PARTNERSHIP LIQUIDATION

On June 1, 2020, A and B of AB Partnership decided to liquidate their partnership. At the time of liquidation, the statement of financial position accounts consisted of:

Cash – P25,000; Non-cash assets – PP600,000; Liabilities – P125,000; A Capital – P225,000; B Capital – P275,000. A and B share profits and losses in the capital ratio. A is personally insolvent. Non cash assets were sold for P350,000. How much cash should B receive?

• P275,000

• P137,500

• (P25,000)

• 0

El, Fe, Gi and Ho are partners with capitals of P11,000; P10,300; P13,700 and P9,000 respectively. El has a loan balance of P2,000. Profits are shared in the ratio of 4:3:2:1 respectively. Assets are sold and liabilities are paid and cash of P12,000 remains. Who got the highest cash distribution?

• El

• Fe

• Gi

• Ho

As of December 31, 2020, the books of TUV Partnership showed capital balances of T – P40,000; U – P25,000; V – P5,000. The partners’ profits and loss ratio was 3:2:1, respectively. The partners decided to dissolve and liquidate. They sold all non-cash assets for P37,000 cash. After settlement of all liabilities amounting to P12,000, they still have P28,000 cash left for distribution. The loss on realization of the non-cash assets was:

• P28,000

• P40,000

• P42,000

• P45,000

Statement 1: After the distribution of cash to partners in a partnership liquidation, the business would have zero assets, liabilities and capital.

Statement 2: Liquidation expenses which are incurred to facilitate the immediate realization of non-cash assets affect cash but not capital.

• True; True

• True; False

• False; True

• False; False

The order of partnership liquidation process is:

• sell assets, disburse cash to partners, pay liabilities

• disburse cash to partners, pay liabilities, sell assets

• pay liabilities, sell assets, disburse cash to partners

• sell assets, pay liabilities, disburse cash to partners

Ex and Why share earnings in 60:40 ratio. They have decided to liquidate their partnership. A portion of the assets has been sold but other assets with carrying amount of P84,000 still must be realized. All liabilities have been paid, and cash of P40,000 is available for distribution to partners. The capital accounts show balances of Ex – P80,000 and Why – P44,000. Determine how should the P40,000 cash be divided.

• Ex – P29,600; Why – P10,400

• Ex – P80,000; Why – P40,000

• Ex - P38,000; Why - P2,000

• Ex - P19,200; Why – P0

The statement of financial position of the AbCeeDee Partnership as of December 31, 2019 follows:

Cash P 20,000; Other Assets 280,000; Total AssetsP300,000

Liabilities P 50,000; Ab, Loan 25,000; Ab,Capital 125,000;

Cee, Capital 70,000; Dee, Capital 30,000; Total Liabilities and Capital P300,000

Profits and loss ratio is 3:2:1 respectively. In January 2020, assets with book value of P60,000 were sold for P90,000. In February 2020, assets with book value of P35,000 were sold for P77,000. In March 2020, assets with book value of 125,000 were sold for 113,000.

Cash is distributed as assets are realized. The total loss to Ab is:

• P10,000

• P20,000

• P30,000

• P60,000

The statement of financial position of the AbCeeDee Partnership as of December 31, 2019 follows:

Cash P 20,000; Other Assets 280,000; Total Assets P300,000

Liabilities P 50,000; Ab, Loan 25,000; Ab, Capital 125,000; Cee, Capital 70,000; Dee, Capital 30,000; Total Liabilities and Capital P300,000

Profits and loss ratio is 3:2:1 respectively. In January 2020, assets with book value of P60,000 were sold for P90,000. In February 2020, assets with book value of P35,000 were sold for P77,000. In March 2020, assets with book value of 125,000 were sold for 113,000.

The total cash received by Cee is:

• P15,000

• P20,000

• P50,000

• P70,000

The statement of financial position of the AbCeeDee Partnership as of December 31, 2019 follows:

Cash P 20,000; Other Assets 280,000; Total Assets P300,000

Liabilities P 50,000; Ab, Loan 25,000; Ab, Capital 125,000; Cee, Capital 70,000; Dee, Capital 30,000; Total Liabilities and Capital P300,000

Profits and loss ratio is 3:2:1 respectively. In January 2020, assets with book value of P60,000 were sold for P90,000. In February 2020, assets with book value of P35,000 were sold for P77,000. In March 2020, assets with book value of 125,000 were sold for 113,000.

The cash received by Dee in January is:

• P0

• P200

• P500

• P1,000

In an installment liquidation, the final cash distribution to the partners should be made in accordance with the:

• ratio of capital contributions less withdrawals by partners

• ratio of the original capital contributions plus additional investment

• balances of the partners’ loan and capital accounts

• partners’ profit and loss sharing ratio