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SOLMAN Chapter 7
SOLMAN Chapter 7
SOLMAN Chapter 7
PC – Chapter 7 page 1
CHAPTER 7
Installment Liquidation
E 7-1
Cash Aguilar Bernardo
Balances before liquidation P 40,000 P 80,000 P 44,000
Restricted interest – possible loss of P84,000 if nothing is
realized on the remaining non-cash assets ( 50,400) ( 33,600)
Balances P 40,000 P 29,600 P 10,400
Distribution of cash to partners ( 40,000) ( 29,600) ( 10,400)
E. 7-2
Conde Dalmacio
Balances before liquidation P142,000 P 108,000
Estimated liquidating expenses ( 10,000) ( 10,000)
Possible loss of P220,000 if nothing is realized on non-cash
assets (110,000) (110,000)
Balances P22,000 (P12,000)
Additional possible loss to Conde for the deficiency of
Dalmacio ( 12,000) 12,000
Balances P 10,000 -
Payment to Conde ( 10,000) -
E 7-3
Estela, Fajardo and Gomez
Cash Priority Program
PAYMENTS
Estela Fajardo Gomez Estela Fajardo Gomez
Capital balances P 30,000 P 70,000 P40,000
Add Loan balances 20,000 20,000 30,000
Total partners’ interest P 50,000 P 90,000 P 70,000
Profit and loss ratio 40% 40% 20%
Loss absorption balance P125,000 P225,000 P350,000
Allocation 1 – Cash to Gomez
reducing LAB to an amount
reported for Fajardo
(P125,000 x 20%) (125,000) P25,000
Balances P125,000 P225,000 P225,000
Allocation II – Cash to Fajardo &
Gomez reducing LAB to an
amount reported for Estela
P100,000 x 40% (100,000) P40,000
P100,000 x 20% (100,000) 20,000
Balances P125,000 P125,000 P125,000 - P40,000 P45,000
Allocation III – further cash
distribution may be made in the
P & L ratio
E 7-4
PC – Chapter 7 page 2
PAYMENTS
Halili Ibanez Jacinto Halili Ibanez Jacinto
Capital balances P11,200 P13,000 P5,800
Profit and loss ratio 4/7 2/7 1/7
Loss absorption balance P19,600 P45,500 P40,600
Allocation I – Cash to Ibanez
reducing LAB to an amount
reported for Jacinto (P4,900 x
2/7) ( 4,900) P 1,400
Balances P19,600 P40,600 P40,600
Allocation II – Cash to Ibanez &
Jacinto reducing LAB to an
amount reported for Halili
P21,000 x 2/7 (21,000) 6,000
P21,000 x 1/7 (21,000) P 3,000
Balances P19,600 P19,600 P19,600 - P 7,400 P 3,000
Allocation III – Further cash
distributions may be made in
the P & L ratio
E 7-5
PC – Chapter 7 page 3
PC – Chapter 7 page 4
Schedule 2
Installment Liquidation
February 28, 2009
3. Journal entries
January Cash 30,000
Kho, Capital 2,400
Lagman, Capital 2,400
Magno, Capital 3,200
Other assest 38,000
Liabilities 36,000
Cash 36,000
PC – Chapter 7 page 5
PC – Chapter 7 page 6
P 7-1
NOPQ Trading
Statement of Liquidation
February 1 – March 31, 2009
CAPITAL
Other Noble Noble Orbos Pimentel Quezon
Cash Assets Liabilities Loan (20%) (30%) (30%) (20%)
Balances before liquidation P100,320 P193,530 P21,360 P15,000 P24,120 P96,480 P109,020 P27,870
February:
Sale of assets & distribution of loss 49,320 (66,060) ( 3,348) ( 5,022) ( 5,022) ( 3,348)
Payment of liabilities ( 17,750) ( 17,750)
Payment of liquidation expenses ( 8,220) ( 1,644) ( 2,466) ( 2,466) ( 1,644)
Balances P123,670 P127,470 P 3,610 P15,000 P19,128 P88,992 P101,532 P22,878
Payment to partners (sch. 1) (120,060) ( 7,980) (49,770) (62,310)
Balances P 3,610 P127,470 P 3,610 P 7,020 P19,128 P39,222 P39,222 P22,878
March:
Sale of assets & distribution of gain 48,330 (44,850) 696 1,044 1,044 696
Payment of liabilities ( 3,610) ( 3,610)
Payment of liquidation expenses ( 7,380) ( 1,476) ( 2,214) ( 2,214) ( 1,476)
Balances P 40,950 P 82,620 P 7,020 P18,348 P38,052 P38,052 P22,098
Payment to partners (sch. 2) ( 40,950) ( 7,020) ( 1,824) (13,266) (13,266) ( 5,574)
Balances, March 31 P 82,620 P16,524 P24,786 P24,786 P16,524
PC – Chapter 7 page 7
Payment to apply on
Loan P 7,980
Capital P49,770 P62,310 P -----
Total cash distribution P 7,980 P49,770 P62,310 P -----
PC – Chapter 7 page 8
P 7-2
1. January : a. Cash 112,000
Accounts Receivable 112,000
PC – Chapter 7 page 9
P 7-2
CAPITAL
Other Toledo Sal. Pay Reyes Samson Toledo
Cash Assets Liabilities Loan to Reyes
Balances before liquidation P19,000 P191,000 P77,000 P 9,000 P 6,000 P50,000 P28,000 P40,000
January:
Collections from customers 112,000 (112,000)
Payment of liquidation expenses ( 4,400) ( 2,200) ( 1,100) ( 1,100)
Payment of liabilities (38,000) (38,000)
Balances P88,600 P79,000 P39,000 P 9,000 P 6,000 P47,800 P26,900 P38,900
Payment to partners (see schedule) ( 16,000) ( 9,000) ( 7,000)
Balances P72,600 P79,000 P39,000 P 6,000 P47,800 P26,900 P31,900
February:
Collections from customers 36,000 (36,000)
Payment of liquidation expenses ( 2,800) ( 1,400) ( 700) ( 700)
Payment of liabilities & dist. of gain (38,000) (39,000) 500 250 250
Balances P67,800 P43,000 P6,000 P46,900 P26,450 P31,450
Payment to partners (see schedule) (19,800) (6,000) ( 1,400) ( 3,700) ( 8,700)
Balances P48,000 P43,000 P45,500 P22,750 P22,750
March:
Collections from cust. & dist. of loss 35,000 (43,000) ( 4,000) ( 2,000) ( 2,000)
Payment of liquidation expenses ( 4,000) ( 2,000) ( 1,000) ( 1,000)
Balances P79,000 P39,500 P19,750 P19,750
Payment to partners ( 79,000) (39,500) (19,750) (19,750)
PC – Chapter 7 page 10
PAYMENTS
Reyes Samson Toledo Reyes Samson Toledo
Capital balances before liquidation P 50,000 P28,000 P40,000
Add Loan balances 6,000 9,000
Total partners’ interest P 56,000 P28,000 P49,000
Profit and loss ratio 50% 25% 25%
Loss absorption balance P112,000 P112,000 P196,000
Allocation I – Cash to Toledo reducing LAB to an amount reported
for Reyes and Samson, reduction of P84,000 requires payment
(25% x P84,000) (84,000) P21,000
Balances P112,000 P112,000 P112,000 - - P21,000
Allocation II – Further cash distributions may be made in the profit and loss ratio
PC – Chapter 7 page
11
P 7-3
Urbe, Verde and Waje
Cash Priority Program
January 1, 2009
PAYMENTS
Urbe Verde Waje Urbe Verde Waje
Capital balances before liquidation P120,000 P90,000 P40,000
Loan balances 45,000 30,000 P13,000
Total partners’ interest P165,000 P120,000 P43,000
Profit and loss ratio 50% 30% 20%
Loss absorption balances P330,000 P400,000 P265,000
Allocation I – Cash to Verde reducing
LAB to an amount reported for
Urbe (P70,000 x 30%) (70,000) P21,000
Balances P330,000 P330,000 P265,000
Allocation II – Cash to Urbe & Verde to
reduce LAB to an amount reported
for Waje (P65,000 x 30%)
(P65,000 x 20%) (65,000) (65,000) P32,500 19,500
Balances P265,000 P265,000 P265,000 P32,500 P40,500 -
Allocation III – Further cash
distributions may be made in the P
& L ratio
2.
February:
Cash available P40,000
Allocation I – Bal. payable to Verde 6,000 P6,000
Allocation II – Payable to Urbe and Verde in the
ratio of 50:30 P34,000 P21,250 P12,750
P21,250 P18,750
March:
Cash available P90,000
Allocation II – Balance 18,000 P11,250 P 6,750
Allocation III – Based on P & L ratio P72,000 360,00 21,600 P14,400
P47,250 P28,350 P14,400
April:
Cash available P30,000
Allocation III – Based on P & L ratio 30,000 P15,000 P9,000 P6,000
PC – Chapter 7 page 12
P 7-3
PC – Chapter 7 page
13
P 7-4
Xavier, Yambot and Zapanta
Cash Distribution Schedule
June 30, 2009
PAYMENTS
Xavier Yambot Zapanta Xavier Yambot Zapanta
Capital balances before liquidation P 67,000 P 45,000 P 31,500
Receivable from partners (12,000) (7,500)
Total partners’ interest P 55,000 P 45,000 P 24,000
Profit and loss ratio 50% 30% 20%
Loss absorption balance P110,000 P150,000 P120,000
Allocation I – Cash to Yambot to
reduce LAB to amount reported
for Zapanta (P30,000 x 30%) 30,000 P9,000
Balances P110,000 P120,000 P120,000
Allocation II – Cash to Zapanta &
Yambot to reduce LAB to an
amount reported for Xavier 10,000 10,000 3,000 2,000
Balances P110,000 P110,000 P110,000
Allocation III – Based on P & L ratio
(P6,000 + P100,000 – P17,000 =
P89,000 – P14,000)
P37,500 22,500 15,000
TOTALS P37,500 P34,500 P17,000
P 7-5
Fernan, Luisa and Susan
Statement of Changes in Partners’ Equity
For the Period of January 1, 2007 to May 31, 2009
PC – Chapter 7 page 14
PC – Chapter 7 page 15
MC 7-1 A
Elaine Flor Gina
Capital balances before liquidation P40,000 P65,000 P48,000
Less loss on realization ( 16,000) (16,000) ( 8,000)
Balances P24,000 P49,000 P40,000
Less Restricted interest – possible loss of P90,000
on other assets (36,000) (36,000) (18,000)
Balances (P12,000) P13,000 P22,000
Less Restricted interest – possible loss of P12,000
to Flor and Gina for the def. of Elaine 12,000 ( 8,000) ( 4,000)
Payment to partners - P 5,000 P18,000
MC 7- 2 B
Elaine Flor Gina
Balances after loss on realization P24,000 P49,000 P40,000
Less Restricted interest – possible loss of P93,000
on other assets and possible liquidation
expenses (37,200) (37,200) (18,600)
Balances (P13,200) P11,800 P21,400
Less Restricted interest – possible loss of P13,200
to Flor and Gina for the def. of Elaine 13,200 ( 8,800) ( 4,400)
Payment to Gina - - P17,000
MC 7-3 D
Elaine = P14,000 x 40% = P5,600
Flor = P14,000 x 40% = P5,600
Gina = P14,000 x 20% = P2,800
MC 7-4 C
Total credits (P105,000 + P5,000) P110,000
Less Cash 700
Other assets P109,300
MC 7-5 C
Capital of Aguas [P25,000 – (P20,000 x 60%)] P13,000
Amount received in final settlement 19,000
Share on gain on realization P 6,000
Profit ratio of Aguas 60%
Total gain on realization P10,000
Book value of other assets 109,300
Cash realized on other assets P119,300
PC – Chapter 7 page 16
MC 7-6 D
PAYMENT
Aguas Bernal Coral Aguas Bernal Coral
Capital balances P13,000 P45,000 P47,000
Profit and loss ratio 60% 25% 15%
Loss absorption balances P21,667 P180,000 P313,333
Allocation I (133,333) P20,000
Balances P21,667 P180,000 P180,000
Allocation II (158,333) (158,333) P39,583 23,750
Balances P21,667 P21,667 P21,667 --- P39,583 P43,750
MC 7-7 D
MC 7-8 A
Book value of other assets P280,000
Less Cash realized 220,000
Loss on realization P 60,000
Profit and loss share of Dalmacio X 3/6
Total loss to Dalmacio P 30,000
MC 7-9 C
Capital of Damian P 70,000
Less Share on the loss on realization (P6,000 x 2/6) 20,000
Cash received by Damian P 50,000
MC 7- 10 D
Dalmacio Damian Davide
Total partners’ interest P150,000 P 70,000 P 30,000
Loss on realization (15,000) (10,000) ( 5,000)
Balances P135,000 P 60,000 P 25,000
Restricted interest – pos. loss of P190,000 on other assets (95,000) (63,333) (31,667)
Balances P 40,000 (P 3,333) (P 6,667)
Restricted interest – possible loss to Dalmacio ( 10,000) 3,333 6,667
Cash received by Davide -0-
PC – Chapter 7 page 17
MC 7-11 B
PAYMENT
Felix Fojas Fajardo Felix Fojas Fajardo
Capital balances P225,000 P150,000 P75,000
Loans (25,000) 50,000
Total partners’ int. P225,000 P125,000 P125,000
Profit and loss ratio 30% 50% 20%
Loss absorption P750,000 P250,000 P625,000
balances
Allocation I (125,000) P37,500
Balances P625,000 P250,000 P625,000
Allocation II (375,000) (375,000) 112,500 P75,000
Balances P250,000 P250,000 P250,000 P150,000 - P75,000
Alloc. III P&L ratio
MC 7-12 D
Creditors Felix Fojas Fajardo
Amount available P325,000 P 250,000
Payment to creditors (250,000)
Allocation. I (37,500) P37,500
Allocation II (37,500 22,500 P15,000
P250,000 P60,000 - P15,000
MC 7-13 A
MC 7-14 C
Felix Fojas
Amount Available P180,000
Allocation I (37,500) P37,500
Allocation II (112,500) 112,500
Allocation III P 30,000 30,000
P30,000/30% x 50% P50,000
MC 7-15B
Fojas Fajardo
Allocation II P 75,000
Allocation III P180,000
P180,000/50% x 20% 72,000
P147,000
TM 24
1. E 5. H 9. I 13. A
2. M 6. M 10. C 14. N
3. K 7. D 11. B 15. L
4. F 8. G 12. J
TM 25
1. A
2. D
3. B
4. D
PC – Chapter 7 page 18
5. D
Allocation 1 P31,000
Allocation 2 – P3,000 x 4/6 P2,000
P3,000 x 2/6 P1,000
P ------ P2,000 P32,000
7. D
PC – Chapter 7 page 19
8. C
Allocation 1 P38,000
Allocation 2 – P10,000 x 3/5 P6,000
P10,000 x 2/5 P4,000
P6,000 P ---- P42,000
10. A
PC – Chapter 7 page 20
TM 26
2.
ASC Partnership
Cash Priority Program
June 30, 2009
PAYMENTS
Alfonso Santos Censon Alfonso Santos Censon
Capital balances before liquidation P175,000 P300,000 P100,000
Add Loan balances 25,000
Total partners’ interest P200,000 P300,000 P100,000
Profit and loss ratio 50% 30% 20%
Loss absorption balance P400,000 P1,000,000 P500,000
Allocation I – Cash to Santos to reduce his balance to that of
Alfonso and Censon (P500,000 x 30% = P150,000) (500,000) P150,000
Balances P400,000 P500,000 P500,000
Allocation 2 – Cash to Santos and Censon to reduce their balances
to that of Alfonso
(P100,000 x 30% = P30,000;
P100,000 x 20% = P20,000) (100,000) (100,000) P30,000 20,000
Balances P400,000 P400,000 P400,000 - P30,000 P170,000
Allocation II – Further cash distributions may be made in the profit and loss ratio
Cash available for distribution = P230,000 + P100,000 – P150,000 = P180,000
2.
Alfonso Santos Censon Total
Allocation 1 P150,000 P150,000
Allocation 2 – P30,000 x 3/5 18,000 P12,000 30,000
Total P ---- P168,000 P12,000 P180,000