To distribute loss from liquidation to partners... AA1 - Chapter 3 2008 edition page 7Allocation III - Further cash distribution may be made in the P & L ratio Loss on realization: Cap
Trang 1CHAPTER 3 Partnership Liquidation
EXERCISES
Exercise 3 - 1
Capital balances before liquidation P 11,000 P 10,300 P 13,700 P 9,000
To offset receivable from Guarin against his capital
To include salary payable to Henson to his interest
To distribute loss from liquidation to partners
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Loss on realization (P121,000 - P49,000 = P72,000) (36,000) (24,000) (12,000)
* Total capital, March 1 (P60,000 + P54,000 + P16,000) P130,000
Net assets, Aug 31 (P5,000 + P121,000 - P32,000) 94,000
Total loss on realization
Capital balance of Katindig after dist of net loss P 10,000
Excess of personal liabilities over personal assets ( 5,000)
Maximum amount of loss that can be absorbed by Katindig P 5,000
Balances before liquidation P 3,000 P456,000 P60,000 P258,000 P90,000 P 51,000Sale of assets and distribution
of loss 317,400 ( 456,000) ( 55,440) ( 83,160)Balances P320,400 P60,000 P258,000 P34,560 (P32,160)Payment of liabilities ( 320,400
Additional loss to Lesaca ( 21,960) 21,960
Exercise 3 – 6
Capital balances before liquidation P180,000 P300,000 P240,000 (P 33,000) Restricted interest – possible loss
Non-cash assets P600,000
Liquidation expenses 9,000
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Unrecorded liabilities 15,000
Total P624,000 ( 156,000) ( 156,000) ( 156,000) ( 156,000)
Restricted interest – possible loss to
Nocum, Oliva and Pascua for the
deficiency of Quinto ( 63,000) ( 63,000) ( 63,000) 189,000
-Restricted interest – possible loss to
Oliva and Pascua for the deficiency of
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Allocation I – Cash to Toledo
reducing LAB to an amount
reported for Sison
Allocation II - Cash to Sison &
Toledo reducing LAB to an amount
reported for Rama
Allocation III - Further cash
distribution may be made in the
P & L ratio
Exercise 3-9
Cash Priority ProgramJanuary 1, 2008
PAYMENTSJulian Lagman Magno Julian Lagman MagnoCapital balances before liquidation P 36,000 P 54,000 P18,000
Add Note payable to Magno 14,000
Total partners’ interest P 36,000 P 54,000 P 32,000
Profit and loss ratio 3/10 3/10 4/10
Loss absorption balances P120,000 P180,000
(60,000)
P80,000Allocation I – Cash to Lagman reducing
LAB to an amount reported for Julian
Balances P120,000 P120,000 P80,000
Allocation II – Cash to Julian & Lagman
reducing LAB to an amount reported
for Magno (P40,000 x 3/10) ( 40,000) (40,000) P12,000 12,000
Balances P80,000 P80,000 P80,000 P12,000 P20,000
-Allocation III – Further cash distributions
may be made in the P & L ratio
2 Julian, Lagman and Magno
Statement of LiquidationJanuary to March, 2008
Cash Assets Liabilities Magno Julian Lagman MagnoBalances before liquidation P12,000 P146,000 P36,000 P14,000 P36,000 P54,000 P18,000January:
Sale of assets and dist
Of loss 30,000 ( 38,000) ( 2,400) ( 2,400) ( 3,200) Payment of liquidation
Payment of liabilities ( 36,000) (36,000)
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Distribution of cash to
Balances P108,000 P14,000 P32,520 P48,120 P13,360February:
Sale of assets and
distribution of gain 44,000 (35,000) 2,700 2,700 3,600 Payment of liquidation
Distribution of cash to
partners (sch 2) (35,600) (10,000) (25,600)
Balances P73,000 P14,000 P22,700 P22,700 P13,600March:
Sale of assets and
distribution of loss 36,000 (73,000) (11,100) (11,100) (14,800) Balances P36,000 P14,000 P11,600 P11,600 P(1,200) Offset of loan against
Final payment to partners (P36,000) (P12,800) (P11,600
) (P11,600)
Schedule 1Installment LiquidationJanuary 31, 2008
Schedule 2Installment LiquidationFebruary 29, 2008
Amount Julian Lagman Mango
Allocation II – Payable to Julian and
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Profit and loss ratio 4/7 2/7 1/7
Loss absorption balance P 19,600 P 45,500 P 40,600
Allocation I - Cash to Villa reducing
LAB to an amount reported for
Waldo (P4,900 x 2/7) ( 4,900) P 1,400
Balances P 19,600 P 40,600 P 40,600
Allocation II - Cash to Villa & Waldo
reducing LAB to an amount
reported for Urbe
P21,000 x 2/7 ( 21,000) 6,000
P21,000 x 1/7 (21,000) P 3,000Balances P 19,600 P 19,600 P 19,600 P 7,400 P 3,000
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Allocation III - Further cash distribution
may be made in the P & L ratio
Loss on realization:
Capital balance of Urbe prior to realization P 11,200
Share of Urbe in the loss on realization P 1,200
Total cash available
New Corporation’s Books
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1 Authorized to issue 50,000 shares of P50 par value Ordinary Share Capital
Problem 3 – 2 (Case 3 – cont.)
Calma, Daza and EstebanSchedule of Cash Distribution to Partners
Capital balances before cash distribution P 27,000 P ( 3,000) P 46,000
Restricted interest - possible loss to Calma and Esteban
in the ratio of 2:1 if Daza fails to pay his deficiency ( 2,000) 3,000 ( 1,000)Free interests - amounts to be paid to partners P 25,000 - P 53,000Payment to apply on:
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Problem 3 – 2 (Case 4 – cont.)
Calma, Daza and EstebanSchedule of Cash Distribution to Partners
Capital balances before cash distribution P 9,000 P (21,000) P 37,000
Restricted interest - possible loss to Calm and Esteban in
the ratio of 2:1 if Daza fails to pay his deficiency (14,000) 21,000 ( 7,000)
-Payment to apply on:
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deficiency of Goco ( 4,500) 9,000 ( 2,700) ( 1,800)Balances P 2,000 P 5,000 P( 1,500) - P( 7,100) P( 2,400)Additional loss for the
deficiency of Herrera ( 1,500) 2,100 ( 600)Balances P 2,000 P 5,000 P( 3,000) - P( 5,000) P( 3,000)Offset against debit balance
in capital account ( 2,000) ( 3,000) 2,000 - 3,000Balances - P 2,000 P( 1,000) P( 5,000) -Additional investment by
Payment to Isla - P 2,000 - - -
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Problem 3 -5
JKLM Trading Co
Schedule To Accompany Statement of Liquidation
Amounts to be Paid to PartnersFebruary 28, 2008
Capital balances before dist of cash P 19,128 P 88,992 P 101,532 P 22,878
Restricted interest - possible loss if
nothing is realized on remaining assets ( 25,494) ( 38,241) ( 38,241) ( 25,494)
Restricted interest - additional possible
loss if Manabat is unable to pay his
deficiency (20:30:30) ( 654) ( 981) ( 981) 2,616Free interest - payments to partners P 7,980 P 49,770 P 62,310 -
Schedule To Accompany Statement of Liquidation
Amounts to be Paid to Partners
March 31, 2008
Capital balances before dist of cash P 18,348 P 38,052 P 38,052 P 22,098
Restricted interest - possible loss if
nothing is realized on remaining assets ( 16,524) ( 24,786) ( 24,786) (16,524)Free interest - payment to partners P 8,844 P 13,266 P 13,266 P 5,574
Payment to apply on:
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Schedule to Accompany Statement of Liquidation
Amounts to be Paid to Partners
July 31, 2008
Quizon Roman Silva
Restricted interest – possible loss of P480,000
on remaining unsold assets and cash
Restricted interest – possible loss of P138,750
Restricted interest – possible loss to Roman ( 6,000) 6,000
QRS PartnershipSchedule to Accompany Statement of Liquidation
Amounts to be Paid to Partners
August 31, 2008
Quizon Roman SilvaBalances before cash distribution P 93,000 P145,800 P142,200
Restricted interest – possible loss of P375,000
on remaining unsold assets and cash
Restricted interest – possible loss of P109,500
Payment to Roman to apply on loan and to
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Total partners’ interest P165,000 P120,000 P 53,000
Profit and loss ratio 50% 30% 20%
Loss absorption balance P330,000 P400,000 P265,000
Allocation I - Cash to Ureta to
reduce LAB to amount
Allocation II - Cash to Tabora
and Ureta to reduce LAB to
amount reported for Veloso ( 65,000) ( 65,000) P32,500 19,500
Allocation III - Further cash
distribution may be made
based on P & L ratio
Allocation I - Bal payable to Ureta 6,000 P 6,000
Allocation II - Payable to Tabora and
Ureta in the ratio of 50:30 P34,000 P21,250 12,750
P21,250 P18,750March:
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Requirement 1 Wilson, Yuson and Zapata
Cash Distribution Schedule
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June 30, 2008
P AY M E N T S
Total partners’ interest P 55,000 P 45,000 P 24,000
Profit and loss ratio 50% 30% 20%
Loss absorption balance P110,000 P150,000 P120,000
Allocation I - Cash to
Yuson to reduce LAB
Allocation II - Cash to Zapata
and Yuson to reduce LAB
Liabilities Wilson Yuson ZapataCapital balances before liquidation P 17,000 P 55,000 P 45,000 P 24,000July - Dist of loss on sale of assets (1) (4,750) (2,850) (1,900)
Payment of liabilities (17,000)
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Gain on transfer of eqt to Zapata (3,000) (1,800) (1,200)
(1) (P22,000 + P14,000) - (P16,500 + P10,000) = P9,500 loss on sale of assets
(2) (P6,000 + P26,500 - P1,000 - P17,000) - P8,000 cash withheld = P6,500 cash dist Req 1(3) schedule of cash distribution below8,000 – 1,500 – 2,500 +4,000
(4) (P99,000 - P4,000 BV of equipment taken by Zapata) - P75,000 = P20,000 loss on sale
Schedule of Cash DistributionAugust 31, 20068
Capital balances after dist
of equipment to Zapata P 52,000 P 36,700 P 12,800
Profit and loss ratio 50% 30% 20%
Loss absorption balance P104,000 P122,333 P 64,000
Allocation I - Cash to
Yuson to reduce LAB to
Allocation II - Cash to Wilson
& Yuson to reduce LAB to
amount reported for Zapata 40,000 40,000 P20,000 12,000
Allocation III – P & L ratio
Problem 3 - 9 - Requirement 3
Cash available in September P76,500
2006:
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Schedule 1 - Distribution of 2006 net income
Schedule 2 - Admission of Cervo
Bonus to Cervo from old partners (shared 65%:35%) P 14,000
Schedule 3 - Cash distribution in February
Restricted interest - possible loss if nothing
is realized on remaining assets (P100,000) 35,000 25,000 40,000Free interest - amount to be paid to partners P 5,000 P - P 5,000
Schedule 4 - Cash distribution in April
Restricted interest - possible loss if nothing
is realized on remaining assets (P80,000) 28,000 20,000 32,000Free interest - amount to be paid to partners P 7,000 P 5,000 P 8,000
Schedule 5 - Loss on realization of assets in May
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Rover CorporationStatement of Financial Position
July 1, 2008
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Assets Liabilities and Shareholders’ EquityCash P 1,950,000 Accounts Payable P 600,000Accounts Receivable (net of Allow Accrued Expenses 6,000
of P120,000) 540,000 Total Liabilities P 606,000Inventories 1,350,000 Shareholders’ Equity
Prepaid Expenses 3,000 Ordinary Share Capital P9,300,000Land 3,600,000 PIC in Excess of Par 750,000Furniture and Equipment 2,520,000 Retained Earnings (deficit) (450,000)Goodwill 243,000 Total Shareholders’ Equity P9,600,000Total Assets P10,206,000 Total liabilities and SH equity P10,206,000
Capital bal before liquidation P 40,000 P 25,000 P 5,000Loss on realization ( 21,000) (14,000) ( 7,000)
Add’l loss to Gueco & Tiangco for the deficiency of Barcelon ( 1,200) ( 800) 2,000Cash distribution to partners P 17,800 P 10,200 P -0 -
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Cash available to partners (P37,500 – P28,500) 9,000
Balances – cash to be paid to partners P 5,400 P 3,600
11 C Total assets = Total capital + Total liabilities
P( 4,400) P(17,800) P14,200 P( 5,400)Additional loss 4,400 3,920 ( 5,880) 5,400
P(62,000) P(6,000) P(6,000) P19,000Additional loss (3,000) 6,000 ( 1,500) (1,500)
200,000
P217,500
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Cash received (paid) (P 66,137,500) P 66,137,500
Capital balances before liquidation P480,000 P135,000 P165,000
Loss on liquidation (P180,000) ( 72,000) ( 90,000) ( 18,000)Cash to be received by Delia P408,000
Capital balances before liquidation P480,000 P135,000 P165,000
Loss on liquidation (P540,000) ( 216,000) ( 270,000) ( 54,000)
P264,000 (P135,000) P111,000Add’l loss to Delia & Flora ( 108,000) 135,000 ( 27,000)
Capital balances before liquidation P480,000 P135,000 P165,000
Loss on liquidation (P180,000) ( 72,000) ( 90,000) ( 18,000)
Possible loss if remaining
inventories are not sold (192,000) ( 240,000) ( 48,000)
Balances before liquidation P 40,000 P 65,000 P 48,000Loss on sale of assets - P40,000 ( 16,000) (16,000) ( 8,000)Possible loss if nothing is realized
on remaining assets - P90,000 ( 36,000) (36,000) (18,000)
Add’l possible loss to Fortuna and
Gener for deficiency of Estrada 12,000 ( 8,000) ( 4,000) Balances - cash to be distributed P - P 5,000 P 18,000
25 B Capital balance of Gener before distribution of cash P 18,000
Share in the cash to be withheld for possible liquidation
expenses - P3,000 x 20%/60% (shared by Fortuna
26 D The remaining cash will be distributed according to profit and loss ratio
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Thus the P14,000 will be distributed as follows:
Estrada - P14,000 x 40% = P5,600 Fortuna - P14,000 x 40% = P5,600 Gener - P14,000 x 20% = P2,800
Amount of noncash assets before liquidation P 109,300
28 C Capital balance of Aguila before dist of net loss P 25,000
Share in net loss (P20,000 x 60%) ( 12,000) Capital balance of Aguila before liquidation P 13,000
Share of Aguila in the gain on sale of other assets P 6,000
Cash to be realized from sale of other assets P 119,300 PAYMEN
Loss absorption bal P 21,667 P180,000 P313,333Alloc I - Cash to Corpuz (133,333) P 20,000Balances P 21,667 P180,000 P180,000
Alloc II -Cash to Balweg and Corpuz (158,333) (158,333) P 39,583 23,750Balances P 21,667 P 21,667 P 21,667 P 39,583 P43,750Alloc III - Based on
P & L ratio
Fractional share (B – 25% and C -15%) ÷ 15/40
RankingNera - P450,000 / 30% = P150,000 3Ochoa - P250,000 / 50% = P 50,000 1Perez - P250,000 / 20% = P125,000 2