AA1 -Chapter (2008 edition))s page Exercise – Balances before liquidation Sale of other assets & distribution of loss Balances Payment of liabilities Balances Offset of loan Additional investment by Velasco Balances Asset distributed to Viola Balances July sale of assets and distribution of loss Balances Payment of liabilities Balances Possible loss on remaining other assets Cash distribution to partners Cash P 80,000 200,000 P280,000 ( 280,000) 90,000 P 90,000 P 90,000 540,000 P630,000 (350,000) P280,000 P280,000 Other Assets P960,000 ( 300,000) P660,000 P660,000 P660,000 ( 200,000) P460,000 ( 400,000) P 60,000 P 60,000 ( 60,000) - Liabilities P630,000 Velasco Loan P 50,000 P630,000 ( 280,000) P350,000 P 50,000 P350,000 P350,000 - P350,000 ( 350,000) - - P 50,000 ( 50,000) Viola P470,000 ( 60,000) P410,000 P410,000 CAPITAL Velasco (P140,000) ( 20,000) (P160,000) Vicente P30,000 ( 20,000) P10,000 P10,000 P410,000 ( 212,000) P198,000 84,000 P282,000 (P160,000) 50,000 90,000 (P 20,000) 6,000 (P 14,000) 28,000 P 14,000 P282,000 ( 36,000) P246,000 P 14,000 ( 12,000) P 2,000 P44,000 ( 12,000) P32,000 P10,000 6,000 P16,000 28,000 P44,000 Chapter – Partnership Liquidation Suggested Answers page PROBLEMS Problem 3-1 Profit and loss ratio Balances before liquidation Sale of non-cash assets and distribution of loss Payment of liquidation expenses Balances Payment of liabilities Balances Additional investment of Elma Balances Payment to partners Elma, Erica and Edna Statement of Liquidation January – 31, 2008 Non-cash Cash Assets Liabilities P 80,000 634,000 ( 24,000) P690,000 (270,000) P420,000 15,000 P435,000 ( 435,000) P810,000 (810,000) P270,000 P270,000 (270,000) Elma 3/8 P60,000 (66,000) ( 9,000) (P15,000) (P15,000) 15,000 C A P I T A L Erica Edna 3/8 2/8 P290,000 P270,000 ( 66,000) ( 44,000) ( 9,000) ( 6,000) P215,000 P220,000 P215,000 P220,000 P215,000 ( 215,000) P220,000 ( 220,000) Chapter – Partnership Liquidation Suggested Answers page Cash Profit and loss ratio Balances before liquidation Sale of non-cash assets and distribution of loss Payment of liquidation expenses Balances Payment of liabilities Balances Offset of loan against debit balance in the capital balance of Elma Balances Payment to partners P 80,000 634,000 (24,000) P690,000 (200,000) P490,000 P490,000 (490,000) Cash Profit and loss ratio Balances before liquidation Sale of non-cash assets and distribution of loss Payment of liquidation expenses Balances Payment of liabilities Balances Offset of receivable against credit balance in the capital of Erica Balances Payment to partners P 80,000 634,000 (24,000) P690,000 (200,000) P490,000 Elma , Erica and Edna Statement of Liquidation January – 31, 2008 Non-cash Note Payable Assets to Elma P810,000 (810,000) C A P I T A L Liabilities P70,000 P200,000 P70,000 P200,000 (200,000) P70,000 ( 15,000) P55,000 ( 55,000) Elma , Erica and Edna Statement of Liquidation January – 31, 2008 NR from Non-cash Assets Erica Elma Erica Edna 3/8 P60,000 (66,000) ( 9,000) (P15,000) 3/8 P290,000 ( 66,000) ( 9,000) P215,000 2/8 P270,000 ( 44,000) ( 6,000) P220,000 (P15,000) P215,000 P220,000 P215,000 ( 215,000) P220,000 ( 220,000) 15,000 NP to Elma Liabilities Elma Erica Edna P70,000 P200,000 3/8 P60,000 (24,750) 3/8 P290,000 ( 24,750) 2/8 P270,000 ( 16,500) P110,000 P70,000 P200,000 (200,000) ( 9,000) P26,250 ( 9,000) P256,250 ( 6,000) P247,500 P110,000 P70,000 P26,250 P256,250 P247,500 P26,250 ( 26,250) ( 110,000) P146,250 ( 146,250) P247,500 ( 247,500) P110,000 P700,000 (700,000) C A P I T A L (110,000) P490,000 (490,000) P70,000 ( 70,000) Chapter – Partnership Liquidation Suggested Answers page Problem – (Case 1) Calma, Daza and Esteban Statement of Liquidation January, 2009 Other Cash Assets Liabilities Balances before liquidation Sale of assets & distribution of loss Balances Payment of liabilities Payment of to partners P 20,000 250,000 P 270,000 ( 112,000) P 158,000 P 340,000 (340,000) - L O A N Daza Esteban P 112,000 P 5,000 P 8,000 P 112,000 (112,000) - P 5,000 P 8,000 C A P I T Calma Daza (2/5) (2/5) P 95,000 P 60,000 (36,000) (36,000) P 59,000 P 24,000 P 5,000 P 8,000 P 59,000 P 24,000 A L Esteban (1/5) P 80,000 (18,000) P 62,000 P 62,000 Problem – (Case 2) Calma, Daza and Esteban Statement of Liquidation January, 2009 Other Cash Assets Liabilities Balances before liquidation Sale of assets & distribution of loss Balances Payment of liabilities Balances Offset of loan against debit balance in the capital account Payment to partners P 20,000 185,000 P 205,000 ( 112,000) P 93,000 P 93,000 P 340,000 (340,000) - P 112,000 P 5,000 P 8,000 P 112,000 (112,000) - P 5,000 P 8,000 C A P I T A L Calma Daza Esteban (2/5) (2/5) (1/5) P 95,000 P 60,000 P 80,000 (62,000) (62,000) (31,000) P 33,000 P( 2,000) P 49,000 P 5,000 P 8,000 P 33,000 P( 2,000) P 49,000 P 33,000 2,000 - P 49,000 - L O A N Daza Esteban (2,000) P 3,000 P 8,000 Chapter – Partnership Liquidation Suggested Answers page Problem – (Case 3) Cash Balances before liquidation Sale of assets & distribution of loss Balances Payment of liabilities Balances Offset of loan against debit balance in the capital account Balances Payment to partners Balances Additional investment by Daza Payment to partners Calma, Daza and Esteban Statement of Liquidation January, 2009 Other Assets Liabilities P 20,000 170,000 P 190,000 ( 112,000) P 78,000 P 78,000 ( 78,000) 3,000 P 3,000 P 340,000 (340,000) - L Daza P 112,000 P 5,000 P 8,000 P 112,000 (112,000) - P 5,000 P 8,000 C A Calma (2/5) P 95,000 (68,000) P 27,000 P 5,000 P 8,000 P 27,000 - - (5,000) - - - - - O A N Esteban - P 8,000 ( 8,000) - P 27,000 ( 25,000) P 2,000 - - P 2,000 P I T A L Daza Esteban (2/5) (1/5) P 60,000 P 80,000 (68,000) (34,000) P( 8,000) P 46,000 P( 8,000) 5,000 P(3,000) P(3,000) 3,000 - P 46,000 P 46,000 (45,000) P 1,000 P 1,000 Chapter – Partnership Liquidation Suggested Answers page Problem 3- (Case 4) Calma, Daza and Esteban Statement of Liquidation January, 2009 Cash Balances before liquidation Sale of assets & distribution of loss Balances Payment of liabilities Balances Offset of loan against debit balance in the capital account Balances Payment to partners Balances Additional investment by Daza Payment to partners P 20,000 125,000 P 145,000 ( 112,000) P 33,000 P 33,000 ( 33,000) 21,000 P 21,000 Other Assets P 340,000 (340,000) - Liabilities L Daza O A N Esteban P 112,000 P 5,000 P 8,000 P 112,000 (112,000) - P 5,000 P 8,000 C A P I T Calma Daza (2/5) (2/5) P 95,000 P 60,000 (86,000) (86,000) P 9,000 P(26,000) P 5,000 P 8,000 P 9,000 P(26,000) P 9,000 5,000 P(21,000) P 9,000 - - (5,000) - - - - P 8,000 ( 8,000) - - - - - P 9,000 P(21,000) 21,000 - A L Esteban (1/5) P 80,000 (43,000) P 37,000 P 37,000 P 37,000 (25,000) P 12,000 P 12,000 Chapter – Partnership Liquidation Suggested Answers page Problem – (Case 5) Calma, Daza and Esteban Statement of Liquidation January, 2009 Other Cash Assets Liabilities Balances before liquidation Sale of assets & distribution of loss Balances Payment of liabilities Balances Offset of loan against debit balance in the capital account Balances Additional investment by Calma and Daza Payment of liabilities, loan and capital P 20,000 90,000 P 110,000 ( 110,000) 40,000 P 40,000 P 340,000 (340,000) - L O A N Daza Esteban P 112,000 P 5,000 P 8,000 P 112,000 (110,000) P 2,000 P 5,000 P 8,000 C A P I T A L Calma Daza Esteban (2/5) (2/5) (1/5) P 95,000 P 60,000 P 80,000 (100,000) (100,000) (50,000) P( 5,000) P(40,000) P 30,000 P 5,000 P 8,000 P( 5,000) P(40,000) P( 5,000) 5,000 - 5,000 P(35,000) 35,000 - - P 2,000 (5,000) - - P 2,000 - P 8,000 P 8,000 P 30,000 P 30,000 P 30,000 Chapter – Partnership Liquidation Suggested Answers Problem page 3-4 Estrella, Capital Estrella, Drawing Total interest of Estrella Cash received by Estrella Share of Estrella in the loss on liquidation Fractional share of Estrella Total loss on liquidation P 144,000 ( 12,000) P 132,000 111,000 P 21,000 ÷ 2/10 P 105,000 a b c Cash Eugenio, Capital Esteban, Capital Estrella, Capital Other Assets 463,000 52,500 31,500 21,000 Liabilities Cash 200,000 Esteban, Loan Eugenio, Capital Esteban, Capital Estrella, Capital Cash 40,000 79,500 102,500 111,000 568,000 200,000 333,000 Eugenio , Esteban and Estrella Statement of Liquidation January – 31, 2008 Balances before liquidation Sale of other assets & distribution of loss Balances Payment of liabilities Balances Payment to partners Cash P 70,000 463,000 P 533,000 (200,000) P 333,000 ( 333,000) Other Assets P 568,000 ( 568,000) Liabilities P 200,000 P 200,000 ( 200,000) Esteban, Loan P 40,000 P 40,000 Eugenio (5/10) P 132,000 ( 52,500) P 79,500 P 40,000 ( 40,000) P 79,500 ( 79,500) CAPI TAL Esteban Estrella (3/10) (2/10) P 134,000 P132,000 ( 31,500) ( 21,000) P 102,500 P 111,000 P 102,500 (102,500) P 111,000 ( 111,000) Chapter – Partnership Liquidation Suggested Answers page Problem - QRS Partnership Statement of Liquidation July to September, 2008 Balances before liquidation July: Sale of assets Payment of liabilities Payment of liquidation expenses Payment of loan Balances August: Sale of assets Payment of liquidation expenses Payment of loan and capital Balances Sept.: Sale of assets Payment of liquidation expenses Additional loss to Roman & Silva Payment to partners P ( ( P ( P ( P ( P ( P Cash 150,000 1,170,000 1,215,000) 7,500) 97,500 67,500) 30,000 66,000 7,500) 88,500 58,500) 30,000 165,000 7,500) 187,500 P 187,500 Other Assets P2,010,000 ( 1,530,000) Accounts Payable P1,215,000 Roman, Loan P150,000 Quizon P300,000 ( 180,000) C A P I T A L Roman Silva P270,000 P225,000 ( 108,000) ( 72,000) ( 1,215,000) P 480,000 - P 480,000 ( 105,000) - P 375,000 - P 375,000 ( 375,000) - P150,000 ( 67,500) P 82,500 P 82,500 ( 41,100) P 41,400 - - P 41,400 - - P 41,400 ( 3,750) P116,250 ( 2,250) P159,750 ( 1,500) P151,500 P116,250 ( 19,500) ( 3,750) P 93,000 P159,750 ( 11,700) ( 2,250) P145,800 P 93,000 ( 105,000) ( 3,750) (P 15,750) 15,750 - P145,800 ( 63,000) ( 2,250) P 80,550 ( 9,450) P 71,100 P151,500 ( 7,800) ( 1,500) P142,200 ( 17,400) P124,800 ( 42,000) ( 1,500) P 81,300 ( 6,300) P 75,000 Chapter – Partnership Liquidation Suggested Answers page Problem - JKLM Trading Statement of Liquidation February - March 31, 2008 Balances before liquidation February: Sale of assets & distribution of loss Payment of liabilities Payment of liquidation expenses Balances Payment to partners (sch 1) Balances March: Sale of assets & distribution of gain Payment of liabilities Payment of liquidation expenses Balances Payment to partners (sch 2) Balances, March 31 Cash P 100,320 49,320 ( 17,750) ( 8,220) P 123,670 ( 120,060) P 3,610 ( ( P ( P 48,330 3,610) 7,380) 40,950 40,950) - Other Assets P 193,530 Liabilities P 21,360 Jocson Loan P 15,000 ( 66,060) C A Jocson P 24,120 P I Kaimo P 96,480 T A Legarda P 109,020 L Manabat P 27,870 ( 3,348) ( 5,022) ( 5,022) ( 3,348) ( 1,644) P 19,128 ( 2,466) P 88,992 (49,770) P 39,222 ( 2,466) P 101,532 ( 62,310) P 39,222 ( 1,644) P 22,878 ( 17,750) P 127,470 P 3,610 P 127,470 P 3,610 P 15,000 ( 7,980) P 7,020 ( 44,850) P 19,128 696 1,044 1,044 P 22,878 696 ( 3,610) P 82,620 p P 82,620 P P 7,020 7,020 P - ( 1,476) P 18,348 ( 1,824) P 16,524 ( 2,214) P 38,052 (13,266) P 24,786 ( 2,214) P 38,052 ( 13,266) P 24,786 ( 1,476) P 22,098 ( 5,574) P 16,524 Chapter – Partnership Liquidation Suggested Answers page Problem - Req Neri, Ordan and Pacia Statement of Liquidation January - March 31, 2008 Balances before liquidation January: Collections from customers Payment of liquidation expenses Payment of liabilities Balances Payment to partners (see schedule) Balances February: Collections from customers Payment of liquidation expenses Payment of liabilities & dist of gain Balances Payment to partners (see schedule) Balances March: Collections from customers & dist of loss Payment of liquidation expenses Payment to partners Cash P 19,000 Other Assets P 191,000 112,000 ( 4,400) ( 38,000) P 88,600 ( 16,000) P 72,600 (112,000) 36,000 ( 2,800) (38,000) P 67,800 ( 19,800) P 48,000 ( 36,000) Liabilities P 77,000 P 79,000 ( 38,000) P 39,000 P 79,000 P 39,000 Pacia, Loan P 9,000 P 9,000 ( 9,000) - P 43,000 ( 39,000) - - P 43,000 - - 35,000 ( 43,000) ( 4,000) P( 79,000) - - - Sal Pay to Neri P 6,000 C A P I T Neri Ordan P 50,000 P 28,000 A L Pacia P 40,000 ( 2,200) ( 1,100) ( 1,100) P 6,000 P 47,800 P 26,900 P 6,000 P 47,800 P 26,900 P 38,900 ( 7,000) P 31,900 P 6,000 ( 6,000) - ( 1,400) 500 P 46,900 ( 1,400) P 45,500 700) 250 P 26,450 ( 3,700) P 22,750 700) 250 P 31,450 ( 8,700) P 22,750 ( 4,000) ( 2,000) ( 2,000) ( 2,000) P 39,500 ( 1,000) P 19,750 ( 1,000) P 19,750 - ( ( Chapter – Partnership Liquidation Suggested Answers page Problem -8 Requirement No Neri, Ordan and Pacia Cash Priority Program January 1, 2008 Neri Capital balances before liquidation P 50,000 Add Loan balances 6,000 Total partners’ interest P 56,000 Profit and loss ratio ÷ 50% Loss absorption balance P112,000 allocation I - Cash to Pacia reducing LAB to an amount reported for Neri and Ordan Reduction of P84,000 requires payment of 25% of P 84,000 Balances P112,000 Allocation II - Further cash distributions may be made in the profit and loss raio SCHEDULE OF CASH DISTRIBUTION: Amount January: Cash available P 16,000 Allocation I: Payable to Pacia 16,000 February: Cash available Allocation I: Payable to Pacia Allocation II Payable according to P & L ratio Neri - Ordan Pacia - P 16,000 P 19,800 5,000 P 14,800 - P 5,000 P 7,400 P 7,400 P 3,700 P 3,700 3,700 P 8,700 Ordan P 28,000 Neri P 28,000 ÷ 25% P112,000 Pacia P 40,000 9,000 P 49,000 ÷ 25% P196,000 P112,000 ( 84,000) P112,000 _ Ordan Pacia _ - P 21,000 P 21,000 Chapter – Partnership Liquidation Suggested Answers page Problem - Requirement Tabora, Ureta and Veloso Statement of Liquidation January to April 30, 2008 Balances before liquidation January: Sale of assets Payment to partners Balances February: Sale of assets Payment to partners Balances March: Sale of assets Payment to partners Balances April: Sale of assets & distribution of loss Balances Payment to partners Cash 15,000 (15,000) 40,000 ( 40,000) Other Assets P 338,000 30,000 P 30,000 (30,000) O A N Ureta Veloso P 30,000 P 13,000 C A P I T A L Tabora Ureta P 120,000 P 90,000 Veloso P 40,000 P 45,000 (15,000) P15,000 P 13,000 P 120,000 P 90,000 P 40,000 ( 21,250) P 23,750 (15,000) - P 13,000 P 120,000 ( 3,750) P 86,250 P 40,000 (23,750) - - (13,000) - ( 23,500) P 96,500 ( 28,350) P 57,900 ( 1,400) P 38,600 - - - ( 81,500) P 15,000 P 15,000 ( 48,900) P 9,000 P 9,000 (32,600) P 6,000 P 6,000 ( 15,000) P 323,000 ( 40,000) P 283,000 90,000 ( 90,000) - L Tabora P 45,000 ( 90,000) P 193,000 ( 193,000) - Chapter – Partnership Liquidation Suggested Answers page ... Daza Esteban (2,000) P 3,000 P 8,000 Chapter – Partnership Liquidation Suggested Answers page Problem – (Case 3) Cash Balances before liquidation Sale of assets & distribution of loss Balances Payment... 1,000 Chapter – Partnership Liquidation Suggested Answers page Problem 3- (Case 4) Calma, Daza and Esteban Statement of Liquidation January, 2009 Cash Balances before liquidation Sale of assets &. .. liquidation Sale of assets & distribution of loss Balances Payment of liabilities Balances Offset of loan against debit balance in the capital account Balances Additional investment by Calma and Daza