Assignment 5

Partnership Liquidation

Instruction: Prepare the answers in written form using a clean paper (e.g. Yellow pad, bond paper,
notebook etc.) and submit a snapshot in CANVAS.

Problem1. Assume the following data for ABC Partnership had the following condensed balance sheet
just before the liquidation on November 1, 2019:

Assets Liabilities and Capital

Cash P 24,000 Liabilities P 12,000

Non-cash assets 84,000 A, Loans 2,400

A, Capital (30%) 9,600
B, Capital (50%) 48,000
C, Capital (20%) 36,000
Total P 108,000 P108,000

Liquidation expenses paid amounted to P1,000.

Required: Compute for the total payment for each partner (including loans) using different assumptions:

1. Non-cash assets were realized at P 96,000.

2. Non-cash assets were realized at P36,000. The personal assets and liabilities of the partners on
this date are as follows:

Personal assets Personal liabilities

A P288,000 P240,000
B 216,000 228,000
C 108,000 108,000

Problem2. A, B, C partnership began the process of liquidation with the following balance sheet:

Assets Liabilities and Capital

Cash P 16,000 Liabilities P 150,000

Non-cash assets 434,000 A, Capital (30%) 80,000

B, Capital (20%) 90,000
C, Capital (50%) 130,000
Total P 450,000 P 450,000

Liquidation expenses are expected to be P12,000. After the liquidation expenses of P12,000 had been
paid and the non-cash assets are sold, C had a deficit of P8,000. For what amount were the non-cash
assets sold?
 Assignment 5
Partnership Liquidation

Problem 3. Assume A, B, C and D are partners sharing profits 40%, 20%, 20%, 20%, respectively. On
January 1, 2019, they agree to liquidate. A balance sheet prepared on this date is shown as follows:

Assets Liabilities and Capital

Non- Cash assets P 181,800 Liabilities P 84,000

A, Loan
6,000
D, Loan 3,000
A, Capital 26,400
B, Capital 25,800
C, Capital 20,400
D, Capital 16,200
Total P 181,800 P 181,800

Results of liquidation are summarized below:

Month Proceeds Book Value Liquidation exp. Cash withheld

January P72,000 P90,000 P1,200 P4,800

February 21,600 30,000 1,320 1,800
March 19,200 24,000 1,440 1,200
April 6,000 19,800 4,800 600
May 2,400 18,000 960 -

Required: Prepare the statement of liquidation and related schedule of safe payment for the month of
January to May 2019.