery and equipment (P120,000 x 60%) 72,000 317,400
Loss on realization P138,600
Exercise 3 6
Nocum Oliva Pascua Quinto
Capital balances before liquidation P180,000 P300,000 P240,000 (P 33,000)
Restricted interest possible loss
AA1 - Chapter 3 (2008 edition) page 3
Exercise 3 - 8
Rama, Sison and Toledo
Cash Priority Program
PAYMENTS
Rama Sison Toledo Rama Sison Toledo
Capital balances P30,000 P70,000 P40,000
AA1 - Chapter 3 (2008 edition) page 4
Exercise 3-9
1. Julian, Lagman and Magno
Cash Priority Program
January 1, 2008
PAYMENTS
Julian Lagman Magno Julian Lagman Magno
Capital balances before liquidation P 36,000 P 54,000 P18,000
Add Note payable to Magno 14,000
Total partners interest P 36,000 P 54,000 P 32,000
Profit and loss ratio 3/10 3/10 4/10
Loss absorption balances P120,000 P180,000 P80,000
Allocation I Cash to Lagman reducing
LAB to an amount reported for Julian
(P60,000 x 3/10) (60,000) P18,000
Balances P120,000 P120,000 P80,000
Allocation II Cash to Julian & Lagman
reducing LAB to an amount reported
for Magno (P40,000 x 3/10) ( 40,000) (40,000) P12,000 12,000
Balances P80,000 P80,000 P80,000 P12,000 P20,000 -
Allocation III Further cash distributions
may be made in the P & L ratio
Payment of liquidation
expenses ( 3,600) ( 1,080) (1,080 (1,440)
Payment of liabilities ( 36,000) (36,000)
Distribution of cash to
partners (sch. 1) ( 2,400) (2,400)
Balances P108,000 P14,000 P32,520 P48,120 P13,360
February:
Sale of assets and
distribution of gain 44,000 (35,000) 2,700 2,700 3,600
Payment of liquidation
expenses (8,400) (2,520) (2,520) (3,360)
Distribution of cash to
partners (sch. 2) (35,600) (10,000) (25,600)
Balances P73,000 P14,000 P22,700 P22,700 P13,600
March:
Sale of assets and
distribution of loss 36,000 (73,000) (11,100) (11,100) (14,800)
Balances P36,000 P14,000 P11,600 P11,600 P(1,200)
Offset of loan against
deficiency ( 1,200) 1,200
Final payment to partners (P36,000) (P12,800) (P11,600 (P11,600
) )
Schedule 1
Installment Liquidation
January 31, 2008
Schedule 2
Installment Liquidation
February 29, 2008
3. Journal entries
January Cash 30,000
Julian, Capital 2,400
Lagman, Capital 2,400
Magno, Capital 3,200
Other Asset 38,000
Liabilities 36,000
Cash 36,000
Exercise 3 - 10
U, V and W Co.
Cash Priority Program
PAYMENTS
Urbe Villa Waldo Urbe Villa Waldo
Capital balances P 11,200 P13,000 P 5,800
Profit and loss ratio 4/7 2/7 1/7
Loss absorption balance P 19,600 P 45,500 P 40,600
Allocation I - Cash to Villa reducing
LAB to an amount reported for
Waldo (P4,900 x 2/7) ( 4,900) P 1,400
Balances P 19,600 P 40,600 P 40,600
Allocation II - Cash to Villa & Waldo
reducing LAB to an amount
reported for Urbe
AA1 - Chapter 3 (2008 edition) page 7
Exercise 3 11
Partnership Books
1. Inventories 90,000
Capital Adjustment Account 90,000
3. Goodwill 56,000
Capital Adjustment Account 56,000
P980,000 P924,000 = P56,000
2. Cash 700,000
Ordinary Share Capital 500,000
PIC in Excess of Par 200,000
Problem 3 - 3
1. a. Cash 48,000
Accumulated Depreciation 25,000
Fuentes, Capital (P72,000 x 5/15) 24,000
Goco, Capital (P72,000 x 5/15) 24,000
Herrera, Capital (P72,000 x 3/15) 14,400
Isla, Capital (P72,000 x 2/15) 9,600
Merchandise Inventory 55,000
Accounts Receivable 60,000
Store Fixtures 30,000
f. Cash 6,000
Fuentes, Capital 1,000
Herrera, Capital 5,000
Problem 3 3 (cont.)
L O A N C A P I T A L
Fuentes Isla Fuentes Goco Herrera Isla
Balances before liquidation P 2,000 P 5,000 P27,000 P15,000 P10,000 P 9,000
Distribution of loss ( 24,000) ( 24,000) ( 14,400) ( 9,600)
Balances P 2,000 P 5,000 P 3,000 P( 9,000) P( 4,400) P( 600)
Additional loss for the
deficiency of Goco ( 4,500) 9,000 ( 2,700) ( 1,800)
Balances P 2,000 P 5,000 P( 1,500) - P( 7,100) P( 2,400)
Additional loss for the
deficiency of Herrera ( 1,500) 2,100 ( 600)
Balances P 2,000 P 5,000 P( 3,000) - P( 5,000) P( 3,000)
Offset against debit balance
in capital account ( 2,000) ( 3,000) 2,000 - 3,000
Balances - P 2,000 P( 1,000) P( 5,000) -
Additional investment by
partners 1,000 5,000
Payment to Isla - P 2,000 - - - -
Chapter 3 Partnership Liquidation
Suggested Answers page
Problem 3 -5
Payment to apply on
Loan P 7,980
Capital P 49,770 P 62,310 -
Total cash distribution P 7,980 P 49,770 P 62,310 -
Problem 3 6
QRS Partnership
Schedule to Accompany Statement of Liquidation
Amounts to be Paid to Partners
July 31, 2008
Quizon Roman Silva
Balances before cash distribution P116,250 P159,750 P151,500
Add Loan balance 150,000
Total partners interest P116,250 P309,750 P151,500
Restricted interest possible loss of P480,000
on remaining unsold assets and cash
withheld of P30,000 ( 255,000) ( 153,000) ( 102,000)
Balances ( P138,750) P156,750 P 49,500
Restricted interest possible loss of P138,750
to Roman and Silva 138,750 ( 83,250) ( 55,500)
Balances - P 73,500 (P 6,000)
Restricted interest possible loss to Roman ( 6,000) 6,000
Payment to Roman to apply on loan P 67,500
QRS Partnership
Schedule to Accompany Statement of Liquidation
Amounts to be Paid to Partners
August 31, 2008
Quizon Roman Silva
Balances before cash distribution P 93,000 P145,800 P142,200
Add Loan balance 82,500
Total partners interest P 93,000 P228,300 P142,200
Restricted interest possible loss of P375,000
on remaining unsold assets and cash
withheld of P30,000 ( 202,500) ( 121,500) ( 81,000)
Balances ( P109,500) P106,800 P 61,200
Restricted interest possible loss of P109,500
to Roman and Silva 109,500 ( 65,700) ( 43,800)
Payment to Roman to apply on loan and to Silva
to apply on capital - P 41,100 P 17,400
Problem 3 - 7
Requirement 1
Tabora, Ureta and Veloso
AA1 -Chapter 3 Partnership Liquidation
Suggested Answers page
Requirement 2
Amount Tabora Ureta Veloso
January:
Cash available P15,000
Allocation I - payable to Ureta 15,000 P15,000
February:
Cash available P40,000
Allocation I - Bal. payable to Ureta 6,000 P 6,000
Allocation II - Payable to Tabora and
Ureta in the ratio of 50:30 P34,000 P21,250 12,750
P21,250 P18,750
March:
Cash available P90,000
Allocation II - Balance 18,000 P11,250 P 6,750
Allocation III - Based on P & L ratio P72,000 36,000 21,600 P14,400
P47,250 P28,350 P14,400
April:
Cash available P30,000
Allocation III - Based on P & L ratio 30,000 P15,000 P 9,000 P 6,000
Problem 3 8 (cont.)
Requirement 1
January: a. Cash 112,000
Accounts Receivable 112,000
Problem 3 - 9
Problem 3 9 Requirement No 2
Wilson, Yuson and Zapata
Cash Distribution Schedule
July 1 - September 30, 2008
Problem 3 - 9 - Requirement 3
Amount Wilson Yuson Zapata
Cash available in September P76,500
Allocation I Balance 1,500 P 1,500
Allocation II 32,000 P 20,000 12,000
Balance - Allocation III P43,000 21,500 12,900 P 8,600
P 41.500 P 26,400 P 8,600
Problem 3 -10
Arceo, Basco and Cervo
Statement of Changes in Partners Capital
For the Period January 1, 2006 to May 31, 2008
2006:
Original investment P50,000 P30,000 P 80,000
Distribution of net income (sch. 1) 15,200 12,800 28,000
Drawings (7,000) (6,000) (13,000)
Balance, December 31 P58,200 P36,800 P 95,000
2007:
Investment of Cervo (sch. 2) (9,100) (4,900) P54,000 40,000
Distribution of net loss 4,200 3,000 4,800 12,000
Drawings (4,900) (3,900) (4,200) (13,000)
Balances, December 31 P40,000 P25,000 P45,000 P110,000
2008:
Distribution of cash in Feb. (sch. 3) (5,000) (5,000) (10,000)
Distribution of cash in April (sch. 4) (7,000) (5,000) (8,000) (20,000)
Balances P28,000 P20,000 P32,000 P 80,000
Sale of assets & distribution of loss
in May (sch. 5) (17,500) (12,500) (20,000) (50,000)
Final cash distribution P 10,500 P 7,500 P 12,000 P 30,000
Problem 3-11
Partnership Books
1. Inventories 60,000
Prepaid Expenses 3,000
Goodwill 243,000
Accrued Expenses 6,000
Leony, Capital 200,000
Espie, Capital 100,000
Corporations Books
1. Cash 450,000
Accounts Receivable 660,000
Inventories 1,350,000
Prepaid Expense 3,000
Furniture and Equipment 2,520,000
Goodwill 243,000
Allowance for Uncollectible Accounts 120,000
Accounts Payable 600,000
Accrued Expenses 6,000
Ordinary Share Capital 4,500,000
2. Land 3,600,000
Cash 1,500,000
Pre-Operating Expenses 450,000
Ordinary Share Capital 4,800,000
PIC in Excess of Par 750,000
AA1 -Chapter 3 Partnership Liquidation
Suggested Answers page
Rover Corporation
Statement of Financial Position
July 1, 2008
MULTIPLE CHOICE
1. D
2. D
3. C
4. C Share on loss on realization
(P39,000 + P4,800 P33,000) P10,800
Percentage ownership of Imperial 20%
Total loss on realization P54,000
10 C Doria Elma
Capital balances before liquidation P 24,500 P 15,500
Loan balances 4,000 3,500
Total partners interest P 28,500 P 19,000
Loss on realization ( 23,100) ( 15,400)
Balances cash to be paid to partners P 5,400 P 3,600
15 A
16 A
17 B Esper Ester Ethel Elmer
Capital balances P 50,000 P50,000 P50,000 P 75,000
Loss on realization (112,000) ( 56,000) ( 56,000) ( 56,000)
P(62,000) P(6,000) P(6,000) P19,000
Additional loss (3,000) 6,000 ( 1,500) (1,500)
Amt to be rec.from the part. P 17,500
AA1 -Chapter 3 Partnership Liquidation
Suggested Answers page
200,00
0
P217,500
18 D Urbe Viray
Initial investment P 137,500,000 P 137,500,000
Purchases ( 1,237,500,000) ( 495,000,000)
Sales 1,339,250,000 462,000,000
Interest ( 2,200,000) ( 1.375,000)
Dividends 1,100,000 2,750,000
Cash held P 238,150,000 P 105,875,000
Equal share 172,012,500 172,012,500
Cash received (paid) (P 66,137,500) P 66,137,500
41 C Roldan Moises
Capital balances before incorporation P94,800 P214,200
Adjustment in assets ( 11,800) ( 23,600)
Adjusted capital P83,000 P190,600
Ordinary Share Capital (720 @P10) 7,200 7,200
Preference Share Capital P75,800 P183,400