i | I CPA REVIEW SCHOOL OF THE PHILIPPINES Maile | ‘Advanced Financial Accounting Gtierrero/Gerthan/DeJesus/Lim/Ferrer/Laca/Valix PARTNERSHIP LIQUIDATION " Rar iho of Accounts 1. Itrefers othe process of converting the non-cash asets ofthe partnership and distributing the total ‘ash tothe creditors and the remainder tothe partners. Dissolution . Termination © Liquidation 4. Operation 2 nhs iusto of general prtnetip, which of the fillowing credits shal be pid fst? ‘Those owing to third persons. '. Those owing o partners other than capital and profits. ‘c. Those owing to partners for their capital contribution. 4d. Those owing to parners for their share in profits. 3. Inthe liquidation of limited partnership, which of the following credits shall be paid last? 1 Those owing to third persons. . Those owing to limited partners Those owing to general partners for their share in pr 4d. Those owing to general partners for their capital contribution, | 4 4. women oak feel pt aspen eso gin? Tho Hable en ep te exe of iso ae afer tp pute as ae om They are lable pro-rata up to the extent oftheir separate astts after partnership ates are exkausted They ae liable pro-rata up tothe extent of thir capital contribution only. 4. They a ihe sald op tthe ext fei sept ee are pare ase re extn 5. Whats the nature of ability of imited parmets as limited partnership debt or obligations? 4 They ae lable equally upto the extent of tir separate assets afer the partership assets are exhnused b. They are liable pro-rata up to the extent oftheir separate assets after he partnership ats are exhausted “They ar liable pro-ata upto the extent oftheir capital cotribution oly ‘They a liable equally yp tothe extent of their capital contin oly. pePage 2 Part I: Problem Solving 1. On December 31, 2020, the Statement of Financial Position of ABC Partnership with profit ot loss ratio of 6:1: of partners A, B and C respectively, revealed the following data: Cash 1,000,000 Other Liabilities 2,900,000 Receivable fom A ‘00,000 Payable B 1,000,000 Other noveash assets 2,000,000, Payable to C 100,000 A, Capital 700,000 B, Capital (650,000) ©, Capital 350,000 On January 1, 2021, the partners decided to liquidate the partnership. All parmers ere legally Acclared to be personally insolvent. The other noncesh assets were sold for P1,500,000. Liquidation expenses amounting wo P100,000 were incured. 1, How much cash was received by B atthe end of partnership liquidation? a 250,000 ». 150,000 «290,000 4 270,000 2. How much cash was received by C atthe end of partnership liquidation? 270,000 150,900 350,000, 220.000 2. D, Band F ere partners in DEF Partnership with profit or loss sharing ratio of 6:1:3, Due to disagrocenent, the partiers decided to liquidate their business with pre-liquidation statement of financial position presented below cash PaM Liabilities PLOM Noncash ass 1™ D, Capital M E, Capital aM F, Cepital M The following cxkttiona notes ave provided: ‘All parners acc legally declared tobe personally insolvent. ‘All noncash assets ae sold ding the Tiguidatioa process. Liquidation expeuses amounting to P2M were paid. E receive: a tosl of 2,500,000 atthe end of liquidation. 1, What isthe amount received by Fat the end of liquidation’? a _ $00.00 ». 2,300,000 ¢ ° €. 3,500.000 2 Using the seme dat, what is the net proceeds fom the sale of all noncash assets? 4. 15,000.000 b. 10,00,000 © 12,000.c60 4 Rono.c00Page 3 ‘3% On December 31, 2020, the Statement of Financial Position of ABC Partnership with profit or loss ‘ato of $:3:2 of respective partners A, B and C. showed the following information: Cash 1,600,000 Tota Liabilities 2,000,000 ‘Noncash assets 1,400,000 A, Capital 100,000 B, Capital 500,000 ©, Capital 400,000 On January 1, 2021, the partners decided to liquidate the partnership in installment. All partners are legally declared to be personally insolvent, ‘As of January 31, 2021, the following transactions occurred: ‘+ Noncash assets with a carying amount 1,000,000 were sold at again of P100,000. ‘+ Liquidation expenses forthe month of January amounting to P50,000 were pai ‘+ Its estimated that liquidation expenses amounting to P1S0,000 will be incurred for the month of February, 2021, ‘+ 20% of the liabilities to third persons were settled. ‘Available cash was distributed tothe partners. ‘As of February 28, 2021, the following transactions occurred: ‘Remaining noncash assets were sold ata loss of P100,000. ‘The final liquidation expenses for the month of February amounted to P100,000, ‘The remaining liabilities to third persons were sete. ‘Remaining cash was finally distribute tothe parmers, 1, What is the amount of cash received by partner C on January 31, 2021? a 260,000 . 240,000 © 300,000 4. 350,000 2. What is the share of B in the maximum possible loss on January 31, 2021? a 275,000 b. 110,000 © 120,000 4. 165,000 3. What is the amount of total eash withheld on January 31, 2021? $50,000 1,600,000 1,750,000 4. 1,700,000 4. What is the amount of cash received by partner A on February 28, 2021? 0 . 25,000 195,000 130,000 eese 8604we 4 4. On December 31, 2020, the Statement of Financial Postion of UFC Partnership shows the following dara with profit or loss sharing of 2:3:5: Cash 15,000,000 Liabilities to others P20,000,000 Other Noneash asset 40,000,000 15,000,000, 12,500,000, 7/300,000 ‘On January 1, 2021 the partners decided to wind up the partnership affairs, During the winding up, liguidation expenses amounted to P2,000,000 were paid, Non-ash assets with book value of 30,000,000 were sold during January. 40% of total liabilities were also paid during Jenuary. 3,000,000 cash wes withheld during January for future liquidation expenses. On January 31, 2021, partner U received P10,000,000, 41, What i the amount received by partner F on J a. 2,500,000 ®. 7,500,000 «©. 5,000,000 4. 3,000,000 ary 31,20217 2 Using the same dats, what is the net proceeds from the sale of non-cash assets during. January 2021? 25,000,000 ». 20,000,000 © 22,000,000 4. 23,000,000 5. On January 1, 2020, ACJ Partnership entered into liquidation. The partners’ capital balances on his date wore as follows: A (25%) P2,500,000 ; C (35%) P5,400,000 J (40%) P3,700,000. ‘The parmership has liabilities amounting to P4,400,000, including & loan from C P600, ‘on hand before the start of liquidation is P800,000. Noneash assets amounting to P7,400,000 were sold at book value and the rest of the cash assets were sold at a loss of 74,200,000. How much cash will be distributed to the partners? b 4. 11,800,000 2 After exhausting the noncash assets of the partnership, assuming all partners has Personal assets more than their personal liabilities. How much cash must be invested by the partners to satisfy the laims ofthe outside creditors and to pay the amount due to the artneris? 1. 3,680,000 >. 4,480,000 ©. 4,360,000 4. 3/800,000 3. IEC received P2,255,000, How much was the loss from the realization of the noncaah a $255,000 . 10,700,000 © 10/525,000, & 9,945,000 END 8604