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Chapter 4
Partnership Liquidation

NAME: Date:
Professor: Section: Score:

QUIZ
1. A and B decided to liquidate their partnership. The partnership’s records show the following
information:
Cash -
Non-cash assets 80,000
80,00
Total assets 0

Liabilities 15,000
Loan payable to Partner A 10,000
Loan payable to Partner B 17,000
A, capital (80%) 20,000
B, capital (20%) 18,000
80,00
Total liabilities and equity
0

The non-cash assets are to be sold in installments and the partners’ claims are to be settled as cash
becomes available. In the first sale, half of the non-cash assets were sold for ₱15,000. How much did
A and B receive in the first cash distribution?
A B
a. 7,000 8,000
b. 2,000 13,000
c. 5,000 10,000
d. 0 0

2. On January 1, 20x1, the partners of ABC Co. decided to liquidate their partnership. The
following information was made available:
Cash 80,000
Accounts receivable 240,000
Inventory 480,000
Equipment 1,200,000
Total 2,000,000
Accounts payable 120,000
Payable to B 80,000
A, Capital (20%) 400,000
B, Capital (30%) 600,000
C, Capital (50%) 800,000
Total 2,000,000

Information on the conversion of non-cash assets is as follows:

 ₱40,000 was collected on accounts receivable; the balance is uncollectible.
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 ₱20,000 was received for the entire inventory.

 The equipment was sold for ₱200,000.
 ₱8,000 liquidation expenses were paid.
 ₱108,000 was paid to outside creditors, after offset of a ₱12,000 credit memorandum received on
January 2, 20x1.
 All of the partners are personally solvent.

How much did B receive from the settlement of his interest in the partnership?
a. 68,800
b. 57,600
c. 183,200
d. 103,200

Use the following information for the next three questions:

On January 1, 20x1, A and B decided to liquidate their partnership. As of this date, their capital
balances were ₱400,000 and ₱800,000, respectively. The partners share profits and losses on a 60:40
ratio. Before liquidation, the partnership had ₱80,000 cash and ₱120,000 liabilities. The partnership
incurred loss of ₱480,000 on the sale of non-cash assets. A is solvent but B is insolvent.

3. How much was the carrying amount of the non-cash assets?

a. 1,420,000
b. 1,360,000
c. 1,240,000
d. 920,000

4. How much was the net proceeds from the sale of non-cash assets?
a. 760,000
b. 1,720,000
c. 1,480,00
d. 680,000

5. How much did A receive from the settlement of his capital balance?
a. 608,000
b. 112,000
c. 806,000
d. 0

Use the following information for the next three questions:

On January 1, 20x1, A and B, who share profits and losses on a 60:40 ratio, decided to liquidate their
partnership. After all the non-cash assets of the partnership were sold for ₱760,000 and all the
₱120,000 liabilities were settled, the partners had ₱720,000 to distribute among themselves. A
received ₱112,000 in the settlement of his ₱400,000 capital balance.

6. How much was the total assets immediately before liquidation?

a. 1,420,000 c. 1,330,000
b. 1,280,000 d. 1,320,000

7. How much was the beginning capital balance of B?

a. 800,000 c. 720,000
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b. 1,600,000 d. 600,000

8. How much did B receive in the settlement of his capital account?

a. 680,000 c. 720,000
b. 660,000 d. 608,000

9. On January 1, 20x1, the partners of ABC Co. decided to liquidate their partnership on
installment basis. Distributions to partners shall be made as cash becomes available. The
following information was made available:
Dr. Cr.
Cash 80,000
Accounts
240,000
receivable
Receivable from C 40,000
Inventory 480,000
Equipment 1,200,000
Accounts payable 120,000
Payable to B 80,000
A, Capital (20%) 400,000
A, Drawings 80,000
B, Capital (30%) 600,000
C, Capital (50%) 800,000
C, Drawings 120,000
2,120,00 2,120,00
Totals
0 0

During January, non-cash assets with carrying amount of ₱520,000 were sold for ₱240,000. The cost
of disposal was ₱80,000. All of the partners are personally insolvent. How much did B receive in the
partial settlement of his capital account?
a. 32,000 c. 140,000
b. 120,000 d. 0

10. ABC Co. is undergoing liquidation. Information before the start of the liquidation process is as
follows:
10,00
Cash Accounts payable 80,000
0
80,00
Accounts receivable Payable to B 20,000
0
10,00
Receivable from A A, Capital (50%) 250,000
0
180,00
Inventory B, Capital (30%) 150,000
0
320,00
Equipment, net C, Capital (20%)
0 100,000
Total Liab. &
Total 600,000 600,000
Equity

The total cash distributed to the partners after the first and second sales of noncash assets were
₱12,000 and ₱30,000, respectively.
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How much cash did B receive in the first cash distribution?

a. 12,000 c. 3,600
b. 8,000 d. 0

The heart of the discerning acquires knowledge, for the ears of the wise seek it out.” (Proverbs 18:15)

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