AA1 -Chapter 3 (2008 edition))s page 1

Exercise 3 7

Other Velasco CAPITAL

Cash Assets Liabilities Loan Viola Velasco Vicente
Balances before liquidation P 80,000 P960,000 P630,000 P 50,000 P470,000 (P140,000) P30,000
Sale of other assets & distribution of loss 200,000 ( 300,000) ( 60,000) ( 20,000) ( 20,000)
Balances P280,000 P660,000 P630,000 P 50,000 P410,000 (P160,000) P10,000
Payment of liabilities ( 280,000) ( 280,000)
Balances --- P660,000 P350,000 P 50,000 P410,000 (P160,000) P10,000
Offset of loan ( 50,000) 50,000
Additional investment by Velasco 90,000 90,000
Balances P 90,000 P660,000 P350,000 ---- P410,000 (P 20,000) P10,000
Asset distributed to Viola ( 200,000) ( 212,000) 6,000 6,000
Balances P 90,000 P460,000 P350,000 ----- P198,000 (P 14,000) P16,000
July sale of assets and distribution of loss 540,000 ( 400,000) 84,000 28,000 28,000
Balances P630,000 P 60,000 P350,000 ----- P282,000 P 14,000 P44,000
Payment of liabilities (350,000) ( 350,000)
Balances P280,000 P 60,000 ------ ---- P282,000 P 14,000 P44,000
Possible loss on remaining other assets ( 60,000) ( 36,000) ( 12,000) ( 12,000)
Cash distribution to partners P280,000 ----- ----- ---- P246,000 P 2,000 P32,000
Chapter 3 Partnership Liquidation
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PROBLEMS
Problem 3-1

1. Elma, Erica and Edna

Statement of Liquidation
January 1 31, 2008
Non-cash C A P I T A L
Cash Assets Liabilities Elma Erica Edna
Profit and loss ratio 3/8 3/8 2/8
Balances before liquidation P 80,000 P810,000 P270,000 P60,000 P290,000 P270,000
Sale of non-cash assets and distribution of loss 634,000 (810,000) (66,000) ( 66,000) ( 44,000)
Payment of liquidation expenses ( 24,000) ( 9,000) ( 9,000) ( 6,000)
Balances P690,000 P270,000 (P15,000) P215,000 P220,000
Payment of liabilities (270,000) (270,000)
Balances P420,000 (P15,000) P215,000 P220,000
Additional investment of Elma 15,000 15,000
Balances P435,000 P215,000 P220,000
Payment to partners ( 435,000) ( 215,000) ( 220,000)
 Chapter 3 Partnership Liquidation
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2. Elma , Erica and Edna

Statement of Liquidation
January 1 31, 2008
Non-cash Note Payable C A P I T A L
Cash Assets to Elma Liabilities Elma Erica Edna
Profit and loss ratio 3/8 3/8 2/8
Balances before liquidation P 80,000 P810,000 P70,000 P200,000 P60,000 P290,000 P270,000
Sale of non-cash assets and distribution of loss 634,000 (810,000) (66,000) ( 66,000) ( 44,000)
Payment of liquidation expenses (24,000) ( 9,000) ( 9,000) ( 6,000)
Balances P690,000 P70,000 P200,000 (P15,000) P215,000 P220,000
Payment of liabilities (200,000) (200,000)
Balances P490,000 P70,000 (P15,000) P215,000 P220,000
Offset of loan against debit balance in the
capital balance of Elma ( 15,000) 15,000
Balances P490,000 P55,000 P215,000 P220,000
Payment to partners (490,000) ( 55,000) ( 215,000) ( 220,000)
3. Elma , Erica and Edna
Statement of Liquidation
January 1 31, 2008
NR from Non-cash NP C A P I T A L
Cash Erica Assets to Elma Liabilities Elma Erica Edna
Profit and loss ratio 3/8 3/8 2/8
Balances before liquidation P 80,000 P110,000 P700,000 P70,000 P200,000 P60,000 P290,000 P270,000
Sale of non-cash assets and distribution of 634,000 (700,000) (24,750) ( 24,750) ( 16,500)
loss
Payment of liquidation expenses (24,000) ( 9,000) ( 9,000) ( 6,000)
Balances P690,000 P110,000 P70,000 P200,000 P26,250 P256,250 P247,500
Payment of liabilities (200,000) (200,000)
Balances P490,000 P110,000 P70,000 P26,250 P256,250 P247,500
Offset of receivable against credit balance in
the capital of Erica (110,000) ( 110,000)
Balances P490,000 P70,000 P26,250 P146,250 P247,500
Payment to partners (490,000) ( 70,000) ( 26,250) ( 146,250) ( 247,500)
Chapter 3 Partnership Liquidation
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Problem 3 2 (Case 1)
Calma, Daza and Esteban
Statement of Liquidation
January, 2009
Other L O A N C A P I T A L
Cash Assets Liabilities Daza Esteban Calma Daza Esteban
(2/5) (2/5) (1/5)
Balances before liquidation P 20,000 P 340,000 P 112,000 P 5,000 P 8,000 P 95,000 P 60,000 P 80,000
Sale of assets & distribution of loss 250,000 (340,000) (36,000) (36,000) (18,000)
Balances P 270,000 - P 112,000 P 5,000 P 8,000 P 59,000 P 24,000 P 62,000
Payment of liabilities ( 112,000) (112,000)
Payment of to partners P 158,000 - - P 5,000 P 8,000 P 59,000 P 24,000 P 62,000

Problem 3 2 (Case 2)
Calma, Daza and Esteban
Statement of Liquidation
January, 2009
Other L O A N C A P I T A L
Cash Assets Liabilities Daza Esteban Calma Daza Esteban
(2/5) (2/5) (1/5)
Balances before liquidation P 20,000 P 340,000 P 112,000 P 5,000 P 8,000 P 95,000 P 60,000 P 80,000
Sale of assets & distribution of loss 185,000 (340,000) (62,000) (62,000) (31,000)
Balances P 205,000 - P 112,000 P 5,000 P 8,000 P 33,000 P( 2,000) P 49,000
Payment of liabilities ( 112,000) (112,000)
Balances P 93,000 - - P 5,000 P 8,000 P 33,000 P( 2,000) P 49,000
Offset of loan against debit balance in the
capital account (2,000) 2,000
Payment to partners P 93,000 - - P 3,000 P 8,000 P 33,000 - P 49,000
Chapter 3 Partnership Liquidation
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Problem 3 2 (Case 3)

Calma, Daza and Esteban

Statement of Liquidation
January, 2009
Other L O A N C A P I T A L
Cash Assets Liabilities Daza Esteban Calma Daza Esteban
(2/5) (2/5) (1/5)
Balances before liquidation P 20,000 P 340,000 P 112,000 P 5,000 P 8,000 P 95,000 P 60,000 P 80,000
Sale of assets & distribution of loss 170,000 (340,000) (68,000) (68,000) (34,000)
Balances P 190,000 - P 112,000 P 5,000 P 8,000 P 27,000 P( 8,000) P 46,000
Payment of liabilities ( 112,000) (112,000)
Balances P 78,000 - - P 5,000 P 8,000 P 27,000 P( 8,000) P 46,000
Offset of loan against debit balance in the
capital account (5,000) 5,000
Balances P 78,000 - - - P 8,000 P 27,000 P(3,000) P 46,000
Payment to partners ( 78,000) ( 8,000) ( 25,000) (45,000)
Balances - - - - - P 2,000 P(3,000) P 1,000
Additional investment by Daza 3,000 3,000
Payment to partners P 3,000 - - - - P 2,000 - P 1,000
Chapter 3 Partnership Liquidation
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Problem 3- 2 (Case 4)
Calma, Daza and Esteban
Statement of Liquidation
January, 2009

Other L O A N C A P I T A L
Cash Assets Liabilities Daza Esteban Calma Daza Esteban
(2/5) (2/5) (1/5)
Balances before liquidation P 20,000 P 340,000 P 112,000 P 5,000 P 8,000 P 95,000 P 60,000 P 80,000
Sale of assets & distribution of loss 125,000 (340,000) (86,000) (86,000) (43,000)
Balances P 145,000 - P 112,000 P 5,000 P 8,000 P 9,000 P(26,000) P 37,000
Payment of liabilities ( 112,000) (112,000)
Balances P 33,000 - - P 5,000 P 8,000 P 9,000 P(26,000) P 37,000
Offset of loan against debit balance in the
capital account (5,000) 5,000
Balances P 33,000 - - - P 8,000 P 9,000 P(21,000) P 37,000
Payment to partners ( 33,000) ( 8,000) (25,000)
Balances - - - - - P 9,000 P(21,000) P 12,000
Additional investment by Daza 21,000 21,000
Payment to partners P 21,000 - - - - P 9,000 - P 12,000
Chapter 3 Partnership Liquidation
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Problem 3 2 (Case 5)

Calma, Daza and Esteban

Statement of Liquidation
January, 2009
Other L O A N C A P I T A L
Cash Assets Liabilities Daza Esteban Calma Daza Esteban
(2/5) (2/5) (1/5)
Balances before liquidation P 20,000 P 340,000 P 112,000 P 5,000 P 8,000 P 95,000 P 60,000 P 80,000
Sale of assets & distribution of loss 90,000 (340,000) (100,000) (100,000) (50,000)
Balances P 110,000 - P 112,000 P 5,000 P 8,000 P( 5,000) P(40,000) P 30,000
Payment of liabilities ( 110,000) (110,000)
Balances - - P 2,000 P 5,000 P 8,000 P( 5,000) P(40,000) P 30,000
Offset of loan against debit balance in the
capital account (5,000) 5,000
Balances - - P 2,000 - P 8,000 P( 5,000) P(35,000) P 30,000
Additional investment by Calma and Daza 40,000 5,000 35,000
Payment of liabilities, loan and capital P 40,000 - P 2,000 - P 8,000 - - P 30,000
Chapter 3 Partnership Liquidation
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Problem 3-4

1. Estrella, Capital P 144,000 3. a. Cash 463,000

Estrella, Drawing ( 12,000) Eugenio, Capital 52,500
Total interest of Estrella P 132,000 Esteban, Capital 31,500
Cash received by Estrella 111,000 Estrella, Capital 21,000
Share of Estrella in the loss on P 21,000 Other Assets 568,000
liquidation
Fractional share of Estrella 2/10
Total loss on liquidation P 105,000 b. Liabilities 200,000
Cash 200,000

c. Esteban, Loan 40,000

Eugenio, Capital 79,500
Esteban, Capital 102,500
Estrella, Capital 111,000
Cash 333,000

2.
Eugenio , Esteban and Estrella
Statement of Liquidation
January 1 31, 2008

CAPI TAL
Other Esteban, Eugenio Esteban Estrella
Cash Assets Liabilities Loan (5/10) (3/10) (2/10)
Balances before liquidation P 70,000 P 568,000 P 200,000 P 40,000 P 132,000 P 134,000 P132,000
Sale of other assets & distribution of loss 463,000 ( 568,000) ( 52,500) ( 31,500) ( 21,000)
Balances P 533,000 P 200,000 P 40,000 P 79,500 P 102,500 P 111,000
Payment of liabilities (200,000) ( 200,000)
Balances P 333,000 P 40,000 P 79,500 P 102,500 P 111,000
Payment to partners ( 333,000) ( 40,000) ( 79,500) (102,500) ( 111,000)
Chapter 3 Partnership Liquidation
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Problem 3 - 6

QRS Partnership
Statement of Liquidation
July to September, 2008

Accounts Roman, C A P I T A L
Cash Other Assets Payable Loan Quizon Roman Silva
Balances before liquidation P 150,000 P2,010,000 P1,215,000 P150,000 P300,000 P270,000 P225,000
July: Sale of assets 1,170,000 ( 1,530,000) ( 180,000) ( 108,000) ( 72,000)
Payment of liabilities ( 1,215,000) ( 1,215,000)
Payment of liquidation expenses ( 7,500) ( 3,750) ( 2,250) ( 1,500)
P 97,500 P 480,000 - P150,000 P116,250 P159,750 P151,500
Payment of loan ( 67,500) ( 67,500)
Balances P 30,000 P 480,000 - P 82,500 P116,250 P159,750 P151,500
August: Sale of assets 66,000 ( 105,000) ( 19,500) ( 11,700) ( 7,800)
Payment of liquidation expenses ( 7,500) ( 3,750) ( 2,250) ( 1,500)
P 88,500 P 375,000 - P 82,500 P 93,000 P145,800 P142,200
Payment of loan and capital ( 58,500) ( 41,100) ( 17,400)
Balances P 30,000 P 375,000 - P 41,400 P 93,000 P145,800 P124,800
Sept.: Sale of assets 165,000 ( 375,000) ( 105,000) ( 63,000) ( 42,000)
Payment of liquidation expenses ( 7,500) ( 3,750) ( 2,250) ( 1,500)
P 187,500 - - P 41,400 (P 15,750) P 80,550 P 81,300
Additional loss to Roman & Silva 15,750 ( 9,450) ( 6,300)
Payment to partners P 187,500 - - P 41,400 - P 71,100 P 75,000
Chapter 3 Partnership Liquidation
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Problem 3 - 5
JKLM Trading
Statement of Liquidation
February 1 - March 31, 2008

Other Jocson C A P I T A L
Cash Assets Liabilities Loan Jocson Kaimo Legarda Manabat
Balances before liquidation P 100,320 P 193,530 P 21,360 P 15,000 P 24,120 P 96,480 P 109,020 P 27,870
February:
Sale of assets & distribution of loss 49,320 ( 66,060) ( 3,348) ( 5,022) ( 5,022) ( 3,348)
Payment of liabilities ( 17,750) ( 17,750)
Payment of liquidation expenses ( 8,220) ( 1,644) ( 2,466) ( 2,466) ( 1,644)
Balances P 123,670 P 127,470 P 3,610 P 15,000 P 19,128 P 88,992 P 101,532 P 22,878
Payment to partners (sch. 1) ( 120,060) ( 7,980) (49,770) ( 62,310)
Balances P 3,610 P 127,470 P 3,610 P 7,020 P 19,128 P 39,222 P 39,222 P 22,878
March:
Sale of assets & distribution of gain 48,330 ( 44,850) 696 1,044 1,044 696
Payment of liabilities ( 3,610) ( 3,610)
Payment of liquidation expenses ( 7,380) ( 1,476) ( 2,214) ( 2,214) ( 1,476)
Balances P 40,950 P 82,620 p -------- P 7,020 P 18,348 P 38,052 P 38,052 P 22,098
Payment to partners (sch. 2) ( 40,950) 7,020 ( 1,824) (13,266) ( 13,266) ( 5,574)
Balances, March 31 P --------- P 82,620 P -------- P ------- P 16,524 P 24,786 P 24,786 P 16,524
Chapter 3 Partnership Liquidation
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Problem 3 - 8

Req. 2
Neri, Ordan and Pacia
Statement of Liquidation
January 1 - March 31, 2008

Other Pacia, Sal. Pay. C A P I T A L

Cash Assets Liabilities Loan to Neri Neri Ordan Pacia
Balances before liquidation P 19,000 P 191,000 P 77,000 P 9,000 P 6,000 P 50,000 P 28,000 P 40,000
January:
Collections from customers 112,000 (112,000)
Payment of liquidation expenses ( 4,400) ( 2,200) ( 1,100) ( 1,100)
Payment of liabilities ( 38,000) ( 38,000)
Balances P 88,600 P 79,000 P 39,000 P 9,000 P 6,000 P 47,800 P 26,900 P 38,900
Payment to partners (see schedule) ( 16,000) ( 9,000) ( 7,000)
Balances P 72,600 P 79,000 P 39,000 - P 6,000 P 47,800 P 26,900 P 31,900
February:
Collections from customers 36,000 ( 36,000)
Payment of liquidation expenses ( 2,800) ( 1,400) ( 700) ( 700)
Payment of liabilities & dist. of gain (38,000) ( 39,000) 500 250 250
Balances P 67,800 P 43,000 - - P 6,000 P 46,900 P 26,450 P 31,450
Payment to partners (see schedule) ( 19,800) ( 6,000) ( 1,400) ( 3,700) ( 8,700)
Balances P 48,000 P 43,000 - - - P 45,500 P 22,750 P 22,750
March:
Collections from customers & dist. of 35,000 ( 43,000) ( 4,000) ( 2,000) ( 2,000)
loss
Payment of liquidation expenses ( 4,000) ( 2,000) ( 1,000) ( 1,000)
Payment to partners P( 79,000) - - - - P 39,500 P 19,750 P 19,750
Chapter 3 Partnership Liquidation
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Problem 3 -8
Requirement No 1 Neri, Ordan and Pacia
Cash Priority Program
January 1, 2008

Neri Ordan Pacia Neri Ordan Pacia

Capital balances before liquidation P 50,000 P 28,000 P 40,000
Add Loan balances 6,000 9,000
Total partners interest P 56,000 P 28,000 P 49,000
Profit and loss ratio 50% 25% 25%
Loss absorption balance P112,000 P112,000 P196,000
allocation I - Cash to Pacia reducing LAB to an amount reported
for Neri and Ordan. Reduction of P84,000 requires payment
of 25% of P 84,000 ( 84,000) _______ _______ P 21,000
Balances P112,000 P112,000 P112,000 -------- --------- P 21,000
Allocation II - Further cash distributions may be made in the profit and loss raio

SCHEDULE OF CASH DISTRIBUTION:

Amount Neri Ordan Pacia
January: Cash available P 16,000
Allocation I:
Payable to Pacia 16,000 - --------- P 16,000

February: Cash available P 19,800

Allocation I:
Payable to Pacia 5,000 P 5,000
Allocation II
Payable according
to P & L ratio P 14,800 P 7,400 P 3,700 3,700
- P 7,400 P 3,700 P 8,700
Chapter 3 Partnership Liquidation
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Problem 3 - 7

Requirement 3
Tabora, Ureta and Veloso
Statement of Liquidation
January 1 to April 30, 2008

Other L O A N C A P I T A L
Cash Assets Tabora Ureta Veloso Tabora Ureta Veloso
Balances before liquidation - P 338,000 P 45,000 P 30,000 P 13,000 P 120,000 P 90,000 P 40,000
January:
Sale of assets 15,000 ( 15,000)
Payment to partners (15,000) (15,000)
Balances - P 323,000 P 45,000 P15,000 P 13,000 P 120,000 P 90,000 P 40,000
February:
Sale of assets 40,000 ( 40,000)
Payment to partners ( 40,000) ( 21,250) (15,000) ( 3,750)
Balances P 283,000 P 23,750 - P 13,000 P 120,000 P 86,250 P 40,000
March:
Sale of assets 90,000 ( 90,000)
Payment to partners ( 90,000) (23,750) (13,000) ( 23,500) ( 28,350) ( 1,400)
Balances - P 193,000 - - - P 96,500 P 57,900 P 38,600
April:
Sale of assets & distribution of loss 30,000 ( 193,000) ( 81,500) ( 48,900) (32,600)
Balances P 30,000 - - - - P 15,000 P 9,000 P 6,000
Payment to partners (30,000) - - - - P 15,000 P 9,000 P 6,000
Chapter 3 Partnership Liquidation
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