CPA REVIEW SCHOOL OF THE PILAY

Manila
ADVANCED GERMAN/LIM/VALIN/MARADIGAN
PARTNERSHIP IMINANCIAL ACCOUNTING
LIQUIDATION

Earth Theory of Account

1.
Statement I. In
plan,
partner ahip instalinont innidantion, osing either a safe payment or cash disrib
cash is distributed to partnen based on their ability to absorb losses.
of total interest is
Statement 2. In the cash distribution plan the partner with the lowest amount
the non-priority partner.
A. Only the first statement is true
b.
Only the second statement is frue
c. Both statements are true
d. Both statements are false

2. Statement 1. In the preparation of schedule of safe payments to partners, cash withheld for
liquidation expenses that may be incurred and unrecorded liabilities that may be discovered are
treated as total loss on realization.

Statement 2. In a partnership liquidation, cash withheld for payment of liabilities to outside

creditors is not part of the maximum possible loss under the safe payment to partners.
a. Only the first statement is true
b. Only the second statement is true
c. Both statements are true

d. Both statements are false

3.
Statement 1. In an installment liquidation. partoet whose share in the maximum possible loss is
greater than his total interest will not reccive eash for that period but may receive distributions from
the partnership by the next period.

Statement 2, In
partnerthip liguidation, with more than one deficient partner, the deficient partner
who is also insolvent is the first to be eliminated in the distribution of cash.
a. Only the first statement is true
b. Only the second statement is trac
C. Both Statcments are true
d. Both statements are frise

4. Statement 1, In total liquidation, partner with a debit balance pre-liquidation

capital shall not
receive any distribution from the partnenship.
Statement 2. In a total liquidation, gain of losis en realization of non-cash assets is distributed to all
partners with a credit capital balance only.
Only the first statement is true
b. Only the second statement is true
C. Both statements are true
d. Both statements are false

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Part 11: Problem Solving
Problem 1. On December
31,2022, the Statemeptof Financial Position of DEF
or loss ratio of 1:4:5 of partners D, Partnership with profit
E and F respectively revenledthe following data
Cash
2,500,000 Liabilities
Non Cash assets 6,250,000 5,000,000
D, Capital 1,750,000
E, Capital 1,250,000
F. Capital 750,000
On January 1, 2023, the partners
be
personally insolvent. derided to liquidate the partnership. All partners are legally declared to
The noncash assets were isold for P4, 500,000 Liquidation expenses
to P730,000 were incurred and paid. amounting

Compute the
amount of cash received by Partner D after liquidation
a. 1,750,000
b.1,400,000
c. 1,500,000
d. 1,250,000

Problem 2. On
September 30. 2023, The J, K and
L Partnership had the following
Statement of Financial Position fiscal year-end

Cash
P240,000
Accounts Receivable Accounts Payable P 420,000
360,000 Loan from
Merchandise 840,000
300.000

Equipment, net
Capital (20%) 840,000
720 000
Loan to J
K. Capital (20%) 600,000
_ 350,000 L. Capital (6:0%) 360,000
P2,520,000
P2,520,000
The partners dissolved the partnership on
October 1. 2023 and began the liquidation process. During
October the following events occurred;

a. Accounts receivables of P180,000 wene collected

merchandise were sold for P240,000.
b. All the
Cash withheld
C.
forliquication expenses that may be incurred amount to P120,000
Compute the amount of cash K would receive in the Arst
distribution
a.

b. 24,000
72,000
d. 120,000
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Problem 3. On December of T, v and C Partnership included the

31.
2023, the accounting records
following ledger account balances:

Receivable from T P1.107,000

P264,000 T, Capital
Loan to C
81,000 V, Capital 905,000
Salary payable to V 972,000
270,000 C. Capital
Total assets include cash
and T
amounting to P469,000. The partnership wns liquidated on December 31, 2023,
received P703,000 cash pursuant to the liquidation. T, V and C share net income
and losses in
5:3:2
ratio, respectively.
In the settlement to partners,
compute the amount of cash paid to V
1,175,000
b.
1,084,000
C. 1,091,000

Problem 4. On
December 31, 2022, the Statement of Financial Position of LMN Partnership shows the
following data with profit or loss sharing of 2:3:5;
Cash
P 3,750,000 Liabilities to others P5,000,000
Other Non Cash asset 10,000,000 3,750,000
L, Capital
M. Capital 3,125,000

N, Capital 1,875,000

On January 1, 2023, the partners decided to wind up the partnership affairs. During the winding up,
liquidation expenses amounting to P500,000 were paid. Non-cash assets with book value of P7,500,000
were sold during January. Forty percent of the total liabilities were also paid during January. P750,000
cash was withheld during January for future liquidation expenses. On January 31, 2023, partner L
received P2,500,000. All partners are insolvent.

1. Compute the amount received by partner M on January 31, 2023

a. 625,000
b. 1,250,000
C. 1,875,000
d. 750,000

2. Using the same information, Compute the proceeds from the sale of non-cash assets during
January 2023?

a. 5,500,000
b. 5,000,000
C. 6,250,000
d. 5,750,000

END

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