78

Chapter 4
CHAPTER 4
MULTIPLE CHOICE ANSWERS AND SOLUTIONS

4-1:

a
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

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

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

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

Capital balances before liquidation (net of loans)

Loss of P130,000, 4:3:3

COLT
P290,000
( 52,000)

MARK
P200,000
( 39,000)

CLOCK
P220,000
( 39,000)

Cash distribution

P238,000

P161,000

P181,000

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

Capital balances before realization

Loss on liquidation, P40,000
Cash distribution
4-2:

c
Capital balances before liquidation
Gain of P10,000 (150,000-140,000)
Cash distribution

4-3:

b
Capital balances before liquidation
Loss of P40,000 (P140,000-P100,000)
Cash distribution

4-4:

a
Capital balances before liquidation
Loss of P70,000 (P140,000-P70,000)
Balances
Absorption of Pong's deficiency, 6:2
Cash distribution

4-5:

4-6:

c
Capital balances before liquidation
Loss of P60,000, 40:50:10
Cash distribution

Partnership Liquidation
4-7:

a
Capital balances before liquidation
Loss of P100,000, 4:3:3
Cash distribution

4-8:

79
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)

b
Capital balances before realization
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

CESAR
P 30,000
( 30,000)
P

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%)

P 27,500

c
Capital balances before liquidation (net)
Loss on realization, P63,600
Balances
Unrecorded liabilities, P500
Balances
Elimination of Nora's deficiency
Payment to partners

4-11:

GREEN
P138,000
_( 5,500)
P132,500

P 91,500
_83,250
P 8,250

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

4-10:

WHITE
P 91,500
( 27,500)
P 64,000

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

ARIES
P33,500
( 22,500)
P11,000

LEO
P 49,000
( 13,500)
P 35,500

TAURUS
P 36,500
( 9,000)
P 27,500

d
Capital balances before liquidation (net)
Loss on realization (schedule 1) P45,000
Payment to partners

80

Chapter 4
4-11, continued:
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%)

4-12:

c
Capital balances, June 11
Net loss from operation (squeeze)
Capital balances, August 30 before
liquidation (48,500-25,600)
Loss on realization (47,500-30,000)
Balances
Additional investment by Olga
Balances
Elimination of Olga's deficiency
Payment to partners

4-13:

P45,000
TOTAL
P32,700
( 9,800)

MOLY
P15,000
( 4,200)

NORA
P13,500
( 2,800)

OLGA
P 4,200
( 2,800)

P22,900
( 17,500)
P 5,400
_1,500
P 6,900
______
P 6,900

P10,800
( 7,500)
P 3,300
_____
P 3,300
( 1,260)
P 2,040

P10,700
( 5,000)
P 5,700
_____
P 5,700
( 840)
P 4,860

P 1,400
( 5,000)
( 3,600)
_1,500
( 2,100)
_2,100
P

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

b
Capital balances before liquidation
Operating loss, P21,000
Drawings
Loans
Loss on realization, P12,000
Balances
Absorption of Tita's deficiency
Payment to Nora

4-14:

a
Capital balances before liquidation
Loss on realization
Accounts Receivable (P50,000 X 40%)
Investment (P30,000 - P20,000)
Equipment (P60,000-P30,000)
Total
Payment to partners

4-15:

P20,000
10,000
_30,000
P60,000

Partnership Liquidation
4-15, continued:
Cash after realization
Less Liabilities (P36,000-P7,500)
Total capital after realization

4-17:

ANDRO
P50,000

( 24,000)
P21,000

( 24,000)
P 3,000

( 12,000)
P38,000

TOTAL
P47,500
( 38,500)
P 9,000

MONA
P28,500
( 23,100)
P 5,400

LISA
P19,000
( 15,400)
P 3,600

81
P 37,500
( 28,500)
P 9,000

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
P350,000
Cash before liquidation
Non-cash assets
Loss on realization
Cash to be realized

P250,000
_100,000
( 50,000)
P300,000
( 40,000)
P260,000

d
Capital balances before realization (net)
Loss on realization (squeeze)
Capital balances after realization
(liabilities-unpaid)
Elimination of CC's deficiency
Balances
Investment by DD
Payment to EE

4-18:

PEDRO
P27,000

c
Capital balances before liquidation (inclusive loans)
Loss on realization, (squeeze)
Capital balances - cash distribution

4-16:

CLARO
P45,000

TOTAL
P100,000
( 125,000)

CC
P 15,000
( 62,500)

DD
P22,500
( 37,500)

EE
P62,500
( 25,000)

(P 25,000)
_______
(P 25,000)
__43,500
P 18,500

( 47,500)
__47,500

______
P

( 15,000)
( 28,500)
(P43,500)
_43,500
P

P37,500
( 19,000)
P18,500
_____
P18,500

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

82
4-19:

Chapter 4
d
LL
P 50,000
__4,800
P 54,800
( 44,880)
P 9,920
______
P 9,920

Capital balances
Salary of LL (P600 X 8 months)
Capital balances before liquidation
Loss on realization
Balances
Additional investment by NN
Payment to partners
4-20:

NN
P 10,000
_______
P 10,000
( 14,960)
(P 4,960)
__4,960
P

TOTAL
P 80,000
___4,800
P 84,800

b
KK's total interest (P60,000-P10,000)
Less: Cash to be paid to KK
Share of total loss (1/3)

P 50,000
__10,000
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
4-21:

MM
P 20,000
_______
P 20,000
( 14,960)
P 5,040
_____
P 5,040

P110,000
50,000
__40,000

P200,000
______50%
P400,000
_120,000
P280,000

a
Capital balances, July 1
Advances to NN, August 1
OO Loan, September 1
Interest, December 31 (6%)
NN (5 mos.)
OO (4 mos.)
Compensation to PP
Capital balances before liquidation
Loss on realization (squeeze)
Cash distribution

TOTAL
P 75,000
( 10,000)
20,000
(

250)
400
__2,500
P 87,650
_56,250
P 35,000

NN
P 25,000
( 10,000)

OO
P 25,000

20,000

PP
P 25,000

400
_______
P 45,400
( 17,550)
P 27,850

___2,500
P 27,500
( 17,550)
P 9,950

250)

_______
P 14,750
( 17,550)
( 2,800)

NN should pay P2,800 and this is to be divided to OO & PP equally or P1,400 each.
Partnership Liquidation
4-22:

a
Capital balances before realization
Loss on realization (squeeze)
Capital balances after realization
(unpaid liabilities)
Elimination of AS's deficiency
Cash to be absorbed

4-23:

83
TOTAL
P 950,000
( 1,000,000)

PG
P350,000
__20,000

JR
P250,000
( 200,000)

AS
P350,000
_500,000

(P 50,000)
_______
P

P 50,000
( 90,000)
(P 40,000)

P 50,000
( 60,000)
(P 10,000)

( 150,000)
P150,000
P

RM
P500,000
( 490,000)
P 10,000

ST
P825,000
( 735,000)
P 90,000

LT
P 20,000
_18,750
P 38,750

AM
P 5,000
__-9,375
P 14,375

a
Capital balances before realization (net)
Loss on realization, P1,225,000
Payment to Partners

4-24:

a
Capital balances before realization (net)
Gain on realization (squeeze)
Capital balances after realization

TOTAL
P 27,500
__37,500
P 65,000

ZP
P 2,500
__9,375
P 11,875

4-25:

c
Capital balances before realization (net)
Loss on realization, P1,000,000
Balances
Additional investment by DJ

4-26:

a
Settlement to Uy
Uy capital before liquidation (net):
Uy capital
Receivable from Uy
Loss of Uy (50%)

AG
P 420,000
( 300,000)
P 120,000

BM
P375,000
( 300,000)
P 75,000

CP
P205,000
(200,000)
P 5,000

DJ
P150,000
(200,000)
P(50,000)
50,000

P351,500
P553,500
( 132,000)

Total loss on realization (P70,000 50%)

421,500
P 70,000
P140,000

__Uy__
__Vi__
__Wi__
__Total__
CB before liquidation 553,500
452,500
486,000
1,492,000
Receivable from Uy
(132,000)
(132,000)
Loan to Wi
( 40,500)
(40,500)
Salary payable to Vi
135,000
135,000
Interest before realization
421,500
587,500
445,500
1,454,500
Loss on realization
( 70,000)
( 42,000)
( 28,000)
( 140,000)
Settlement to partners 351,500
545,500
417,500
1,314,500
84

Chapter 4
SOLUTIONS TO PROBLEMS
Problem 4 1

Case 1
Rivas and Briones
Statement of Liquidation
December 31, 2011
Rivas,
Loan
P 18,000

Briones,
Loan
P 20,000

Partners' Capitals
Rivas
Briones
(90%)
(10%)
P40,000 P10,000

( 200,000) _______ _______

132,000
18,000
______ ( 132,000) ______

18,000

_______
20,000
_______
20,000

( 59,400) ( 6,600)
( 19,400)
3,400
_______ ______
( 19,400)
3,400

Assets
Cash
Others Liabilities
P 20,000 P200,000 P132,000

Balances before liquidation........

Realization of assets and
distribution of loss............... _134,000
Balances......................................
154,000
Payment of liabilities.................. ( 132,000)
Balances......................................
22,000
Offset Rivas' loan against his
capital deficiency................. _______
Balances......................................
22,000
Additional loss to Briones.......... _______
Balances......................................
22,000
Payment to partner...................... P(22,000)

_______

_______

_______

_______

( 18,000) _______

20,000
_______ _______

20,000
P(20,000)

_18,000 ______
( 1,400)
3,400
__1,400 ( 1,400)

2,000
P(2,000)

Case 2
Rivas and Briones
Statement of Liquidation
December 31, 2011
Assets
Cash
Others Liabilities
P20,000 P200,000 P132,000

Rivas,
Loan
P 18,000

Briones,
Loan
P 20,000

Partners' Capitals
Rivas
Briones
(70%)
(30%)
P40,000 P10,000

Balances before liquidation........

Realization of assets and
distribution of loss...............
134,000 ( 200,000) _______
______ _______ ( 46,200) ( 19,800)
Balances......................................
154,000

132,000
18,000
20,000
( 6,200)
9,800
Payment of liabilities.................. ( 132,000) _______ ( 132,000) ______ _______ _______ ______
Balances......................................
22,000

18,000
20,000
( 6,200)
9,800
Offset loan against capital
deficiency............................ ________ _______ _______ ( 6,200) ( 9,800) __6,200 __9,800
Balances......................................
22,000

11,800
10,200

Payment to partner...................... P(22,000)

P(11,800) P(10,200)

Partnership Liquidation
Problem 4-1, continued:
Case 3

85

Rivas and Briones

Statement of Liquidation
December 31, 2011
Rivas,
Loan
P 18,000

Briones,
Loan
P20,000

Partners' Capitals
Rivas
Briones
(50%)
(50%)
P40,000 P10,000

( 200,000) _______ _______

132,000
18,000
_______ ( 132,000)

18,000

______
20,000
__
20,000

( 33,000) ( 33,000)
( 7,000) ( 23,000)
_
_______
( 7,000) ( 23,000)

Assets
Cash
Others Liabilities
P 20,000 P200,000 P132,000

Balances before liquidation........

Realization of assets and
distribution of loss............... _134,000
Balances......................................
154,000
Payment of liabilities.................. ( 132,000)
Balances......................................
22,000
Offset Briones'' loan against
his capital deficiency........... _______
Balances......................................
22,000
Additional loss to Rivas.............. _______
Balances......................................
22,000
Payment to partner...................... P(22,000)

_______

_______

_______

_______

_______ ( 20,000)
18,000

_______ _______
18,000

P(18,000)

______ _20,000
7,000 ( 3,000)
( 3,000) __3,000
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.......................................................................................................
86

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

Problem 4-1, continued:

Case 3:
Cash.............................................................................................................. 134,000
Rivas, Capital.................................................................................................
33,000
Briones, Capital.............................................................................................
33,000
Other Assets............................................................................................
Liabilities. ..................................................................................................... 132,000
Cash.......................................................................................................
Briones, Loan.................................................................................................
20,000
Briones, Capital......................................................................................
Rivas, Capital.................................................................................................
3,000
Briones, Capital......................................................................................
Rivas, Loan....................................................................................................18,000
Rivas, Capital.................................................................................................
4,000
Cash.......................................................................................................

22,000
Chapter 4

200,000
132,000
20,000
3,000
22,000

Problem 4 2
Blando and Castro
Statement of Liquidation
April 30, 2011
A s s e t s
Cash Receivables Inventory
Balances before
liquidation................. P 18,000
P75,000
Collection of
receivables and
distribution of loss.... _37,500
( 75,000)
Balances......................... 55,500

Realization of
inventory and
distribution of
loss............................ _30,000
_______
Balances......................... 85,500

Realization of other
assets and distribution
of loss........................ _40,000
_______
Balances......................... 125,500

Payment of accounts
payable...................... ( 42,000)
_______
Balances......................... 83,500

Payments to partners.. P(83,500)

P(42,400)

Accounts
Payable

Others

Blando,
Loan

Partners'
Blando
(60%)

Capitals
Castro
(40%)

P90,000 P84,000

P42,000 P 24,000 P102,000

P99,000

_______ _______
90,000 84,000

_______
42,000

_______ ( 22,500)
24,000
79,500

( 15,000)
84,000

( 90,000) _______
84,000

_______
42,000

_______ ( 36,000)
24,000
43,500

( 24,000)
60,000

_______ ( 84,000) _______

42,000

_______ ( 26,400)
24,000
17,100

( 17,600)
42,400

_______ _______

( 42,000) _______ _______ _______

24,000
17,100
42,400

P(24,000) P( 17,100)

Partnership Liquidation

87
Problem 4 3

a.

Electric Company
Statement of Partnership Realization and Liquidation
June 30, 2011

Balances
Sale of
assets at a loss
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

14,000

_95,000
115,000

______
15,000

(135,000)
-0-

______
30,000

______
10,000

(20,000)
60,000

(12,000)
24,000

( 8,000)
6,000

_(30,000)
85,000

______
15,000

_______
-0-

(30,000)
-0-

______
10,000

_______
60,000

______
24,000

______
6,000

(24,000)
-0-

( 6,000)
-0-

Offset Amp,
receivable
(15,000)
Payments to partners:
Loan
(10,000)
Capitals
_(75,000) ______
_______
Balances
-0-0-0b. (1) Cash
Amp, Capital
Volt, Capital
Watt, Capital
Noncash Assets
Sell noncash assets at a loss of P40,000.

(15,000)
_______
-0-

(10,000)
______
-0-

(45,000)
-095,000
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

30,000

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
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.
88

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, 2011

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
(4)
P320,000
( 192,000)
128,000
( 128,000)

Celia
(1)
P160,000
( 48,000)
112,000
( 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
Statement of Liquidation

Balances before liquidation....

Realization & Dist. of gain....
Balances................................
Payment of liabilities.............
Payment to Partners...............

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)

Partnership Liquidation

BB.................................................... P160,000
CC.................................................... P20,000
DD................................................... P60,000
EE....................................................
P 0

( 296,000)

( 98,000)
89

Problem 4 6
a.

Capital
KK(4)
(LL(2)
P240,000
P70,000
__56,000
_28,000
296,000
98,000

b.

BB, CC, DD, & EE

Statement of Liquidation
Cash Liabilities BB (30%)
Balances before liquidation.... P
0
P60,000 P160,000
Advances by BB to pay liabilities
( 60,000)
60,000
Deposit by DD....................... 60,000
______ _______
Balances................................ 60,000

220,000
Elimination of EE's deficiency
( 90,000)
Elimination of DD's deficiency
______ __( 90,000)
Payment to partners................ 60,000

40,000

C a p i t a l
CC (10%)DD (20%)
EE (40%)
P80,000 (P120,000) P(180,000)
_______
80,000
( 30,000)
( 30,000)
20,000

__60,000 ________
( 60,000) ( 180,000)
( 60,000)
180,000
120,000

Problem 4 7
Sayson and Company
Statement of Liquidation
Date
Liabilities
P a r t n e r s' C a p i t a l s
Assets
Accounts Notes
Pea Sayson
Zobel Ayala
Pea
Cash Noncash Payable Payable
Loan
(45%)
(30%) (15%)
(10%)
P 15,000 P155,250 P11,250 P9,000 P 1,500 P 75,345 P 86,498 P(14,993)

Balances before liquidation

P1,650
Realization of assets and
distribution of gain..... 185,000 ( 155,250) _______ ______
Balances.......................... 200,000
11,250 9,000
Payment of liabilities...... ( 20,250)________ ( 11,250) ( 9,000)
Balances.......................... 179,750
1,650
Additional loss to Sayson,
Zobel and Pea;
45:30:10..................... _______ ________ ________ ______
Balances.......................... 179,750
Offset Pea's loan against
his capital deficiency.. _______ ________ ________ ______
Balances.......................... 179,750
Payments to partners.......P(179,750)

______
1,500
______
-

17,850
93,195
______
1,500

11,900 ______ ______

98,398 ( 14,993) 1,650
______ _______ ______
93,195 98,398 ( 14,993)

______ ( 7,937) ( 5,292) 14,993

1,500 85,258 93,106
( 114) ______ ______ _______
1,386 85,258 93,106
P(1,386) P(85,258) P(93,106)

90

( 1,764)
- (114)
114
-

Chapter 4
Problem 4 8

a.

Art, Bea and Cid Partnership

Statement of Liquidation
June 4, 2011

Balances before liquidation

(including Bea loan, P4,000)......
Realization of assets
at a loss of P63,300...................
Unrecorded accounts payable..........
Payment to creditors........................
Balances.........................................
Eliminate Cid's deficit.....................
Balances.........................................
Payment to Partners.........................
b.
2011
July 5

Cash

Assets
Other

Liabilities

Partners' Capital
Art (40%) Bea (40%) Cid (20%)

P 6,000

P94,000

P20,000

P27,000

P43,000

30,000

( 94,000)

(20,500)
16,200
______
16,200
(16,200)

______
______
-

(25,320)
500
(20,500)
______
-

(25,320)
(200)
______
1,480
(1,380)
100
_( 100)

(12,660)
(200)
______
17,480
(1,380)
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

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

Bea capital (P500 x 40%)...............................................................
Cid capital (P500 x 20%)...............................................................

200
200
100

94,000

P10,000
(100)
______
(2,760)
_2,760
-

Liabilities..............................................................................
To record trade accounts payable.

c.

500

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

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, 2011
-

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-

92

Chapter 4
Problem 4-9, continued:
KGB Partnership
Schedule of Distribution of Personal Assets
June 30, 2011
.
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- -