RC AL KHWARIZMI INTERNATIONAL COLLEGE FOUNDATION, INC.

DEPARTMENT OF ACCOUNTANCY
PARTNERSHIP LIQUIDATION PART 2

Multiple Choice

Partners S, V and I share profits and losses in the ratio of 4:5:1. The statement of financial position for the partnership
is as follows:
Cash 50,000 Accounts payable 150,000
Inventory 360,000 S, capital 160,000
V, capital 45,000
I, capital 55,000
Total Assets 410,000 Total Liabilities and Capital 410,000

1. If the inventory is sold for 300,000, how much should S receive upon liquidation of the partnership?
a. 48,000 c. 136,000
b. 100,000 d. 160,000
2. If the inventory is sold for 180,000, how much should I receive upon liquidation of the partnership?
a. 28,000 c. 37,000
b. 32,000 d. 55,000

3. The partnership will be liquidated in instalments. As cash becomes available, it will be distributed to the
partners. If inventory costing 200,000 is sold for 140,000, how much cash should be distributed to each partner
at this time?
a. 56,000; 70,000; 14,000 c. 32,000; 0; 8,000
b. 16,000; 20,000; 4,000 d. 20,000; 0; 20,000

4. In accounting for the liquidation of a partnership, cash payments to partners after all non-partner creditors
claims have been satisfied, but before the final cash distribution, should be according to
a. The partners relative profit and loss sharing ratios
b. The final balances in partner capital accounts
c. The partners relative share of the gain or loss on liquidations
d. Safe payments computations

5. In a partnership liquidation, the final cash distribution to the partners should be made in accordance with the
a. The partners profit and loss sharing ratios
b. The final balances in partners loan capital accounts
c. Ratio of the capital contributions by the partners
d. Ratio of capital contributions less withdrawal by partners

6. After all non-cash assets have been converted into cash in the liquidation of the P and R partnership, the
ledger contains the following account balances
Debit Credit
Cash 47,000
Accounts payable 32,000
Loan payable to P 15,000
P, capital 7,000
R, capital 7,000
Available cash should be distributed with 32,000 going to accounts payable and
a. 15,000 to the loan payable to P c. 8,000 to P and 7,000 to R
b. 7,500 each to P and R d. 7,000 to P and 8,000 to R
7. On Jan 1, 2011, the partners of L, R and E, who share P/L in the ratio of 5:3:2, respectively, decided to liquidate
their partnership. On this date, the partnership condensed statement of financial position was as follows:
 RC AL KHWARIZMI INTERNATIONAL COLLEGE FOUNDATION, INC.
DEPARTMENT OF ACCOUNTANCY
PARTNERSHIP LIQUIDATION PART 2

Cash 50,000 Liabilities 60,000

Other assets 250,000 L capital 80,000
R, capital 90,000
E, capital 70,000
Total Assets 300,000 Total Liabilities and Capital 300,000
On Jan 15, 2011, the first cash sale of other assets with a carrying amount of 150,000 realized 120,000. Safe
instalment payments to the partners were made same date. How much cash should be distributed to each
partner?
a. 15,000; 51,000; 44,000 c. 55,000; 33,000; 22,000
b. 40,000; 45,000; 35,000 d. 60,000; 36,000; 24,000

8. The condensed statement of financial position is presented for B, C and D, who share profits and losses in the
ratio of 4:3:3, respectively:
Cash 100,000 Liabilities 150,000
Other assets 300,000 B, capital 40,000
C, capital 180,000
D, capital 30,000
Total Assets 400,000 Total Liabilities and Capital 400,000
The partners agreed to dissolve the partnership after selling the other assets for 200,000. Upon dissolution of the
partnership, B should have received
a. 0 c. 60,000
b. 40,000 d. 70,000

9. The process of terminating the business, selling the assets, paying the liabilities and disbursing remaining cash to
the partners is called
a. Dissolution c. Withdrawal
b. Formation of a new partnership d. Liquidation

10. A and M have shared P and L equally. Immediately prior to the final cash disbursement in the liquidation of
their partnership, the books showed:
Cash = Liabilities + A, Capital + M, Capital
100,000 0 60,000 40,000
a. 40,000 c. 50,000
b. 60,000 d. 100,000

11. Partners A and V have capital balances of 15,000 and 12,000, respectively. They share profits and losses in a 2:1
ratio. They sold all the partnership assets for 60,000, which resulted to a 6,000 gain on realization. The amount
that V should receive as her share of cash upon liquidation of the partnership is
a. 12,000 c. 23,000
b. 20,000 d. 14,000

12. N, C and S are partners sharing P/L equally. The partnership is being liquidated and after all assets are
converted to cash and all liabilities paid, there remained 52,000 cash available for distribution to the partners.
N and C have capital balances of 40,000 and 30,000, respectively. S has a debit balance of 18,000 in her
capital account. If S is personally insolvent, how much cash will be distributed to N?
a. 26,000 c. 40,000
b. 31,000 d. 34,000

13. The T, M and O company decided to liquidate its operations on Jan 1. The capital accounts and P/L
percentages on that date for the three partners are as follows:
 RC AL KHWARIZMI INTERNATIONAL COLLEGE FOUNDATION, INC.
DEPARTMENT OF ACCOUNTANCY
PARTNERSHIP LIQUIDATION PART 2

Balance in Capital
Partner P/L %
Accounts
T 10,000 20%
M 12,000 30%
O -4,000 50%
O is unable to contribute any assets to the partnership to cover her deficit. How much would be distributed to T
from liquidation?
a. 10,000 c. 6,000
b. 9,200 d. 8,400

14. The condensed statement of financial position is presented for Al and Am company, immediately prior to its
liquidation:
Cash 100,000 Liabilities 10,000
Other assets 50,000 Al, capital 50,000
Am, capital 90,000
Total Assets 150,000 Total Liabilities and Capital 150,000
If non-cash assets are sold for 90,000 and Al and Am share P/L equally, what will be the final cash distribution to Al?
a. 65,000 c. 70,000
b. 95,000 d. 50,000

15. Prior to partnership liquidation, a schedule of possible losses is frequently prepared to determine the amount of
cash that may be safely distributed to the partners. The schedule of possible losses
a. Consist of each partners capital account plus loan balance, divided by that partners profit and loss
sharing ratio
b. Shows the successive losses necessary to eliminate the capital accounts of partners (assuming no
contribution of personal assets by the partners)
c. Indicates the distribution of successive amounts of available cash to each partner
d. Assumes contribution of personal assets by partners unless there is a substantial presumption of personal
insolvency by the partners

The following are based on the Dec 31, 2010 statement of financial position of the M, C and I partnership:
Cash 20,000
Inventory 120,000
Property and Equipment, net 300,000
Accounts payable 170,000
M, capital (50%) 100,000
C, capital (30%) 90,000
I, capital (20%) 80,000
On Jan 1, 2011, the partners decided to liquidate the partnership. They agreed that all cash should be distributed
as soon as it becomes available. A cash distribution plan is necessary to facilitate the distribution of cash.

16. The distribution plan should be based on relative vulnerability to losses. For the M, C and I partnership, the
relative vulnerability should show that
a. M is the most vulnerable c. C is the most vulnerable
b. M is the least vulnerable d. C is the least vulnerable

17. If cash of 180,000, including 20,000 cash on hand, becomes available, it should be distributed in accordance
with a cash priority plan. How much cash should be distributed to the creditors and partners, respectively?
a. 170,000 to creditors; 10,000 to C
b. 170,000 to creditors; 10,000 to M
c. 170,000 to creditors; 10,000 to I
d. 170,000 to creditors; 5,000 to M; 3,000 to C; 2,000 to I
 RC AL KHWARIZMI INTERNATIONAL COLLEGE FOUNDATION, INC.
DEPARTMENT OF ACCOUNTANCY
PARTNERSHIP LIQUIDATION PART 2

18. If cash of 220,000, including 20,000 cash on hand, becomes available, it should be distributed first to settle the
accounts payable and then to
a. 25,000 to M; 15,000 to C and 10,000 to I c. 10,000 to M; 32,000 to C and 8,000 to I
b. 0 to M; 26,000 to C and 24,000 to I d. 0 to M; 18,000 to C and 32,000 to I

As of Dec 31, 2011, the books of V, G and C partnership showed capital balances of V, 40,000; G, 25,000 and C,
5,000. The partners P/L ratio was 3:2:1, respectively. The partners decided to dissolve and liquidate. They sold all
the non-cash assets for 37,000 cash. After settlement of all liabilities amounting to 12,000, they still have 28,000 cash
left for distribution.

19. The loss on realization of the non-cash assets was

a. 42,000 c. 45,000
b. 40,000 d. 21,000

20. Assuming that any debit balance of partners capital is uncollectible, the share of V on 28,000 cash for
distribution was:
a. 19,000 c. 18,000
b. 16,000 d. 17,800
The following statement of financial position is presented for the partnership of V, P and Y who share profits and
losses in the ratio of 5:3:2, respectively.

Cash 120,000 Liabilities 280,000

Other Assets 1,080,000 V, capital 560,000
P, capital 320,000
Y, capital 40,000
1,200,000 1,200,000

21. Assume that the partners decided to liquidate the partnership. If the other assets were sold for 800,000, how
should the available cash be distributed?
a. 280,000 to V; 320,000 to P; 40,000 to Y c. 412,000 to V; 228,000 to P; 0 to Y
b. 324,000 to V; 236,000 to P; 16,000 to Y d. 410,000 to V; 230,000 to P; 0 to Y

From the records of the DTA partnership, answer question #4 to 6:

DTA Partnership
Statement of Financial Position
Dec 31, 2011

Assets
Cash 2,000
Other Assets 28,000
Total 30,000

Liabilities and Capital

De Mesa, Loan 2,500
De Mesa, Capital 12,500
Tudtud, Capital 7,000
Apostol, Capital 3,000
Total 25,000

Profit and loss ratio is 3:2:1 for De Mesa, Tudtud and Apsotol, respectively. Cash is distributed as assets are realized.
Other assets were realized as follows:
 RC AL KHWARIZMI INTERNATIONAL COLLEGE FOUNDATION, INC.
DEPARTMENT OF ACCOUNTANCY
PARTNERSHIP LIQUIDATION PART 2

Date Cash Received Book Value

Jan 2011 6,000 9,000
Feb 2011 3,500 7,700
Mar 2011 12,500 11,300

22. The total loss to De Mesa is:

a. 3,000 c. 1,000
b. 2,000 d. 0

23. Total cash received by Tudtud is:

a. 2,000 c. 5,000
b. 1,500 d. 0

24. Cash received by Apostol in January is:

a. 200 c. 0
b. 1,000 d. 500

25. R, C and P have capital balances of 40,000, 50,000 and 18,000, respectively and a profit sharing ratio of 4:2:1,
respectively. If R received 8,000 upon liquidation, the total amount received by all the partners was:
a. 108,000 c. 24,000
b. 56,000 d. 52,000

26. Assume the same facts in #7 above except that R received 26,000 as a result of the liquidation, P received as
part of the liquidation:
a. 26,000 c. 14,500
b. 18,000 d. 14,000

27. The condensed statement of financial position of R, T and D partnership as of Mar 31, 2011 follows:
Assets
Cash 28,000
Other Assets 265,000
Total 293,000

Liabilities and Capital

Liabilities 48,000
R, Capital 95,000
T, Capital 80,000
D, Capital 70,000
Total 293,000
P/L ratio is 50:25:25, respectively. The partners voted to dissolve the partnership and liquidate by selling assets in
instalments. 70,000 was realized on the first cash sale of other non-cash assets which has a book value of
150,000. After settlement with creditors, all cash available was distributed to partners. How much cash did D
receive?
a. 10,500 c. 32,500
b. 20,000 d. 21,250
C, S and B are partners sharing P/L in the ratio of 4:3:3, respectively. The condensed statement of financial position
of CSB partnership as of Dec 31, 2011 is:
 RC AL KHWARIZMI INTERNATIONAL COLLEGE FOUNDATION, INC.
DEPARTMENT OF ACCOUNTANCY
PARTNERSHIP LIQUIDATION PART 2

Assets Liabilities and Capital

Cash 50,000 Liabilities 40,000
Other Assets 130,000 C, Capital 60,000
S, Capital 40,000
B, Capital 40,000
Total 180,000 Total 180,000

28. The CSB partnership was dissolved and liquidated by instalments. The first realization of 40,000 cash was on the
sale of other assets with book value of 80,000. After the payment of the liabilities, the cash available is
distributed to C, S and B, respectively as follows:
a. 36,000; 27,000; 27,000 c. 44,000; 28,000; 28,000
b. 16,000; 12,000; 12,000 d. 24,000; 13,000; 13,000

29. The condensed statement of financial position of B, A and I who share in the P/L in the ratio of 5:3:2,
respectively, is as follows:
Assets Liabilities and Capital
Cash 30,000 Liabilities 50,000
Other Assets 320,000 B, Capital 80,000
A, Capital 115,000
I, Capital 105,000
Total 350,000 Total 350,000
The partners agreed to liquidate the partnership by instalment. Immediately there was a realization of 100,000
cash in selling other assets with book value of 150,000. On the cash availability, priority is the payment of the
liabilities and the balance is not to be distributed to the partners. How should the remaining cash be
distributed?
a. 50,000; 30,000 and 20,000 respectively c. 0; 48,000 and 32,000 respectively
b. 40,000; 24,000 and 16,000 respectively d. 0, 31,000 and 49,000 respectively

30. Ri, Co and Re are partners sharing P/L in the ratio of 5:3:2, respectively. The condensed statement of financial
position of RCR partnership as of Dec 31, 2011 is:

Assets Liabilities and Capital

Cash 40,000 Liabilities 60,000
Other Assets 210,000 Ri, Capital 48,000
Co, Capital 72,000
Re, Capital 70,000
Total 250,000 Total 250,000

The RCR partnership was dissolved and liquidated by instalments. The first realization of 90,000 cash was on the
sale of other assets with book value of 120,000. How much should be distributed to each partner after this sale?
a. Ri 0; Co 28,800; Re 41,200 c. Ri 35,000; Co 21,000; Re 14,000
b. Ri 0; Co 30,000; Re 40,000 d. Ri 45,000; Co 27,000; Re 18,000