79 Chapter 4
CHAPTER 4 MULTIPLE CHOICE ANSWERS AND SOLUTIONS 4-1:
a PAR P 20,000 ( 20,000) P –
BOOGIE P 16,000 ( 12,000) P 4,000
BIRDIE P 10,000 ( 8,000) P 2,000
PING P 50,000 __6,000 P 56,000
PANG P 50,000 __2,000 P 52,000
PONG P 10,000 __2,000 P 12,000
PING P 50,000 ( 24,000) P 26,000
PANG P 50,000 ( 8,000) P 42,000
PONG P 10,000 ( 8,000) P 2,000
PING P 50,000 ( 42,000) P8,000 ( 3,000) P 5,000
PANG P 50,000 ( 14,000) P 36,000 ( 1,000) P 35,000
PONG P 10,000 ( 14,000) ( 4,000) __4,000 –
COLT MARK Capital balances before liquidation (net of loans)P290,000 P200,000 Loss of P130,000, 4:3:3 ( 52,000) ( 39,000) Cash distribution P238,000 P161,000
CLOCK P220,000 ( 39,000) P181,000
Capital balances before realization Loss on liquidation, P40,000 Cash distribution 4-2:
c Capital balances before liquidation Gain of P10,000 (150,000-140,000) Cash distribution
4-3:
b Capital balances before liquidation Loss of P40,000 (P140,000-P100,000) Cash distribution
4-4:
a Capital balances before liquidation Loss of P70,000 (P140,000-P70,000) Balances Absorption of Pong's deficiency, 6:2 Cash distribution
4-5:
4-6:
b
c Capital balances before liquidation Loss of P60,000, 40:50:10 Cash distribution
JONAS P160,000 ( 24,000) P136,000
CARLOS P 45,000 ( 20,000) P 25,000
TOMAS P 55,000 ( 6,000) P 49,000
Partnership Liquidation
4-7:
a Capital balances before liquidation Loss of P100,000, 4:3:3 Cash distribution
4-8:
BERT P180,000 ( 30,000) P150,000
NORY P23,000
OSCAR P 13,500
15,000 ( 30,900) P 7,100
– ( 20,600) ( P7,100) P 36,500 15,000 P 51,500
d Capital balances before liquidation (net) Loss on realization (schedule 1) P27,500 Balances, cash distribution
BLACK P99,000 ( 13,750) P85,250
Schedule 1: Capital balances of white (net) Cash received by White White's share of total loss (30%)
GREEN P138,000 _( 5,500) P132,500
P 27,500
c Capital balances before liquidation (net) Loss on realization, P63,600 Balances Unrecorded liabilities, P500 Balances Elimination of Nora's deficiency Payment to partners
4-11:
WHITE P 91,500 ( 27,500) P 64,000 P 91,500 _83,250 P 8,250
Total loss on realization (P8,250/39%) 4-10:
CESAR P 30,000 ( 30,000) P –
b Capital balances before realization Additional investment by Nory for the unpaid liabilities (33,000-18,000) Loss on realization (schedule 1) Payment by Oscar to Nory Schedule 1 Total capital before liquidation Unpaid liabilities Total loss on realization
4-9:
ARIEL P40,000 ( 40,000) P –
ANA P27,000 ( 25,320) P 1,680 ( 200) P 1,480 ( 1,380) P 100
EVA P 43,000 ( 25,320) P 17,680 ( 200) P 17,480 ( 1,380) P 16,100
NORA P 10,000 ( 12,660) ( 2,660) ( 100) ( 2,760) __2,760 P –
ARIES P33,500 ( 22,500)
LEO P 49,000 ( 13,500)
TAURUS P 36,500 ( 9,000)
d Capital balances before liquidation (net) Loss on realization (schedule 1) P45,000
Payment to partners
P11,000
P 35,500
P 27,500
81 Chapter 4 4-11, continued:
Schedule 1: Taurus capital (net) Payment to Taurus Share of total loss (20%)
P36,500 ( 27,500) P 9,000
Total loss on realization (9,000/20%) 4-12:
P45,000
c OLGA Capital balances, June 11 P 4,200 Net loss from operation (squeeze) ( 2,800) Capital balances, August 30 before liquidation (48,500-25,600) P 1,400 Loss on realization (47,500-30,000) ( 5,000) Balances
TOTAL
MOLY
NORA
P32,700
P15,000
P13,500
( 9,800)
( 4,200)
( 2,800)
P22,900
P10,800
P10,700
( 17,500)
( 7,500)
( 5,000)
P 5,400
P 3,300
P 5,700
_1,500
_____–
_____–
P 6,900
P 3,300
P 5,700
______
( 1,260)
( 840)
P 6,900
P 2,040
P 4,860P
RITA P49,000 ( 3,500) ( 10,000) – ( 2,000) P33,500 __1,500 P32,000
SARA P18,000 ( 7,000) ( 15,000) 8,000 ( 4,000) P – _____– P –
TITA P10,000 ( 10,500) ( 20,000) 25,000 ( 6,000) ( 1,500) _1,500 P –
CLARO
PEDRO
P45,000
P27,000
00) Additional investment by Olga _1,500 Balances 00) Elimination of Olga's deficiency _2,100 Payment to partners – 4-13:
b Capital balances before liquidation Operating loss, P21,000 Drawings Loans Loss on realization, P12,000 Balances Absorption of Tita's deficiency Payment to Nora
4-14:
a ANDRO Capital balances before liquidation
P50,000 Loss on realization Accounts Receivable (P50,000 X 40%) Investment (P30,000 - P20,000) Equipment (P60,000-P30,000) Total
P20,000 10,000 _30,000 P60,000
( 24,000)
( 24,000)
P21,000
P 3,000
TOTAL P47,500
MONA P28,500
( 38,500)
( 23,100)
P 9,000
P 5,400P
000) Payment to partners P38,000 4-15:
c Capital balances before liquidation (inclusive loans) P19,000 Loss on realization, (squeeze) ( 15,400) Capital balances - cash distribution
3,600 Partnership Liquidation 4-15, continued:
Cash after realization Less Liabilities (P36,000-P7,500) Total capital after realization 4-16:
4-17:
P 37,500 ( 28,500) P 9,000
a FF capital before distribution of net loss Add: share of net loss (P10,000 X 40%) FF capital before liquidation Cash settlement to FF FF share of total loss on realization (40%)
P100,000 _( 4,000) 96,000 ( 80,000) P 16,000
Total loss on realization (P16,000/40%)
P 40,000
Total capital before liquidation (P260,000-P10,000) Add: Liabilities Total assets Cash before liquidation Non-cash assets Loss on realization Cash to be realized
P250,000 _100,000 P350,000 ( 50,000) P300,000 ( 40,000) P260,000
d Capital balances before realization (net) P62,500 Loss on realization (squeeze) ( 25,000)
TOTAL P100,000
CC P 15,000
DD P22,500
( 125,000)
( 62,500)
( 37,500)
Capital balances after realization (liabilities-unpaid) P37,500 Elimination of CC's deficiency ( 19,000) Balances P18,500 Investment by DD _____– Payment to EE P18,500 4-18:
(P 25,000)
( 47,500)
( 15,000)
_______–
__47,500
( 28,500)
–
(P43,500)
(P 25,000) __43,500
______–
_43,500
P 18,500
P
P
–
–
d Total capital before liquidation Liabilities Total assets Less: Cash balance before realization Cash after payment of liabilities payment of liabilities Cash realized Non-cash asset Less: cash realized Loss on realization
P 30,000 __1,500 P 31,500 P 11,100 1,500 ( 11,600)
__1,000 P 30,500 _11,600 P 18,900
83 Chapter 4
4-19:
d TOTAL Capital balances P 80,000 Salary of LL (P600 X 8 months) ___4,800 Capital balances before liquidation P 84,800 Loss on realization Balances Additional investment by NN Payment to partners
4-20:
LL
MM
NN
P 50,000
P 20,000
P 10,000
__4,800
_______
_______
P 54,800
P 20,000
P 10,000
( 44,880) P 9,920 ______– P 9,920
( 14,960) P 5,040 _____– P 5,040
( 14,960) (P 4,960) __4,960 P –
b KK's total interest (P60,000-P10,000) Less: Cash to be paid to KK Share of total loss (1/3)
P 50,000 __10,000 P 40,000
Total loss on realization (P40,000/1/3)
P120,000
Total assets: Total interest of the partners before liquidation: JJ (P70,000+P30,000+P10,000) KK (P60,000-P10,000) LL (P30,000+P10,000) Divide by Total Loss on realization Cash to be realized 4-21:
P110,000 50,000 __40,000
P200,000 ______50% P400,000 _120,000 P280,000
a Capital balances, July 1 P 25,000 Advances to NN, August 1 OO Loan, September 1 Interest, December 31 (6%) NN (5 mos.) OO (4 mos.) Compensation to PP ___2,500 Capital balances before liquidation P 27,500 Loss on realization (squeeze) ( 17,550) Cash distribution
TOTAL P 75,000
NN P 25,000
( 10,000) 20,000
( 10,000) –
(
250) 400 __2,500
(
OO P 25,000 – 20,000
250)
_______
400 _______
P 87,650
P 14,750
P 45,400
_56,250
( 17,550)
( 17,550)
P 35,000
( 2,800)
P 27,850
9,950 NN should pay P2,800 and this is to be divided to OO & PP equally or P1,400 each.
Partnership Liquidation
4-22:
a Capital balances before realization P350,000 Loss on realization (squeeze) _500,000 Capital balances after realization (unpaid liabilities) ( 150,000) Elimination of AS's deficiency P150,000
TOTAL P 950,000
PG P350,000
JR P250,000
( 1,000,000)
__20,000
( 200,000)
(P 50,000)
P 50,000
P 50,000
_______–
( 90,000)
( 60,000)
Cash to be absorbed
P
–
(P 40,000)
(P 10,000)
RM P500,000 ( 490,000) P 10,000
ST P825,000 ( 735,000) P 90,000
TOTAL P 27,500
LT P 20,000
AM P 5,000
__37,500
_18,750
__-9,375
P 65,000
P 38,750
P 14,375
AG P 420,000
BM P375,000
CP P205,000
( 300,000)
( 300,000)
(200,000)
P 120,000
P 75,000
P 5,000
– 4-23:
a Capital balances before realization (net) Loss on realization, P1,225,000 Payment to Partners
4-24:
a Capital balances before realization (net) P 2,500 Gain on realization (squeeze) __9,375 Capital balances after realization P 11,875
4-25:
c Capital balances before realization (net) P150,000 Loss on realization, P1,000,000 (200,000) Balances P(50,000) Additional investment by DJ
50,000 4-26:
a Settlement to Uy Uy capital before liquidation (net): Uy capital Receivable from Uy Loss of Uy (50%)
P351,500 P553,500 ( 132,000)
Total loss on realization (P70,000 ÷ 50%) CB before liquidation Receivable from Uy Loan to Wi Salary payable to Vi Interest before realization Loss on realization Settlement to partners 85
__Uy__ 553,500 (132,000)
P140,000 __Vi__ 452,500
__Wi__ 486,000 ( 40,500)
421,500 ( 70,000) 351,500
421,500 P 70,000
135,000 587,500 ( 42,000) 545,500
445,500 ( 28,000) 417,500
__Total__ 1,492,000 (132,000) (40,500) 135,000 1,454,500 ( 140,000) 1,314,500
Chapter 4
SOLUTIONS TO PROBLEMS Problem 4 – 1 Case 1 Rivas and Briones Statement of Liquidation December 31, 2013 Partners' Capitals Assets
Rivas,
Briones,
Rivas
Loan
Loan
(90%)
Briones Cash (10%) Balances before liquidation. . . P10,000 Realization of assets and distribution of loss........... ( 6,600) Balances................................ 3,400 Payment of liabilities............. ______ Balances................................ 3,400 Offset Rivas' loan against his capital deficiency............ ______ Balances................................ 3,400 Additional loss to Briones...... ( 1,400) Balances................................ 2,000 Payment to partner................. P(2,000)
Others Liabilities
P 20,000 P200,000 P132,000 P 18,000 P 20,000
P40,000
_134,000 ( 200,000) _______ _______ _______
( 59,400)
154,000
–
132,000
( 132,000) ______– ( 132,000) 22,000
–
–
18,000
20,000
______ _______ _______ 18,000
20,000
_______ _______ _______ ( 18,000) _______ 22,000
–
–
( 19,400)
–
20,000
_______ _______ _______ _______ _______ 22,000
–
–
–
P(22,000)
–
–
– P(20,000)
( 19,400) _18,000 ( 1,400) __1,400
20,000
– –
Case 2 Rivas and Briones Statement of Liquidation December 31, 2013 Partners' Capitals Assets
Rivas,
Briones,
Rivas
Briones Cash Others Liabilities Loan Loan (30%) Balances before liquidation. . . P20,000 P200,000 P132,000 P 18,000 P 20,000 P10,000 Realization of assets and distribution of loss........... 134,000 ( 200,000) _______ ______ _______ ( 19,800) Balances................................ 154,000 – 132,000 18,000 20,000 9,800 Payment of liabilities............. ( 132,000) _______ ( 132,000) ______ _______ ______ Balances................................ 22,000 – – 18,000 20,000 9,800 Offset loan against capital deficiency........................ ________ _______ _______ ( 6,200) ( 9,800) __9,800 Balances................................ 22,000 – – 11,800 10,200 Payment to partner................. P(22,000) – – P(11,800) P(10,200) –
(70%) P40,000 ( 46,200) ( 6,200) _______ ( 6,200) __6,200 – –
Partnership Liquidation Problem 4-1, continued: Case 3 Rivas and Briones Statement of Liquidation December 31, 2013 Partners' Capitals Assets
Rivas,
Briones,
Rivas
Briones Cash (50%) Balances before liquidation........ P 20,000 P10,000 Realization of assets and distribution of loss............... _134,000 ( 33,000) Balances...................................... 154,000 23,000) Payment of liabilities.................. ( 132,000) Balances...................................... 22,000 23,000) Offset Briones'' loan against his capital deficiency........... _______ _20,000 Balances...................................... 22,000 3,000) Additional loss to Rivas.............. _______ __3,000
Others
Liabilities
Loan
Loan
(50%)
P200,000
P132,000
P 18,000
P20,000
P40,000
( 200,000) _______
_______
______
( 33,000)
18,000
20,000
( 7,000)
18,000
__ 20,000
_ _______ ( 7,000)
–
132,000
_______ ( 132,000) – – _______
_______
_______
( 20,000)
–
–
18,000
–
_______
_______
_______
_______
______ 7,000 ( 3,000)
Balances...................................... Payment to partner...................... –
22,000 P(22,000)
– –
– –
18,000 P(18,000)
– –
4,000 P( 4,000)
Journal Entries Case 1: Cash.............................................................................................................. Rivas, Capital................................................................................................. Briones, Capital............................................................................................. Other Assets............................................................................................ Liabilities. ..................................................................................................... Cash....................................................................................................... Rivas, Loan.................................................................................................... Rivas, Capital......................................................................................... Briones, Capital............................................................................................. Rivas, Capital......................................................................................... Briones, Loan................................................................................................. Briones, Capital............................................................................................. Cash .................................................................................................... Case 2: Cash.............................................................................................................. Rivas, Capital................................................................................................. Briones, Capital............................................................................................. Other Assets............................................................................................ Liabilities. ..................................................................................................... Cash....................................................................................................... Rivas, Loan.................................................................................................... Briones, Loan................................................................................................. Rivas, Capital......................................................................................... Briones, Capital...................................................................................... Rivas, Loan.................................................................................................... Briones, Loan................................................................................................. Cash....................................................................................................... 87 Chapter 4
134,000 59,400 6,600 200,000 132,000 132,000 18,000 18,000 1,400 1,400 20,000 2,000 22,000 134,000 46,200 19,800 200,000 132,000 132,000 6,200 9,800 6,200 9,800 11,800 10,200 22,000
Problem 4-1, continued:
Case 3: Cash.................................................................................................. Rivas, Capital.................................................................................... Briones, Capital................................................................................. Other Assets................................................................................ Liabilities........................................................................................... Cash. ........................................................................................... Briones, Loan.................................................................................... Briones, Capital.......................................................................... Rivas, Capital.................................................................................... Briones, Capital.......................................................................... Rivas, Loan........................................................................................ Rivas, Capital.................................................................................... Cash. ...........................................................................................
134,000 33,000 33,000 200,000 132,000 132,000 20,000 20,000 3,000 3,000 18,000 4,000 22,000
Problem 4 – 2 Blando and Castro Statement of Liquidation April 30, 2013 Partners' Capitals A s s e t s
Accounts
Blando,
Blando
Others
Payable
Loan
(60%)
Castro Cash Receivables Inventory (40%) Balances before liquidation.................... P 18,000 P99,000 Collection of receivables and distribution of loss........ _37,500 ( 15,000) Balances............................ 84,000 Realization of inventory and distribution of loss............................... ,000) Balances............................ 60,000 Realization of other assets and distribution of loss........................... ( 17,600)
P75,000
P90,000
P84,000
P42,000
P 24,000
P102,000
( 75,000)
_______ _______
_______
_______
( 22,500)
84,000
42,000
24,000
( 90,000) _______
_______
_______
42,000
24,000
_______
_______
42,000
24,000
17,100
_______
_______
24,000
17,100
55,500
–
_30,000
_______
85,500
–
–
_40,000
_______
_______
–
–
Balances............................ 125,500 42,400 Payment of accounts payable......................... ( 42,000) _______ Balances............................ 83,500 42,400 Payments to partners….. … P(83,500) P(42,400)
_______
90,000
84,000
( 84,000)
_______ _______
( 42,000)
–
–
–
–
–
–
–
–
Partnership Liquidation
Problem 4 – 3 a.
–
Electric Company Statement of Partnership Realization and Liquidation June 30, 2013
79,500
( 36,000) 43,500
( 26,400)
P(24,000) P( 17,100)
Balances 14,000 Sale of assets at a loss ( 8,000) 6,000 Payment to creditors ______
Capital Balances Volt Watt 30% 20%
Cash
Amp. Loan
Noncash Assets
Liabilities
Volt, Loan
Amp 50%
20,000
15,000
135,000
30,000
10,000
80,000
36,000
_95,000
______
(135,000)
______
______
(20,000)
(12,000)
115,000
15,000
-0-
30,000
10,000
60,000
24,000
_(30,000)
______
_______
(30,000)
______
_______
______
10,000
60,000
24,000
85,000 15,000 -06,000 Offset Amp, receivable (15,000) Payments to partners: Loan (10,000) Capitals _(75,000) ______ _______ ,000) Balances -0-0-0-0b. (1) Cash Amp, Capital Volt, Capital Watt, Capital Noncash Assets Sell noncash assets at a loss of P40,000.
-0-
(15,000) _______ -0-
(10,000) ______
(45,000)
(24,000)
-0-
-0-
-0-
95,000 20,000 12,000 8,000 135,000
(2) Liabilities Cash Pay creditors.
30,000
(3) Amp, Capital Amp, Loan Offset receivable from Amp against his capital credit.
15,000
(4) Volt, Loan Amp, Capital Volt, Capital Watt, Capital Cash Final lump-sum distribution to partners.
10,000 45,000 24,000 6,000
30,000
15,000
85,000
Note: All partners permitted Amp to offset his receivable against his capital credit. Alternatively, Amp could be required to pay the partnership the P15,000 receivable; the partnership would then pay him an additional P15,000 for his capital credit. In this case, an offset of the receivable against the capital credit is reasonable, provided the receivable is not interest-bearing, Amp has a sufficient capital credit, Amp is personally solvent, and the note is not secured against specific assts of Amp. The offset is not automatic, but must be determined by the terms of the initial note, and by the partners.
89 Chapter 4
Problem 4 – 4 a.
b.
Bina, capital before liquidation......................................................................................... Payment to Bina................................................................................................................ Loss absorbed by Bina (40%)...........................................................................................
P320,000 _128,000 P192,000
Loss on realization (P192,000 40%)..............................................................................
P480,000
AIDA, BINA & CELIA Statement of Partnership Liquidation January 1, 2013
Balances before liquidation. Realization & dist. of loss. . . Balances............................. Settlement to partners..........
Cash
Other Assets
P80,000 240,000 320,000 (320,000)
P720,000 ( 720,000) – _______
Aida (5) P320,000 ( 240,000) 80,000 ( 80,000)
Capital Bina Celia (4) (1) P320,000 P160,000 ( 192,000) ( 48,000) 128,000 112,000 ( 128,000) ( 112,000)
Problem 4 – 5 a.
b.
LL, capital before liquidation........................................................................................... Settlement to LL............................................................................................................... Gain realized by LL (20%)...............................................................................................
P 70,000 __98,000 P 28,000
Total gain on realization (P28,000 20%)....................................................................... Other assets sold............................................................................................................... Selling price ...................................................................................................................
P140,000 _500,000 P640,000
JJ, KK & LL Statement of Liquidation
Balances before liquidation.... Realization & Dist. of gain.... Balances................................ Payment of liabilities............. Payment to Partners............... ( 98,000)
Cash P50,000 640,000 690,000 ( 60,000) (630,000)
Other Assets Liabilities JJ (4) P500,000 P60,000 P180,000 ( 520,000) _______ __56,000 – 60,000 236,000 ( 60,000) _______ _______ ( 236,000)
Capital KK(4) (LL(2) P240,000 P70,000 __56,000 _28,000 296,000 98,000 ( 296,000)
Partnership Liquidation
Problem 4 – 6 a.
BB.................................................... P160,000 CC.................................................... P20,000 DD................................................... P60,000 EE.................................................... P –0–
b.
BB, CC, DD, & EE Statement of Liquidation Cash Liabilities P 0 P60,000
Balances before liquidation.... P(180,000) Advances by BB to pay liabilities Deposit by DD....................... 60,000 ________ Balances................................ 60,000 0) Elimination of EE's deficiency Elimination of DD's deficiency Payment to partners................ 60,000
C a p i t a l CC (10%)DD (20%) EE (40%) P80,000 (P120,000)
BB (30%) P160,000
( 60,000) 60,000 ______ _______ –
_______
220,000
( 90,000) ______ __( 90,000) – 40,000
__60,000
80,000
( 60,000)
( 180,00
( 30,000) ( 30,000) 20,000
( 60,000) 120,000 –
180,000
Problem 4 – 7 Sayson and Company Statement of Liquidation –Date–
Assets
Liabilities Accounts Notes
Peña
P a r t n e r s' C a p i t a l s Sayson Zobel Ayala
Peña Cash
Noncash
Payable
Payable
Loan
(45%)
(30%)
(15%)
Balances before liquidation.... P1,650 Realization of assets and distribution of gain........... ______
P 15,000
P155,250
P11,250
P9,000
P 1,500
P 75,345
185,000
( 155,250)
_______
______
______
17,850
11,900
______
Balances................................. 1,650 Payment of liabilities............. ______
200,000
-
11,250
9,000
1,500
93,195
98,398
( 14,993)
( 11,250)
( 9,000)
______
______
______
_______
-
-
1,500
93,195
98,398
( 14,993)
(10%)
Balances................................. 1,650 Additional loss to Sayson,
( 20,250) ________ 179,750
-
P 86,498 P(14,993)
Zobel and Peña; 45:30:10............................ 1,764) Balances................................. (114) Offset Peña's loan against his capital deficiency........ 114 Balances.................................
_______ ________ ________ 179,750
-
-
_______ ________ ________ 179,750
______
-
______
( 7,937)
( 5,292)
14,993 -
-
1,500
85,258
93,106
______
( 114)
______
______
-
1,386
85,258
93,106
-
Payments to partners.............. P(179,750)
_______ -
P(1,386) P(85,258) P(93,106)
91 Chapter 4
Problem 4 – 8 a.
Art, Bea and Cid Partnership Statement of Liquidation June 4, 2013
(20%) Balances before liquidation (including Bea loan, P4,000)...... P10,000 Realization of assets at a loss of P63,300................... Unrecorded accounts payable.......... (100) Payment to creditors........................ ______ Balances......................................... (2,760) Eliminate Cid's deficit..................... _2,760 Balances......................................... Payment to Partners......................... b. 2013 July 5
Cash
Assets Other
Liabilities
Partners' Capital Art (40%) Bea (40%) Cid
P 6,000
P94,000
P20,000
P27,000
P43,000
30,000
( 94,000)
(25,320) 500
(25,320) (200)
(12,660) (200)
(20,500)
______
(20,500)
______
______
16,200
-
-
1,480
17,480
______
______
______
(1,380)
(1,380)
16,200 (16,200)
-
-
100 _( 100)
16,100 ( 16,100)
-
-
Cash ............................................................................................. Art capital (P63,300 x 40%)........................................................... Bea capital (P63,300 x 40%).......................................................... Cid capital (P63,300 x 20%).......................................................... Other assets........................................................................... To record realization of other assets at a loss of P63,300.
30,700 25,320 25,320 12,660 94,000
c.
Art capital (P500 x 40%)................................................................ Bea capital (P500 x 40%)............................................................... Cid capital (P500 x 20%)............................................................... Liabilities.............................................................................. To record trade accounts payable.
200 200 100
Liabilities. ...................................................................................... Cash...................................................................................... To record payment of liabilities.
20,500
Art capital. ..................................................................................... Bea capital ..................................................................................... Cid capital............................................................................. To eliminate Cid's capital deficit.
1,380 1,380
Art capital. ..................................................................................... Bea capital ..................................................................................... Cid capital...................................................................................... Cash...................................................................................... To record payments to partners to complete liquidation.
100 4,000 12,100
500
20,500
2,760
16,200
Cid's loss must be limited to P5,000, or P25,000 for the partnership (P5,000 / 20% = P25,000). Because the liquidation of liabilities results in a loss of P500, only P24,500 may be lost on the realization of other assets. This requires that other assets realize P69,500 (P94,000 – 24,500) to enable Cid to receive P5,000 from the partnership to pay personal creditors in full.
Problem 4 –9 KGB Partnership Statement of Realization and Liquidation Lump-sum Liquidation on June 30, 2013 -
Preliquidation balances Sale of assets and distribution of 430,000 loss Cash contributed by B Distribution of deficit of insolvent partner: 20/60 (P2,000) 40/60 (P2,000) Offset deficit with loan Contribution by G Payment of creditors Distribution to K Postliquidation balances
92
Capital Balances K G 20% 40% (240,000) (100,000)
B 40% (120,000)
(60,000)
86,000 (154,000)
172,000 72,000
172,000 52,000
(60,000)
(154,000)
72,000
50,000 2,000
Cash 50,000
Noncash Assets 950,000
Liabilities (480,000)
G Loan (60,000)
520,000 570,000
950,000 -0-
(480,000)
-
(480,000)
50,000 620,000
-0-
(2,000) 666 620,000 620,000 13,334 633,334 (480,000) 153,334 (153,334) -0-
-0-0-
(480,000) (480,000)
(60,000) 60,000 -0-
(153,334) (153,334)
(480,000) 480,000 -0-
-0-
(153,334) (153,334) 153,334
-0-0-0-
-0-
-0-
-0-
-0-
1,334 73,334 (60,000) 13,334 (13,334) -0-
-0-0-0-
-0-
-0-
-0-
-0-
Partnership Liquidation
-
93 Chapter 4 Problem 4-9, continued: KGB Partnership Schedule of Distribution of Personal Assets June 30, 2013 . Personal assets, excluding partnership capital and loan interests Personal liabilities Personal net worth, excluding partnership capital and loan interests Contribution to partnership Distribution from partnership Personal capacity
K
G
B
500,000 (460,000)
600,000 (480,000)
700,000 (650,000)
40,000
120,000 (13,334) -0- 106,666
50,000
153,334 193,334
-0- -0- -
