Advanced Accounting Chapter 4

68
Chapter 4
CHAPTER 4
MULTIPLE CHOICE
4-1: a
Capital balances before realization
Loss on liquidation, P40,000
Cash distribution
PAR
P 20,000
( 20,000)
P
BOOGIE
P 16,000
( 12,000)
P 4,000
BIRDIE
P 10,000
( 8,000)
P 2,000
Capital balances before liquidation

Gain of P10,000 (150,000-140,000)
Cash distribution
PING
P 50,000
__6,000
P 56,000
PANG
P 50,000
__2,000
P 52,000
PONG
P 10,000
__2,000
P 12,000

Loss of P40,000 (P140,000-P100,000)
Cash distribution
PING
P 50,000
( 24,000)
P 26,000
PANG
P 50,000
( 8,000)
P 42,000
PONG
P 10,000
( 8,000)
P 2,000

Loss of P70,000 (P140,000-P70,000)
Balances
Absorption of Pong's deficiency, 6:2
Cash distribution
PING
P 50,000
( 42,000)
P8,000
( 3,000)
P 5,000
PANG
P 50,000
( 14,000)
P 36,000
( 1,000)
P 35,000
PONG
P 10,000
( 14,000)
( 4,000)
__4,000
COLT
MARK
Capital balances before liquidation (net of loans)P290,000 P200,000
Loss of P130,000, 4:3:3
( 52,000)
( 39,000)
Cash distribution
P238,000
P161,000
CLOCK
P220,000
( 39,000)
P181,000
4-2: c
4-3: b
4-4: a
4-5: b
4-6: c
Loss of P60,000, 40:50:10
Cash distribution
JONAS
P160,000
( 24,000)
P136,000
CARLOS
P 45,000
( 20,000)
P 25,000
TOMAS
P 55,000
( 6,000)
P 49,000
Partnership Liquidation
4-7: a
Loss of P100,000, 4:3:3
Cash distribution
ARIEL
P40,000
( 40,000)
P
BERT
P180,000
( 30,000)
P150,000
NORY
P23,000
OSCAR
P 13,500
15,000
( 30,900)
P 7,100
( 20,600)
( P7,100)
CESAR
P 30,000
( 30,000)
P
4-8: b
Additional investment by Nory for
the unpaid liabilities (33,000-18,000)
Loss on realization (schedule 1)
Payment by Oscar to Nory
Schedule 1
Total capital before liquidation
Unpaid liabilities
Total loss on realization
P 36,500
15,000
P 51,500
4-9: d
Capital balances before liquidation (net)
Loss on realization (schedule 1) P27,500
Balances, cash distribution
BLACK
P99,000
( 13,750)
P85,250
Schedule 1:
Capital balances of white (net)
Cash received by White
White's share of total loss (30%)
WHITE
P 91,500
( 27,500)
P 64,000
GREEN
P138,000
_( 5,500)
P132,500
P 91,500
_83,250
P 8,250
Total loss on realization (P8,250/39%)
P 27,500
4-10: c
Loss on realization, P63,600
Balances
Unrecorded liabilities, P500
Balances
Elimination of Nora's deficiency
Payment to partners
ANA
P27,000
( 25,320)
P 1,680
( 200)
P 1,480
( 1,380)
P 100
EVA
P 43,000
( 25,320)
P 17,680
( 200)
P 17,480
( 1,380)
P 16,100
NORA
P 10,000
( 12,660)
( 2,660)
( 100)
( 2,760)
__2,760
P

Loss on realization (schedule 1) P45,000
ARIES
P33,500
( 22,500)
LEO
P 49,000
( 13,500)
TAURUS
P 36,500
( 9,000)
4-11: d
Payment to partners
P11,000
P 35,500
P 27,500
70
Chapter 4
Schedule 1:
Taurus capital (net)
Payment to Taurus
Share of total loss (20%)
P36,500
( 27,500)
P 9,000
Total loss on realization (9,000/20%)
P45,000
4-12: c
OLGA
Capital balances, June 11
P 4,200
Net loss from operation (squeeze)
( 2,800)
Capital balances, August 30 before
liquidation (48,500-25,600)
P 1,400
Loss on realization (47,500-30,000)
( 5,000)
Balances
TOTAL
MONA
NORA
P32,700
P15,000
P13,500
( 9,800)
( 4,200)
( 2,800)
P22,900
P10,800
P10,700
( 17,500)
( 7,500)
( 5,000)
P 5,400
P 3,300
P 5,700
_1,500
_____
_____
P 6,900
P 3,300
P 5,700
00)
Additional investment by Olga
_1,500
Balances
00)
Elimination of Olga's deficiency
_2,100
Payment to partners
______
( 1,260)
( 840)
P 6,900
P 2,040
P 4,860P

Operating loss, P21,000
Drawings
Loans
Loss on realization, P12,000
Balances
Absorption of Tita's deficiency
Payment to Nora
RITA
P49,000
( 3,500)
( 10,000)
( 2,000)
P33,500
__1,500
P32,000
SARA
P18,000
( 7,000)
( 15,000)
8,000
( 4,000)
P
_____
P
TITA
P10,000
( 10,500)
( 20,000)
25,000
( 6,000)
( 1,500)
_1,500
P
CLARO
PEDRO
P45,000
P27,000
4-13: b
4-14: a
ANDRO
P50,000
Loss on realization
Accounts Receivable (P50,000 X 40%)
Investment (P30,000 - P20,000)
Equipment (P60,000-P30,000)
Total
P20,000
10,000
_30,000
P60,000
( 24,000)
( 24,000)
P21,000
P 3,000
TOTAL
P47,500
MONA
P28,500
( 38,500)
( 23,100)
P 9,000
P 5,400P
000)
Payment to partners
P38,000
4-15: c
Capital balances before liquidation (inclusive loans)
P19,000
Loss on realization, (squeeze)
( 15,400)
Capital balances - cash distribution
3,600
Cash after realization

Less Liabilities (P36,000-P7,500)
Total capital after realization
P 37,500
( 28,500)
P 9,000
4-16: a
FF capital before distribution of net loss
Add: share of net loss (P10,000 X 40%)
FF capital before liquidation
Cash settlement to FF
FF share of total loss on realization (40%)
P100,000
_( 4,000)
96,000
( 80,000)
P 16,000
Total loss on realization (P16,000/40%)
P 40,000
Total capital before liquidation (P260,000-P10,000)

Add: Liabilities
Total assets
Cash before liquidation
Non-cash assets
Loss on realization
Cash to be realized
P250,000
_100,000
P350,000
( 50,000)
P300,000
( 40,000)
P260,000
4-17: d
Capital balances before realization (net)
P62,500
Loss on realization (squeeze)
( 25,000)
TOTAL
P100,000
CC
P 15,000
DD
P22,500
( 125,000)
( 62,500)
( 37,500)
Capital balances after realization

(liabilities-unpaid)
P37,500
Elimination of CC's deficiency
( 19,000)
Balances
P18,500
Investment by DD
_____
Payment to EE
P18,500
(P 25,000)
( 47,500)
( 15,000)
_______
__47,500
( 28,500)
(P43,500)
(P 25,000)
__43,500
______
_43,500
P 18,500
4-18: d
Total capital before liquidation
Liabilities
Total assets
Less: Cash balance before realization
Cash after payment of liabilities
payment of liabilities
Cash realized
Non-cash asset
Less: cash realized
Loss on realization
P 30,000
__1,500
P 31,500
P 11,100
1,500
( 11,600)
__1,000
P 30,500
_11,600
P 18,900
72
Chapter 4
4-19: d
TOTAL
Capital balances
P 80,000
Salary of LL (P600 X 8 months)
___4,800
P 84,800
Loss on realization
Balances
Additional investment by NN
Payment to partners
LL
MM
NN
P 50,000
P 20,000
P 10,000
__4,800
_______
_______
P 54,800
P 20,000
P 10,000
( 44,880)
P 9,920
______
P 9,920
( 14,960)
P 5,040
_____
P 5,040
( 14,960)
(P 4,960)
__4,960
P
4-20: b
KK's total interest (P60,000-P10,000)
Less: Cash to be paid to KK
P 50,000
__10,000
Share of total loss (1/3)
P 40,000
Total loss on realization (P40,000/1/3)
P120,000
Total assets:
Total interest of the partners before liquidation:
JJ (P70,000+P30,000+P10,000)
KK (P60,000-P10,000)
LL (P30,000+P10,000)
Divide by
Total
Loss on realization
Cash to be realized
P110,000
50,000
__40,000
P200,000
______50%
P400,000
_120,000
P280,000
4-21: a
Capital balances, July 1
P 25,000
Advances to NN, August 1
OO Loan, September 1
Interest, December 31 (6%)
NN (5 mos.)
OO (4 mos.)
Compensation to PP
___2,500
P 27,500
( 17,550)
Cash distribution
TOTAL
P 75,000
NN
P 25,000
( 10,000)
20,000
( 10,000)
250)
400
__2,500
OO
P 25,000
20,000
250)
_______
400
_______
P 87,650
P 14,750
P 45,400
_56,250
( 17,550)
( 17,550)
P 35,000
( 2,800)
P 27,850
9,950
NN should pay P2,800 and this is to be divided to OO & PP equally or P1,400 each.
4-22: a
P350,000
_500,000
(unpaid liabilities)
( 150,000)
Elimination of AS's deficiency
P150,000
TOTAL
P 950,000
PG
P350,000
JR
P250,000
( 1,000,000)
__20,000
( 200,000)
(P 50,000)
P 50,000
P 50,000
_______
( 90,000)
( 60,000)
Cash to be absorbed
(P 40,000)
(P 10,000)
RM
P500,000
( 490,000)
P 10,000
ST
P825,000
( 735,000)
P 90,000
TOTAL
P 27,500
LT
P 20,000
AM
P 5,000
__37,500
_18,750
__-9,375
P 65,000
P 38,750
P 14,375
AG
P 420,000
BM
P375,000
CP
P205,000
( 300,000)
( 300,000)
(200,000)
P 120,000
P 75,000
P 5,000
4-23: a
Loss on realization, P1,225,000
Payment to Partners
4-24: a
P 2,500
Gain on realization (squeeze)
__9,375
P 11,875
4-25: c
P150,000
Loss on realization, P1,000,000
(200,000)
Balances
P(50,000)
Additional investment by DJ
50,000
4-26: a
Settlement to Uy
Uy capital before liquidation (net):
Uy capital
Receivable from Uy
Loss of Uy (50%)
P351,500
P553,500
( 132,000)
Total loss on realization (P70,000 50%)

CB before liquidation
Receivable from Uy
Loan to Wi
Salary payable to Vi
Interest before realization
Loss on realization
Settlement to partners
74
__Uy__
553,500
(132,000)
P140,000
__Vi__
452,500
__Wi__
486,000
( 40,500)
421,500
( 70,000)
351,500
421,500
P 70,000
135,000
587,500
( 42,000)
545,500
445,500
( 28,000)
417,500
__Total__
1,492,000
(132,000)
(40,500)
135,000
1,454,500
( 140,000)
1,314,500
Chapter 4
SOLUTIONS TO PROBLEMS
Problem 4 1
Case 1
Rivas and Briones
Statement of Liquidation
December 31, 2008
Partners'
Capitals
Assets
Rivas,
Briones,
Rivas
Loan
Loan
(90%)
Briones
Cash
(10%)
Balances before liquidation. . .
P10,000
Realization of assets and
distribution of loss...........
( 6,600)
Balances................................
3,400
Payment of liabilities.............
______
Balances................................
3,400
Offset Rivas' loan against his
capital deficiency............
______
Balances................................
3,400
Additional loss to Briones......
( 1,400)
Balances................................
2,000
Payment to partner.................
P(2,000)
Others Liabilities
P 20,000 P200,000 P132,000 P 18,000 P 20,000
P40,000
_134,000 ( 200,000) _______ _______ _______
( 59,400)
154,000
132,000
( 132,000) ______ ( 132,000)

22,000
18,000
20,000
______ _______ _______

18,000
20,000
_______ _______ _______ ( 18,000) _______

22,000
( 19,400)
20,000
_______ _______ _______ _______ _______

22,000
P(22,000)
P(20,000)
( 19,400)
_18,000
( 1,400)
__1,400
20,000
Case 2
Rivas and Briones
December 31, 2008
Partners'
Capitals
Assets
Rivas,
Briones,
Rivas
Briones
Cash
Others Liabilities
Loan
Loan
(30%)
Balances before liquidation. . . P20,000 P200,000 P132,000 P 18,000 P 20,000
P10,000
distribution of loss........... 134,000 ( 200,000) _______ ______ _______
( 19,800)
Balances................................ 154,000
132,000
18,000
20,000
9,800
Payment of liabilities............. ( 132,000) _______ ( 132,000) ______ _______
______
Balances................................
22,000
18,000
20,000
9,800
Offset loan against capital
deficiency........................ ________ _______ _______ ( 6,200) ( 9,800)
__9,800
Balances................................
22,000
11,800
10,200
Payment to partner................. P(22,000)
P(11,800) P(10,200)
(70%)
P40,000
( 46,200)
( 6,200)
_______
( 6,200)
__6,200
Case 3
Rivas and Briones
December 31, 2008
Partners'
Capitals
Assets
Rivas,
Briones,
Rivas
Briones
Cash
(50%)
Balances before liquidation........ P 20,000
P10,000
distribution of loss............... _134,000
( 33,000)
Balances......................................
154,000
23,000)
Payment of liabilities.................. ( 132,000)
Balances......................................
22,000
23,000)
Offset Briones'' loan against
his capital deficiency........... _______
_20,000
Balances......................................
22,000
3,000)
Additional loss to Rivas.............. _______
__3,000
Others
Liabilities
Loan
Loan
(50%)
P200,000
P132,000
P 18,000
P20,000
P40,000
( 200,000) _______
_______
______
( 33,000)
18,000
20,000
( 7,000)
18,000
__
20,000
_
_______
( 7,000)
132,000
_______ ( 132,000)
_______
_______
_______
( 20,000)
18,000
_______
_______
_______
_______
______
7,000
( 3,000)
Balances......................................
Payment to partner......................
22,000
P(22,000)
18,000
P(18,000)
4,000
P( 4,000)
Journal Entries
Case 1:
Cash..............................................................................................................
Rivas, Capital.................................................................................................
Briones, Capital..............................................................................................
Other Assets............................................................................................
Liabilities. .....................................................................................................
Cash........................................................................................................
Rivas, Loan....................................................................................................
Rivas, Capital..........................................................................................
Briones, Capital..............................................................................................
Rivas, Capital..........................................................................................
Briones, Loan.................................................................................................
Briones, Capital..............................................................................................
Cash ....................................................................................................
Case 2:
Cash..............................................................................................................
Rivas, Capital.................................................................................................
Briones, Capital..............................................................................................
Other Assets............................................................................................
Liabilities. .....................................................................................................
Cash........................................................................................................
Rivas, Loan....................................................................................................
Briones, Loan.................................................................................................
Rivas, Capital..........................................................................................
Briones, Capital......................................................................................
Rivas, Loan....................................................................................................
Briones, Loan.................................................................................................
Cash........................................................................................................
76
Chapter 4
Case 3:
Cash...................................................................................................
Rivas, Capital....................................................................................
Briones, Capital.................................................................................
Other Assets................................................................................
Liabilities...........................................................................................
Cash. ...........................................................................................
Briones, Loan....................................................................................
Briones, Capital...........................................................................
Rivas, Capital....................................................................................
Briones, Capital...........................................................................
Rivas, Loan........................................................................................
Rivas, Capital....................................................................................
Cash. ...........................................................................................
134,000
59,400
6,600
200,000
132,000
132,000
18,000
18,000
1,400
1,400
20,000
2,000
22,000
134,000
46,200
19,800
200,000
132,000
132,000
6,200
9,800
6,200
9,800
11,800
10,200
22,000
134,000
33,000
33,000
200,000
132,000
132,000
20,000
20,000
3,000
3,000
18,000
4,000
22,000
Problem 4 2
Blando and Castro
April 30, 2008
Partners'
Capitals
A s s e t s
Accounts
Blando,
Blando
Others
Payable
Loan
(60%)
Castro
Cash Receivables Inventory
(40%)
Balances before
liquidation.................... P 18,000
P99,000
Collection of
receivables and
distribution of loss........ _37,500
( 15,000)
Balances............................
84,000
Realization of
inventory and
distribution of
loss...............................
,000)
Balances............................
60,000
Realization of other
assets and distribution
of loss...........................
( 17,600)
P75,000
P90,000
P84,000
P42,000
P 24,000
P102,000
( 75,000)
_______ _______
_______
_______
( 22,500)
84,000
42,000
24,000
( 90,000) _______
_______
_______
42,000
24,000
_______
_______
42,000
24,000
17,100
_______
_______
24,000
17,100
55,500
_30,000
_______
85,500
_40,000
_______
_______
Balances............................ 125,500
42,400
Payment of accounts
payable......................... ( 42,000)
_______
Balances............................
83,500
42,400
Payments to partners.. P(83,500)
P(42,400)
_______
90,000
84,000
( 84,000)
_______ _______
( 42,000)
Problem 4 3
a.
Electric Company
Statement of Partnership Realization and Liquidation
June 30, 2008
79,500
( 36,000)
43,500
( 26,400)
P(24,000) P( 17,100)
Balances
14,000
Sale of
assets at a loss
( 8,000)
6,000
Payment to
creditors
______
Capital Balances
Volt Watt
30% 20%
Cash
Amp.
Loan
Noncash
Assets
Liabilities
Volt,
Loan
Amp
50%
20,000
15,000
135,000
30,000
10,000
80,000
36,000
_95,000
______
(135,000)
______
______
(20,000)
(12,000)
115,000
15,000
-0-
30,000
10,000
60,000
24,000
_(30,000)
______
_______
(30,000)
______
_______
______
10,000
60,000
24,000
85,000
15,000
-06,000
Offset Amp,
receivable
(15,000)
Payments to partners:
Loan
(10,000)
Capitals
_(75,000) ______
_______
,000)
Balances
-0-0-0-0b. (1) Cash
Amp, Capital
Volt, Capital
Watt, Capital
Noncash Assets
Sell noncash assets at a loss of P40,000.
-0-
(15,000)
_______
-0-
(10,000)
______
(45,000)
(24,000)
-0-
-0-
-0-
95,000
20,000
12,000
8,000
135,000
(2) Liabilities
Cash
Pay creditors.
30,000
(3) Amp, Capital

Amp, Loan
Offset receivable from Amp against his capital credit.
15,000
(4) Volt, Loan

Amp, Capital
Volt, Capital
Watt, Capital
Cash
Final lump-sum distribution to partners.
10,000
45,000
24,000
6,000
30,000
15,000
85,000
Note: All partners permitted Amp to offset his receivable against his capital credit. Alternatively, Amp
could be required to pay the partnership the P15,000 receivable; the partnership would then pay him an
additional P15,000 for his capital credit. In this case, an offset of the receivable against the capital credit is
reasonable, provided the receivable is not interest-bearing, Amp has a sufficient capital credit, Amp is
personally solvent, and the note is not secured against specific assts of Amp. The offset is not automatic,
but must be determined by the terms of the initial note, and by the partners.
78
Chapter 4
Problem 4 4
a.
b.
Bina, capital before liquidation.........................................................................................

Payment to Bina................................................................................................................
Loss absorbed by Bina (40%)...........................................................................................
P320,000
_128,000
P192,000
Loss on realization (P192,000 40%)..............................................................................
P480,000
AIDA, BINA & CELIA

Statement of Partnership Liquidation
January 1, 2008
Balances before liquidation.

Realization & dist. of loss. . .
Balances.............................
Settlement to partners..........
Cash
Other Assets
P80,000
240,000
320,000
(320,000)
P720,000
( 720,000)
_______
Aida
(5)
P320,000
( 240,000)
80,000
( 80,000)
Capital
Bina
Celia
(4)
(1)
P320,000
P160,000
( 192,000) ( 48,000)
128,000
112,000
( 128,000) ( 112,000)
Problem 4 5
a.
b.
LL, capital before liquidation...........................................................................................

Settlement to LL...............................................................................................................
Gain realized by LL (20%)...............................................................................................
P 70,000
__98,000
P 28,000
Total gain on realization (P28,000 20%).......................................................................

Other assets sold...............................................................................................................
Selling price ...................................................................................................................
P140,000
_500,000
P640,000
JJ, KK & LL
Balances before liquidation....

Realization & Dist. of gain....
Balances................................
Payment to Partners...............
( 98,000)
Cash
P50,000
640,000
690,000
( 60,000)
(630,000)
Other
Assets
Liabilities JJ (4)
P500,000
P60,000 P180,000
( 520,000) _______ __56,000
60,000
236,000
( 60,000)
_______ _______ ( 236,000)
Capital
KK(4)
(LL(2)
P240,000
P70,000
__56,000
_28,000
296,000
98,000
( 296,000)
Problem 4 6
a.
BB.................................................... P160,000
CC.................................................... P20,000
DD................................................... P60,000
EE....................................................
P 0
b.
BB, CC, DD, & EE

Cash Liabilities
P
0
P60,000

P(180,000)
Advances by BB to pay liabilities
Deposit by DD....................... 60,000
________
Balances................................ 60,000
0)
Elimination of EE's deficiency
Elimination of DD's deficiency
Payment to partners................ 60,000
C a p i t a l
CC (10%)DD (20%)
EE (40%)
P80,000 (P120,000)
BB (30%)
P160,000
( 60,000)
60,000
______ _______
_______
220,000
( 90,000)
______ __( 90,000)
40,000
__60,000
80,000
( 60,000)
( 180,00
( 30,000)
( 30,000)
20,000
( 60,000)
120,000
180,000
Problem 4 7
Sayson and Company
Date
Assets
Liabilities
Accounts
Notes
Pea
P a r t n e r s' C a p i t a l s
Sayson
Zobel
Ayala
Pea
Cash
Noncash
Payable
Payable
Loan
(45%)
(30%)
(15%)

P1,650
distribution of gain...........
______
P 15,000
P155,250
P11,250
P9,000
P 1,500
P 75,345
185,000
( 155,250)
_______
______
______
17,850
11,900
______
Balances.................................
1,650
______
200,000
11,250
9,000
1,500
93,195
98,398
( 14,993)
( 11,250)
( 9,000)
______
______
______
_______
1,500
93,195
98,398
( 14,993)
(10%)
Balances.................................
1,650
Additional loss to Sayson,
( 20,250) ________
179,750
P 86,498 P(14,993)
Zobel and Pea;

45:30:10............................
1,764)
Balances.................................
(114)
Offset Pea's loan against
his capital deficiency........
114
Balances.................................
_______ ________ ________

179,750
_______ ________ ________

179,750
______
______
( 7,937)
( 5,292)
14,993
-
1,500
85,258
93,106
______
( 114)
______
______
1,386
85,258
93,106
Payments to partners.............. P(179,750)
_______
-
P(1,386) P(85,258) P(93,106)
80
Chapter 4
Problem 4 8
a.
Art, Bea and Cid Partnership

June 4, 2008
(20%)
Balances before liquidation
(including Bea loan, P4,000)......
P10,000
Realization of assets
at a loss of P63,300...................
Unrecorded accounts payable..........
(100)
Payment to creditors........................
______
Balances.........................................
(2,760)
Eliminate Cid's deficit.....................
_2,760
Balances.........................................
Payment to Partners.........................
b.
2008
July 5
Cash
Assets
Other
Liabilities
Partners' Capital
Art (40%) Bea (40%) Cid
P 6,000
P94,000
P20,000
P27,000
P43,000
30,000
( 94,000)
(25,320)
500
(25,320)
(200)
(12,660)
(200)
(20,500)
______
(20,500)
______
______
16,200
1,480
17,480
______
______
______
(1,380)
(1,380)
16,200
(16,200)
100
_( 100)
16,100
( 16,100)
Cash .............................................................................................
Art capital (P63,300 x 40%)...........................................................
Bea capital (P63,300 x 40%)..........................................................
Cid capital (P63,300 x 20%)...........................................................
Other assets...........................................................................
To record realization of other assets at a loss of P63,300.
30,700
25,320
25,320
12,660
94,000
c.
Art capital (P500 x 40%)................................................................

Bea capital (P500 x 40%)...............................................................
Cid capital (P500 x 20%)................................................................
Liabilities..............................................................................
To record trade accounts payable.
200
200
100
Liabilities. ......................................................................................
Cash. .....................................................................................
To record payment of liabilities.
20,500
Art capital.......................................................................................
Bea capital......................................................................................
Cid capital.............................................................................
To eliminate Cid's capital deficit.
1,380
1,380
Art capital.......................................................................................
Bea capital......................................................................................
Cid capital. .....................................................................................
Cash. .....................................................................................
To record payments to partners to complete liquidation.
100
4,000
12,100
500
20,500
2,760
16,200
Cid's loss must be limited to P5,000, or P25,000 for the partnership (P5,000 / 20% = P25,000).
Because the liquidation of liabilities results in a loss of P500, only P24,500 may be lost on the
realization of other assets. This requires that other assets realize P69,500 (P94,000 24,500) to
enable Cid to receive P5,000 from the partnership to pay personal creditors in full.
Problem 4 9
KGB Partnership
Statement of Realization and Liquidation
Lump-sum Liquidation on June 30, 2008
-
Preliquidation balances
Sale of assets
and distribution
of 430,000 loss
Cash contributed
by B
Distribution of deficit
of insolvent partner:
20/60 (P2,000)
40/60 (P2,000)
Offset deficit with loan
Contribution by G
Payment of creditors
Distribution to K
Postliquidation
balances
Capital Balances
K
G
20%
40%
(240,000) (100,000)
B
40% (120,000)
(60,000)
86,000
(154,000)
172,000
72,000
172,000
52,000
(60,000)
(154,000)
72,000
50,000
2,000
Cash
50,000
Noncash
Assets
950,000
Liabilities
(480,000)
G
Loan
(60,000)
520,000
570,000
950,000
-0-
(480,000)
(480,000)
50,000
620,000
-0-
(2,000)
666
620,000
620,000
13,334
633,334
(480,000)
153,334
(153,334)
-0-
-0-0-
(480,000)
(480,000)
(60,000)
60,000
-0-
(153,334)
(153,334)
(480,000)
480,000
-0-
-0-
(153,334)
(153,334)
153,334
-0-0-0-
-0-
-0-
-0-
-0-
1,334
73,334
(60,000)
13,334
(13,334)
-0-
-0-0-0-
-0-
-0-
-0-
-0-
82
Chapter 4
KGB Partnership
Schedule of Distribution of Personal Assets
June 30, 2008
.
Personal assets, excluding partnership
capital and loan interests
Personal liabilities
Personal net worth, excluding
partnership capital and loan
interests
Contribution to partnership
Distribution from partnership
Personal capacity
500,000
(460,000)
600,000
(480,000)
700,000
(650,000)
40,000
120,000
(13,334)
-0- 106,666
50,000
153,334
193,334
-0- -0- -

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68

Capital balances before liquidation

Capital balances before liquidation

Capital balances before liquidation

Total loss on realization (P8,250/39%)

Capital balances before liquidation (net)

Total loss on realization (9,000/20%)

Capital balances before liquidation

Cash after realization

Total loss on realization (P16,000/40%)

Total capital before liquidation (P260,000-P10,000)

Capital balances after realization

Share of total loss (1/3)

Total loss on realization (P40,000/1/3)

Total loss on realization (P70,000 50%)

P 20,000 P200,000 P132,000 P 18,000 P 20,000

_134,000 ( 200,000) _______ _______ _______

( 132,000) ______ ( 132,000)

______ _______ _______

_______ _______ _______ ( 18,000) _______

_______ _______ _______ _______ _______

(3) Amp, Capital

(4) Volt, Loan

Bina, capital before liquidation.........................................................................................

Loss on realization (P192,000 40%)..............................................................................

AIDA, BINA & CELIA

Balances before liquidation.

LL, capital before liquidation...........................................................................................

Total gain on realization (P28,000 20%).......................................................................

Balances before liquidation....

BB, CC, DD, & EE

Balances before liquidation....

Balances before liquidation....

Zobel and Pea;

_______ ________ ________

_______ ________ ________

Payments to partners.............. P(179,750)

P(1,386) P(85,258) P(93,106)

Art, Bea and Cid Partnership

Art capital (P500 x 40%)................................................................

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_134,000 ( 200,000) ___ _ _____

__ _ _____

___ _ _ ( 18,000) ___

___ _ _ _ _____

_ __

_ __