CC admits DD for partnership interest in his business.

The balance sheet accounts of CC on November 30,20x4 prior to the adm

Debits Credits
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P ?
Accounts receivable . . . . . . . . . . . . . . . . . . 96,000
Merchandise inventory . . . . . . . . . . . . . . . . 144,000
Accounts payable . . . . . . . . . . . . . . . . . . . . P 49,600
CC, capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

It is agreed that for purposes of establishing CC's interest, the following adjustments should be made:
1 An allowance for doubtful accounts of 4% of accounts receivable is to be established.
2 The merchandise inventory is to be valued at P160,000.
3 Prepaid expenses of P5,200 and accrued expenses of P3,200 are to be recognized.

DD is to invest cash of P113,640 to give him a one-third (1/3) interest in the firm.

4 The balance of the capital of CC before the adjustments is:

5 The total assets of the partnership after the formation is:

SOLUTION
UNADJUSTED CAPITAL OF CC 213,120 ANS. NO.4 TOTAL ASSETS
ADJ: A=L+C
ALLOW FOR B/D -3840 ASSETS LIABILITIES
MERCHANDISE INVENTORY 16000 ANS. NO.5 393,720 52,800
PREPAID EXPENSES 5200
ACCRUED EXPENSES -3200
ADJUSTED CAPITAL OF CC 227,280

ADJUSTED CAPITAL
CC CAPITAL 227,280
DD CAPITAL 113,640
TOTAL CAPITAL 113640/1/3 340,920

NOS. 15 AND 16
Tom, Dick, and Harry are partners in an equipment leasing business that has not been able to generate the type
of revenue expected by the partners. They share profits and losses in a ratio of 5:3:2. They have decided to liquidate
the business and have sold all the assets except for one piece of heavy machinery. All partnership liabilities have
been settled and all the partners are personally insolvent. The machinery has a book value of P85,000, and the partners have c
Tom, capital . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Dick, capital . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Harry, capital . . . . . . . . . . . . . . . . . . . . . . . . 15,000

15 What amount of cash will each partner receive as a liquidating distribution if the mach
16 What amount of cash will each partner receive as a liquidating distribution if the mach
 TOM DICK HARRY TOTAL
CAPITA BALANCES 50,000 20,000 15,000 85,000
TOTAL LOSS - 9,000.0 - 5,400 - 3,600.0 - 18,000
CASH AVAILABLE FOR DISTRIBUTION 41,000 14,600 11,400 67,000 ANSWER FOR NO.15

FOR NOS. 18 AND 19

The partners of the M & N Partnership started liquidating their business on July 1, 202
M and 60% to N. The balance sheet of the partnership appeared as follows:
M & N Partnership
Balance Sheet - July 1, 2021

Assets Liabilities & Equity

Cash 8, 800 Accounts payable 32, 400
Receivable 22, 400 M, capital P31, 000
Inventory 39, 400 M, drawing ( 5, 400) 25,600
Equipment P65, 200 N, capital P33, 200
Accumulated N, drawing 200 33,000
Depreciation (30, 800) 34, 400 N, loan 14, 000
Total P105, 000 Total P105, 000

During the month of July, the partners collected of the receivables with no loss. The partners also sold during the month the e

18. How much of the cash was paid to M's capital on July 31, 2021? 18 9,440
19. How much of the cash was paid to N's capital on July 31, 2021? 19 22,760

SOLUTION
COMPUTATION OF CASH AVAILABLE FOR DISTRIBUTION
CASH BEGINNING 8,800 CAPITA BALANCES
REALIZATION: LOAN
RECEIVABLES 22,400 TOTAL PARTNERS INTEREST
INVENTORY 33,400 TOTAL LOSS
TOTAL CASH 64,600 CASH AVAILABLE FOR DISTRIBUTION
LESS: LIABILITIES - 32,400
CASH AVAILABLE FOR DISTRIBUTION 32,200

FOR NOS. 20 AND 21

RR, SS and TT decided to dissolve the partnership on November 30, 2011. their capital balances and profit ratio on this date, fo

Capital Bal Profit Ratio

RR P50, 000 40%
SS 60, 000 30%
TT 20, 000 30%

The net income from January 1, to November 30, 2011 is P45, 000. also, on this date, cash and liabilities are P40, 000 and P90,
 20 How much must be realized from the sale of the firm's non-cash assets?
21 How much cash receive by SS and TT upon liquidation?
40 30 30
RR SS TT TOTAL
CAPITA BALANCES 50,000 60,000 20,000 130,000
NET INCOME 18,000 13,500 13,500 45,000
CAPITAL BALANCES AFTER NI 68,000 73,500 33,500 175,000
TOTAL LOSS - 13,000 - 9,750 - 9,750 - 32,500
CASH AVAILABLE FOR DISTRIBUTION 55,000 63,750 23,750 142,500
ANS. NO.21

23 A local partnership was considering the possibility of liquidation since one of the partn
Capital balances at that time were as follows. Profits and losses were divided on a 4:2:
Ding, capital 60, 000
Laurel, capital 67, 000
Ezzard, capital 17, 000
Tillman, capital 96, 000

Ding's creditors filed a P25, 000 claim against the partnership's assets. At that time, the partnership held assets reported at P3
if the assets could be sold for P230, 000, what is the minimum amount that Ding's creditors would have received?
DING LAUREL EZZARD TILLMAN TOTAL
CAPITA BALANCES 60,000 67,000 17,000 96,000 240,000
TOTAL LOSS - 52,000 - 26,000 - 26,000 - 26,000 - 130,000
CASH AVAILABLE FOR DISTRIBUTION 8,000 41,000 - 9,000 70,000 110,000
ABSORPTION -4500 2250 9000 2250
CASH PAYMENT TO PARTNERS 3,500 43,250 - 72,250 110,000
ANS

NO. 25
Cash P 90, 000 Liabilities
Non-cash assets 300, 000 Perry, capital
Quincy, capitalP170, 000
_______ Renquist, capit70, 000
P390, 000 50, 000
100, 000
Perry, Quincy and Renquist had shared profits and losses in a rat P390, 000
Any amount in excess of ________

PERRY QUINCY
70, 000 50, 000
20% 40% RENQUIST PERRY QUINCY
 350000 125000 100, 000
100,000 40%
250000 250,000
125000 20,000
250000
125000 25,000

26 AA, BB, and Cc are partners in ABC partnership and share profits and losses 50%, 30%
The partners have agreed to liquidate the partnership and some liquidation expenses
the partnership balance sheet reflects the following book values:
Cash P 25, 200
Non-cash assets 297, 600
Notes payable to Cc 38, 400
Other liabilities 184, 800
AA, capital 72, 000
BB, capital deficit ( 12, 000)
CC, capital 39, 600

Assuming that the actual liquidation expenses are P16, 800 and that the non-cash assets with a book value of P250, 000 are so

SOLUTION 50 30 20
AA BB CC TOTAL
CAPITA BALANCES 72,000 -12000 39600 99,600
ADD: LOAN 38400 38,400
TOTAL PARTNERS INTEREST 72,000 -12,000 78,000 138,000
TOTAL LOSS - 49,200 - 29,520 - 19,680 - 98,400
CASH AVAILABLE FOR DISTRIBUTION 22,800 -41,520 58,320 39,600
ABSORPTION - 29,657 41520 - 11,863
PAYMENT TO PARTNERS -6,857 0 46,457
ABSORPTION 6,857 -6,857
PAYMENT TO PARTNER 0 0 39,600 ANS
vember 30,20x4 prior to the admission of DD are as follows:

receivable is to be established.

3,200 are to be recognized.

CAPITAL
340,920

generate the type

e decided to liquidate
hip liabilities have
85,000, and the partners have capital account balances as follows:

uidating distribution if the machinery is sold for P67,000? 15 TOM, 41,000 / DICK, 14,600 / HARRY
uidating distribution if the machinery is sold for P20,100? 16 TOM, 17,550 / DICK, 530 / HARRY, 2
 TOM DICK HARRY TOTAL
CAPITA BALA 50,000 20,000 15,000 85,000
TOTAL LOSS - 32,450 - 19,470 - 12,980 - 64,900
SWER FOR NO.15 CASH AVAILAB 17,550 530 2,020 20,100 ANSWER FOR NO.16

ting their business on July 1, 2021, at which time the partners were sharing profits and losses 40% to
appeared as follows:

lso sold during the month the entire inventory on which they realized a total of P33, 400.

ANS
ANS

M N TOTAL
25,600 33,000 58,600
14,000 14,000
25,600 47,000 72,600
- 16,160 - 24,240 - 40,400
9,440 22,760 32,200
ANS.NO.18 ANS. NO.19

s and profit ratio on this date, follow:

liabilities are P40, 000 and P90, 000 respectively. For RR to receive P55, 000 in full settlement of his interest in the firm,
 non-cash assets? 20 192,500 ANS
21 SS, 63,750/ TT, 23,750 ANS

SOLUTION FOR NO. 20

A= L+C
ASSETS LIABILITIES CAPITAL
265,000 90,000 175,000
CASH 40,000
NCA 225,000 NCA 225,000
TOTAL ASSETS 265,000 PROCEED FROM SALE OF NCA 192,500 ANS. NO,20
LOSS ON SALE - 32,500

quidation since one of the partners is solvent (Tillman) and the others are insolvent.
nd losses were divided on a 4:2:2:2 basis, respectively.

rship held assets reported at P360, 000 and liabilities of P120, 000.
ould have received?     3,500 ANS

COMPUTATION OF CASH AVAILABLE FOR DISTRIBUTION

CASH PROCEED FROM REALIZATION OF NCA 230,000

LESS: LIABILITIES - 120,000
CASH AVAILABLE FOR DISTRIBUTION 110,000

RENQUIST 170,000 185,000

 10,000
20,000
25,000
50,000
275,000 CASH
50,000 90,000 PROCEED NCA
185,000

are profits and losses 50%, 30% and 20%, respectively.

and some liquidation expenses to be incurred. Prior to the liquidation,

a book value of P250, 000 are sold for P216, 000. How much cash should CC receive?      39,600

COMPUTATION OF CASH AVAILABLE FOR DISTRIBUTION

BEGINNING CASH 25,200
REALIZATION 216,000
LESS: LIABILITIES - 184,800
LIQUIDATION EXPENSE - 16,800
CASH AVAILABLE FOR DISTRIBUTION 39,600
000 / DICK, 14,600 / HARRY, 11.400
550 / DICK, 530 / HARRY, 2,020
ANS