Ivy T.

Ecat
BSA 301

PROBLEM 1:
a. Compute for the maximum potential loss and rank each partner

ANSWER AND SOLUTION:

A B C
Balance before liquidation
Loan (to) from P (5,000) P10, 000
Capital balances P45,000 30,000 15,000
Total Interest P45, 000 P25, 000 P25, 000
Divided by: Profit and loss ratio 30% 50% 20%
Loss absorption abilities/potential P 150,000 P50, 000 P125, 000

Vulnerability ranking
A: rank 3 B: rank 1 C rank 2
(1 most vulnerable):

b. Assuming 65,000 is available for first distribution, whom should it receive and at
what amount

ANSWER AND SOLUTION:

The 65,000 first distribution will receive by the priority creditor amounting to
P50,000, while A will receive P 12,000 and C will receive P3,000.

A B C total

Balance before liquidation

Loan (to) from P (5,000) P10, 000
Capital balances P45,000 30,000 15,000
Total Interest P45,000 P25,000 P25,000 P95,000
Reduce in equity (24,000) (40,000) (16,000) (80,000)
Payment to partners P21,000 P(15,000) P9,000 P15,000
Additional loss(3:2) (9,000) 15,000 (6,000) ____
Payment to partners P 12,000 P3,000 P15,000

Cash avail for first distribution: P65, 000

Less: priority creditors 50,000
Payment to partners P15,000
PROBLEM 2: Compute for the total number of shares of preference and ordinary share
issued by the corporation in exchange of the assets and liabilities of the partnership.

ANSWER AND SOLUTION:

Assets
Cash P 45,000
Accounts Receivable 40,000
Inventory 68,000
Property and Equipment 180,600
Total Assets P 333,600
Less: Liabilities (60,000)
Amount to be paid P 273,600

Value of Equity shares to be issued to each partner = 720 x 10 = 7, 200

Total amount paid in form of equity shares = 7,200 x 2 = 14,400
Amount to be paid in form of preference shares = 273,600 – 14,400 = 259,200
Total No. of preference shares to be issued = 259,200 / 100 = 2592 shares

PROBLEM 3: If the liquidation takes places at this point and the net assets are realized
at book value, the partners are entitled to:

ANSWER:  

Ba will receive P110, 500, while Be will receive P58, 500 respectively.

PROBLEM 4: After C’s retirement, the capital balances of B and D respectively will be

PROBLEM 5: The capital of A, B, C respectively after the payment and admission of A

ANSWER AND SOLUTION:

A B C
Balance P 250,000 P150,000 P100,000
Revaluation (60,000x5:3:2) 30,000 18,000 12,000
Adjusted capital P280,000 P168,000 P112,000
Multiply: (100%-25%) 75% 75% 75%____
Capital after payment and
Admission Of A P210,000 126,000 P84,000
PROBLEM 6: The partners’ capital balances on December 31,2021 after closing the net
profit and drawing accounts:

ANSWER: A’s Capital balance: P 139,540, while B’s capital balance is: P48, 860

SOLUTION:

A B
P 25,000 -
1,440 -
8,100 P 4,680
34,540 4.680
(20,000) (30,000)
14,540 (25,140)
Add: Capital 125,000 75,000
End, Capital P139,540 P 48,860

PROBLEM 7: