PARTNERSHIP LIQUIDATION INSTALLMENT

Problem A = AA and BB formed a partnership on July 1, 2015 to operate two stores

to be managed by each of them. The invested P30,000 and P20,000 and agreed to
share earning 60% and 40%, respectively. All their transactions were for cash and all
their subsequent transactions were handled through their respective personal bank
accounts as summarized below:
AA BB
Cash receipts P79,100 P65,245 5. Assuming the remaining noncash assets were sold at 60% of the carrying
Cash disbursement 62,275 70,695 value, the actual liquidating expenses on the second sale was P34,000 and
unrecorded liabilities was P75,000, how much is the total cash paid to all
On October 31, 2015, all remaining noncash assets in the two stores were sold for
cash of P60,000. The partnership was liquidated, and cash settlement was effected partners as final settlement??
Required: 6. Using assumption no. 5, how much is the final payment received by James?
1. In the distribution of the P60,000 cash, how much partners AA
received as an additional recovery? Problem B = James, Wade and Bosh of the Miami Heat Partnership has the
following account balances before liquidation.
Problem B = On December 31, 2015, Go Your Own Way partners J, A and C have Cash P 420,000 Liabilities P1,445,000
capital balances of P252,000, P368,000 and P305,000, respectively. The partnership Noncash assets 4,793,000 Loan from Bosh 100,000
has P275,000 liabilities and cash of P200,000. On May 1, 2016, the partnership
Loan to Wade 192,000 James Capital, 25% 1,120,000
decided to liquidate. Its net income from January to May 1, amounted to P348,000.
Receivable from James 44,000 Wade Capital, 15% 1,632,000
Its profit/loss distribution agreement calls for annual salaries of P134,400, P158,400,
Expenses, including Bosh Capital, 60% 2,240,000
and P115,200 for J, A, and C, respectively. Any remainder will be distributed as
follows: 25% to J, 25% to A, and 50% to C. salaries of partners 2,556,000
P240,000 each Revenues 1,468,000
Part of partners agreement, salaries given to partners are treated as expenses and
salaries are accrue quarterly. The salaries for the first quarter of 2016 were credited Before liquidation, it was discovered that the salaries given to the partners were
to salaries payable. The partnerships cash as of this date amounted to P250,000, credited to Salaries Payable and are still part of the total liabilities. No drawings were
the non-cash assets includes loans receivable from A amounted to P20,000 and its made as the period. During June, some noncash assets were sold that resulted to a
total liabilities amounted to P477,000, including salaries payable to partners.
gain of P72,000. Liquidation expenses of P124,000 were paid and additional
During June, noncash assets were sold for a certain amount. The partnership paid expenses amounting to P96,000 were expected to be incurred through the following
P75,000 of its liabilities to outside creditors. Liquidating expenses amounting to months of liquidating the partnership. Liabilities of outsiders amounting to P516,000
P35,800 were paid and cash will be withheld for the payment of its remaining were paid.
liabilities to outsiders. Required:
REQUIRED: 7. For Wade to receive P1,272,000 on the first distribution of cash which of the
2. How much were the noncash assets sold for in order for A to receive following statement is TRUE?
the amount priority to her before all partners will receive payments and an
a. The total maximum possible loss for the month of June amounted to
additional P150,000?
3. In satisfying the previous question, which of the following statement P1,789,000.
below is true? b. The total amount of cash paid to partners in June was amounted to
a. The non-cash assets were sold at P1,365,000. P3,736,000.
b. Partner A received cash of P275,100 as recovery of his interest in the c. The proceeds from the sale of non-cash assets sold in June was amounted
partnership. to P3,801,000.
c. Total cash paid to creditor and partners including cash withheld to settle in
d. The amount of cash withheld considered in the computation of maximum
full all liabilities owned to outside creditors was P1,329,200.
d. The total loss on sales of noncash assets was P615,000. possible loss is amounted to P96,000.
4. How much is the loss on realization on sale of noncash assets? 8. What is the total payment made to partners on the month of June?
5. Between J and C, who gets higher recovery of their interest in the 9. How much is the cash realized from the first sale of assets?
partnership? 10. How much is the carrying value of noncash sold on the first sale?
6. How much is the total cash paid to all partners? 11. What is the cash balance after all payments made on the month of June?
7. How much is the total cash received by Partner J?
8. How much is the total cash received by Partner A?
Problem C = A balance sheet for the partnership James, Wade and Bosh who share
9. How much is the total cash received by Partner C?
profits in the ratio of 2:1:1, shows the following balances just before liquidation:
Quiz 2 Cash P 120,000 Liabilities P 200,000
Problem C = James, Wade and Bosh are partners who share profits and losses as Other Assets 595,000 James, Capital 220,000
follows: James 45%, Wade 15% and Bosh 40%. The Statement of Financial Position Wade, Capital 155,000
of Miami Heat Partnership as of December 31, 2015 is given below: Bosh, Capital 140,000
Assets Liabilities and Capital On the first month of the liquidation, assets with book value of P380,000 are sold for
Cash P268,000 Liabilities P 532,000 P345,000. Liquidation expenses of P10,000 are paid, and additional liquidation
Noncash assets P1,940,00 Loan Payable to James 44,000 expenses are anticipated. Liabilities are paid amounting P74,000 and sufficient cash
0 is retained to insure the payment to creditors before making payment to partners. On
James, Capital 694,000 the first payment to partners, Wade receives P82,500.
Wade, Capital 354,000 Required:
Bosh, Capital 584,000
12. The total cash distributed to the partners in the first installment.
Total P2,208,00 Total P2,208,000
13. The amount of cash withheld for the anticipation of liquidation expenses
0
and unpaid liabilities is:
On January 1, 2015 the partners decided to liquidate. For the month of January, 14. How much is the cash received by Bosh and Wade during first installment?
some assets were sold at a gain of P56,000. Payment to partner Wade from the initial 15. Continuation: If the remaining book value of other assets was sold for P175,000
sale of assets was P180,000. Cash withheld for possible liquidation and and payment for unpaid liabilities and liquidation expense were made. How much
unrecognized liabilities amounted to P146,800. liquidation expenses was paid, if James received P80,000 in the final
Required: settlement?
1. Which of the following statement is true?
a. The book / carrying value of the noncash assets sold in January amounted Isaiah 55:8-9
to P982,800. "For My thoughts are not your thoughts, Nor are your ways My ways," says the
b. Payment to partner James from the initial sale of assets was P172,000. LORD. "For as the heavens are higher than the earth, So are My ways higher
c. The total amount of cash paid and distributed for the month of January is than your ways, And My thoughts than your thoughts.(NKJV)
P1,048,000.
d. The share of Bosh in the maximum possible loss is P427,680. - For God is the source of wisdom, Pray to Him. Dont quit, for He is
2. How much is the total cash paid to James on first installment? with You. Believe and you will receive.
3. How much is the total maximum possible loss in the month of January? God bless You.
4. How much is the realized from the first sale of non-cash assets?