PARTNERSHIP LIQUIDATION

PROBLEM M:
The following condensed statement of financial position is presented for the partnership of AA,
BB and CC, who share profits and losses in the ratio of 4:4:2, respectively:
Cash P160,000
Other
assets
Total

Liabilities P180,000
AA, capital 48,000
BB, capital 216,000
CC, capital
Total

The partners agreed to dissolve the partnership after selling the other assets for P200,000.

Requirements:
1. How much should each partner receive upon liquidation?
0; 168, 000; 12,000
2. Assume instead that the other assets were sold for P10,000 and that deficient
partners, if any, are solvent. How much should each partner receive upon
liquidation?
0; 92,000; 0
3. Assume instead that the other assets were sold for P50,000 and that deficient
partners, if any, are insolvent. How much should each partner receive upon
liquidation?
0; 30,000; 0
4. Assume instead that the partnership is dissolved and liquidated by installments.
The first realization of P40,000 cash is on the sale of other assets with book value
of P80,000. 60% of the liabilities were liquidated. Liquidation expenses paid
amounted to P2,000 while future liquidation expenses are estimated to be P3,000.
How much should each partner receive on the first installment?
0; 15,000; 0
5. Using information in item 4, assume that in the second realization of P50,000 cash
is on the sale of other assets with book value of P95,000. The remaining liabilities
were liquidated. Liquidation expenses paid amounted to P500 with P2,500
estimated to be incurred in the future. How much should each partner receive on
the second installment?
0; 50,000; 0
PROBLEM N:

AA, BB and CC decided to liquidate their partnership on November 30, 2021. Their capital
balances and profit ratio, before closing entries were made, follow:
AA, capital (40%) P50,000
BB, capital (30%) 60,000
CC, capital (30%) 20,000

The net income from January 1 to November 30 is P44,000. On date of liquidation, the cash
and liabilities are P40,000 and P90,000, respectively.

Requirements:
1. How much must be realized from the sale of the non-cash assets in order for AA
to receive P55,200 in full settlement of his interest in the firm?
193,000
PROBLEM O:
AA, BB and CC 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 statement of financial position
reflects the following book values:
Cash P 25,200)
Non-cash assets 297,600)
Payable to CC 38,400)
Other liabilities 184,800)
AA, capital 72,000)
BB, capital ( P12,000)
CC, capital 39,600)

Actual liquidation expenses are P16,800 and that the non-cash assets with a book value of
P240,000 were sold for P216,000.

Requirements:
1. How much cash should each partner receive?
0; 0; 39,600
PROBLEM P:

The partnership of AA, BB and CC was liquidated on June 30, 2021 and account balances after
non-cash assets were converted into cash on September 1, 2021 are:
Cash P50,000 Accounts payable P120,000)
AA, capital (30%) 90,000)
BB, capital (30%) (60,000)
CC, capital (40%) (100,000)

Personal assets and liabilities of the partners at September 1, 2021 are:

Personal Personal
Assets Liabilities
AA P80,000 P90,000
BB 100,000 61,000
CC 190,000 80,000

CC contributes P70,000 to the partnership in order to have sufficient cash to pay partnership
creditors.

Requirements:
1. How much should each partner receive as a result of liquidation?
81,000; 0; 0