Partnership Liquidation Q10
Keaton, Lewis, and Meador share profits and losses in a ratio
1) The following balances in the condensed balance sheet are presented
for the partnership of A, B, and C, who share profits and losses in the
ratio of 4:3:3, respectively: Cash, P160,000; Other assets, P320,000;
Liabilities, P180,000; A, capital, P48,000; B, capital, P216,000; and C,
capital, P36,000. The partners agreed to dissolve the partnership after
selling the other assets for P200,000. Upon dissolution of the
partnership, A should have received _______.
2) W, X, and Y are partners sharing profits and losses in the ratio of
4:3:3, respectively. The balances in the condensed balance sheet of
Heidi Partnership as of December 31, 2018 are: Cash, P50,000; Other
assets, P130,000; Liabilities, P40,000; W, capital, P60,000; X, capital,
P40,000; and Y, capital, P40,000. Assume instead that the Heidi
Partnership is dissolved and liquidated by installments, and the first
realization of P40,000 cash is on the sale of other assets with book
value of P80,000. After the payment of liabilities, the available cash
shall be distributed to W, X, and Y, respectively, as follows: _______
_______ _______
3) The partners of the M&N Partnership started liquidating their
business on July 1, 2018, at which time the partners were sharing
profits and losses 40% to M and 60% to N. The balances in the balance
sheet of the partnership appeared as follows: Cash, P8,800;
Receivable, P22,400; Inventory, P39,400; Equipment, P65,200;
Accumulated depreciation, P30,800; Accounts payable, P32,400; M,
capital, P31,000; M, drawing, P5,400; N, capital, P33,200; N, drawing,
P200; N, loan, P14,000. During the month of July, the partners
collected P600 of the receivables with no loss. The partners also sold
during the month the entire inventory on which they realized a total of
P32,400. How much of the cash was paid to M’s capital on July 31,
2018? _______
4) After operating for 5 years, the books of the partnership of Bo and
By showed the following balances: Net assets, P169,000; Bo, capital,
P110,500; and By, capital, P58,500. If liquidation takes place at this
point and the net assets are realized at book value, Bo and By will
receive _______ and _______, respectively.
5) R, S, and T decided to dissolve the partnership on November 30,
2018. Their capital balances and profit ratio on this date, follow: R
(40%), P50,000; S (30%), P60,000; and T (30%), P20,000. The net
income from January 1 to November 30, 2018 is P44,000. Also, on this
date, cash and liabilities are P40,000 and P90,000, respectively. For R
to receive P55,200 in full settlement of his interest in the firm, how
much must be realized from the sale of the firm’s non-cash assets?
_______
6) Silverio, Domingo, Reyes, and Pastor are partners, sharing earnings
in the ratio of 3/21, 4/21, 6/21, and 8/21, respectively. The balances of
their capital accounts on December 31, 2018 are as follows: Silverio,
P1,000; Domingo, P25,000; Reyes, P25,000; and Pastor, P9,000. The
partners decide to liquidate, and they accordingly convert the non-cash
assets into P23,200 of cash. After paying the liabilities amounting to
P3,000, they have P22,200 to divide. Assume that a debit balance in
any partner’s capital is uncollectible. After the P22,200 was divided,
the capital balance of Domingo was _______.
7) As of December 31, 2018, the books of Ton Partnership showed
capital balances of: T, P40,000; O, P25,000; and N, P5,000. The
partners’ profit and loss ratio was 3:2:1, respectively. The partners
decided to liquidate and they sold all non-cash assets for P37,000.
After settlement of all liabilities amounting P12,000, they still have
cash of P28,000 left for distribution. Assuming that any capital debit
balance is uncollectible, the share of T in the distribution of the
P28,000 cash would be _______.
8) A local partnership was considering the possibility of liquidation
since one of the partners is solvent (Tillman) and the others are
insolvent. Capital balances at that time were as follows: Ding, capital,
P60,000; Laurel, capital, P67,000; Ezzard, capital, P17,000; Tillman,
capital, P96,000. Profits and losses were divided on a 4:2:2:2 basis,
respectively. Ding’s creditors filed a P25,000 claim against the
partnership’s assets. At that time, the partnership held assets reported
at P360,000 and liabilities of P120,000. If the assets could be sold for
P228,000, what is the minimum amount that Ding’s creditors would
have received? _______
9) The Keaton, Lewis, and Meador Partnership had the following
balances in their balance sheet just before entering liquidation: Cash,
P10,000; Non-cash assets, P300,000; Liabilities, P130,000; Keaton,
capital, P60,000; Lewis, capital, P40,000; and Meador, capital,
P80,000.
of 2:4:4. Non-cash assets were sold P180,000. Liquidation expenses
were P10,000. Assume that Keaton was personally insolvent with
assets of P8,000 and liabilities of P60,000. Lewis and Meador were
both solvent and able to cover deficits in their capital accounts, if any.
What amount of cash could Keaton’s personal creditors have expected
to receive from partnership assets? _______
10) The following account balances were available for the Perry,
Quincy, and Renquist Partnership just before it entered liquidation:
Cash, P90,000; Non-cash assets, P300,000; Liabilities, P170,000;
Perry, capital, P70,000; Quincy, capital, P50,000; and Renquist,
capital, P100,000. Perry, Quincy, and Renquist had shared profits and
losses in a ratio of 2:4:4. Liquidation expenses were expected to be
P8,000. All partners were solvent. What would be the minimum
amount for which the non-cash assets must have been sold for, in order
for Quincy to receive some cash from the liquidation? _______
11) A, B, and C are partners in ABC Partnership and share profits and
losses 50%, 30%, and 20%, respectively. The partners have agreed to
liquidate the partnership and some liquidation expenses to be incurred.
Prior to the liquidation, the partnership balance sheet reflects the
following book values: Cash, P25,200; Non-cash assets, P297,600;
Notes payable to C, P38,400; Other liabilities, P184,800; A, capital,
P72,000; B, capital deficit, P12,000; and C, capital, P39,600.
Assuming that the actual liquidation expenses are P16,800 and that the
non-cash assets with a book value of P240,000 are sold for P216,000.
How much cash should C receive? _______
12) After all non-cash assets have been converted into cash in the
liquidation of the A and J partnership, the ledger contains the following
account balances: Cash, P34,000; Accounts payable, P25,000; Loan
payable to A, P9,000; A, capital deficit, P8,000; and J, capital, P8,000.
Available cash should be distributed P25,000 to accounts payable, and
_______ to A and _______ to J.
13) Arthur, Baker, and Carter are partners in textile distribution
business, sharing profits and losses equally. On December 31, 2018,
the partnership capital balances and drawings were as follows: Arthur,
capital, P100,000; Arthur, drawing, P60,000; Baker, capital, P80,000;
Baker, drawing, P40,000; Carter, capital, P300,000; and Carter,
drawing, P20,000. The partnership was unable to collect on trade
receivables and was forced to liquidate. Operating profit in 2012
amounted to P72,000 which was all exhausted, including the
partnership assets. Unsettled creditors’ claims at December 31, 2018
totaled P84,000. Baker and Carter have substantial private resources,
but Arthur has no personal assets. The final cash distribution to Carter
was _______.
14) Jar, Ram, and Millo, who divide profits and losses 50%, 30%, and
20%, respectively, have the following October 31, 2018 account
balances: Jar, drawing (debit), P12,000; Millo, drawing (credit),
P4,800; Accounts receivable – Jar, P7,200; Loans payable – Ram,
P14,400; Jar, capital, P59,400; Ram, capital, P44,400; and Millo,
capital, P39,000. The partnership’s assets are P211,200 (including cash
of P64,200). The partnership is liquidated and Millo receives P33,000
in final settlement. How much is the total loss on realization? _______
15) When Mikki and Mylene, partners who share earnings equally,
were incapacitated in an airplane accident, a liquidator was appointed
to wind up their business. The accounts showed: Cash, P35,000; Other
assets, P110,000; Liabilities, P20,000; Mikki, capital, P71,000; and
Mylene, capital, P54,000. Because of highly specialized nature of the
non-cash assets, the liquidator anticipated that considerable time
would be required to dispose them. The expenses of liquidating the
business (advertising, rent, travel, etc.) are estimated at P10,000. At
this point, how much cash can be distributed safely to Mikki and
Mylene, respectively? _______ _______
16) A balance sheet for the partnership for K, L, and M, who share
profits 2:1:1 respectively, shows the following balances just before
liquidation: Cash, P48,000; Other assets, P238,000; Liabilities,
P80,000; K, capital, P88,000; L, capital, P62,000; and M, capital,
P56,000. In the first month of liquidation, P128,000 was received on
the sale of certain assets. Liquidation expenses of P4,000 were paid,
and additional liquidation expenses of P3,200 are anticipated before
liquidation is completed. Creditors were paid P22,400. The available
cash was distributed to the partners. The cash to be received by each
partner based on the above data are _______, _______, and _______,
respectively.