Partnership Liquidation Lumpsum January 23, 2017 Partnership Liquidation Lumpsum January 23, 2017

Problem A: A, B and C are partners in a partnership and share profits and Problem A: A, B and C are partners in a partnership and share profits and
losses 40%, 40% and 20% respectively. The partners have agreed to losses 40%, 40% and 20% respectively. The partners have agreed to
liquidate the partnership and anticipate that liquidation expenses will liquidate the partnership and anticipate that liquidation expenses will
total P14,000. Prior to the liquidation, the partnership balance sheet total P14,000. Prior to the liquidation, the partnership balance sheet
reflects the following book values: reflects the following book values:
Cash Php 25,000 Cash Php 25,000
Noncash assets 200,000 Noncash assets 200,000
Note payable to C 12,000 Note payable to C 12,000
Other liabilities 165,000 Other liabilities 165,000
A, Capital 40,000 A, Capital 40,000
B, Capital 18,000 B, Capital 18,000
C, Capital (10,000) C, Capital (10,000)
The actual liquidation expenses are P20,000 and that noncash assets are The actual liquidation expenses are P20,000 and that noncash assets are
sold for P180,000. sold for P180,000.
Required: Required:
1. Payment to A 1. Payment to A
2. Payment to B 2. Payment to B
3. Payment to C 3. Payment to C
4. Additional investment by the partners 4. Additional investment by the partners

Problem B: White, Sands and Luke has the ffg. capital balances and profit Problem B: White, Sands and Luke has the ffg. capital balances and profit
and loss ratios; P50,000 (30%), P100,000 (20%) and P200,000 (50%). If and loss ratios; P50,000 (30%), P100,000 (20%) and P200,000 (50%). If
the partnership is to be liquidated and P150,000 becomes available for the partnership is to be liquidated and P150,000 becomes available for
the partners immediately. the partners immediately.
Required: Required:
5. Payment to White 5. Payment to White
6. Payment to Sands 6. Payment to Sands
7. Payment to Luke 7. Payment to Luke

Problem C: A local partnership was considering the possibility of Problem C: A local partnership was considering the possibility of
liquidation since one of the partners, D, was insolvent. Capital balances liquidation since one of the partners, D, was insolvent. Capital balances
at that time were as follows. Profits and losses were divided on a 4:2:2:2 at that time were as follows. Profits and losses were divided on a 4:2:2:2
basis, respectively. basis, respectively.
D, Capital P 60,000 E, Capital P 17,000 D, Capital P 60,000 E, Capital P 17,000
L, Capital 67,000 T, Capital 96,000 L, Capital 67,000 T, Capital 96,000
D creditors filed a P25,000 claim against partnership’s assets. At that D creditors filed a P25,000 claim against partnership’s assets. At that
time, the partnership held assets reported at P360,000 and liabilities at time, the partnership held assets reported at P360,000 and liabilities at
P120,000. If the assets could be sold for P228,000. P120,000. If the assets could be sold for P228,000.
8. What is the minimum amount that D’s creditors would have 8. What is the minimum amount that D’s creditors would have
received? received?

Problem D: A, B and C partnership began the process of liquidation with Problem D: A, B and C partnership began the process of liquidation with
the ffg. accounts: the ffg. accounts:
A, Capital P80,000 C, Capital P130,000 A, Capital P80,000 C, Capital P130,000
B, Capital 90,000 Cash 20,000 B, Capital 90,000 Cash 20,000
Liabilities 150,000 Noncash assets 430,000 Liabilities 150,000 Noncash assets 430,000
A, B and C share profits and losses in a ratio of 3:2:5. Liquidation expenses A, B and C share profits and losses in a ratio of 3:2:5. Liquidation expenses
are expected to be P12,000. After the liquidation expenses of P12,000 are expected to be P12,000. After the liquidation expenses of P12,000
had been paid and the noncash assets sold. C had a deficit of P8,000. had been paid and the noncash assets sold. C had a deficit of P8,000.
9. At what amount were the noncash assets sold? 9. At what amount were the noncash assets sold?
10. Result of Realization of Noncash asset 10. Result of Realization of Noncash asset
11. Payment to A 11. Payment to A
12. Payment to B 12. Payment to B
13. Payment to C 13. Payment to C
14. Who among the partners made an additional investment? 14. Who among the partners made an additional investment?
15. Total amount of additional investments 15. Total amount of additional investments

Isaiah 55:8-9 Isaiah 55:8-9

"For My thoughts are not your thoughts, Nor are your ways My ways," says the "For My thoughts are not your thoughts, Nor are your ways My ways," says the
LORD. "For as the heavens are higher than the earth, So are My ways higher LORD. "For as the heavens are higher than the earth, So are My ways higher
than your ways, And My thoughts than your thoughts.(NKJV) than your ways, And My thoughts than your thoughts.(NKJV)

- For God is the source of wisdom, Pray to Him. Don’t quit, for He is - For God is the source of wisdom, Pray to Him. Don’t quit, for He is
with You. Believe and you will receive. with You. Believe and you will receive.
God bless You. God bless You.