On June 1, 2020, A and B of AB Partnership decided to liquidate their partnership.

At the time of
liquidation, the statement of financial position accounts consisted of:
Cash – P25,000; Non-cash assets – PP600,000; Liabilities – P125,000; A Capital – P225,000; B Capital –
P275,000. A and B share profits and losses in the capital ratio. A is personally insolvent. Non cash assets
were sold for P350,000. How much cash should B receive?
a. P275,000 b.P137,500 c.(P25,000) d.0

El, Fe, Gi and Ho are partners with capitals of P11,000; P10,300; P13,700 and P9,000 respectively. El has
a loan balance of P2,000. Profits are shared in the ratio of 4:3:2:1 respectively. Assets are sold and
liabilities are paid and cash of P12,000 remains. Who got the highest cash distribution?
a. El b. Fe c. Gi d. Ho

As of December 31, 2020, the books of TUV Partnership showed capital balances of T – P40,000; U –
P25,000; V – P5,000. The partners’ profits and loss ratio was 3:2:1, respectively. The partners decided to
dissolve and liquidate. They sold all non-cash assets for P37,000 cash. After settlement of all liabilities
amounting to P12,000, they still have P28,000 cash left for distribution. The loss on realization of the
non-cash assets was:
a.P28,000 b.P40,000 c.P42,000 d.P45,000

Ex and Why share earnings in 60:40 ratio. They have decided to liquidate their partnership. A portion of
the assets has been sold but other assets with carrying amount of P84,000 still must be realized. All
liabilities have been paid, and cash of P40,000 is available for distribution to partners. The capital
accounts show balances of Ex – P80,000 and Why – P44,000. Determine how should the P40,000 cash be
divided.
a. Ex – P29,600; Why – P10,400 b. Ex – P80,000; Why – P40,000
c. Ex - P38,000; Why - P2,000 d. Ex - P19,200; Why – P0

The statement of financial position of the AbCeeDee Partnership as of December 31, 2019 follows:
Cash P 20,000; Other Assets 280,000; Total AssetsP300,000; Liabilities P 50,000; Ab, Loan 25,000;
Ab,Capital 125,000; Cee, Capital 70,000; Dee, Capital 30,000; Total Liabilities and Capital P300,000
Profits and loss ratio is 3:2:1 respectively. In January 2020, assets with book value of P60,000 were sold
for P90,000. In February 2020, assets with book value of P35,000 were sold for P77,000. In March 2020,
assets with book value of 125,000 were sold for 113,000.
Cash is distributed as assets are realized. The total loss to Ab is:
a.P10,000 b. P20,000 c. P30,000 d. P60,000

The statement of financial position of the AbCeeDee Partnership as of December 31, 2019 follows:
Cash P 20,000; Other Assets 280,000; Total Assets P300,000; Liabilities P 50,000; Ab, Loan 25,000; Ab,
Capital 125,000; Cee, Capital 70,000; Dee, Capital 30,000; Total Liabilities and Capital P300,000
Profits and loss ratio is 3:2:1 respectively. In January 2020, assets with book value of P60,000 were sold
for P90,000. In February 2020, assets with book value of P35,000 were sold for P77,000. In March 2020,
assets with book value of 125,000 were sold for 113,000.
The total cash received by Cee is:
a. P15,000 b.P20,000 c. P50,000 d. P70,000

The statement of financial position of the AbCeeDee Partnership as of December 31, 2019 follows:
Cash P 20,000; Other Assets 280,000; Total Assets P300,000; Liabilities P 50,000; Ab, Loan 25,000; Ab,
Capital 125,000; Cee, Capital 70,000; Dee, Capital 30,000; Total Liabilities and Capital P300,000
Profits and loss ratio is 3:2:1 respectively. In January 2020, assets with book value of P60,000 were sold
for P90,000. In February 2020, assets with book value of P35,000 were sold for P77,000. In March 2020,
assets with book value of 125,000 were sold for 113,000.
The cash received by Dee in January is:
a. P0 b. P200 c. P500 d. P1,000

In an installment liquidation, the final cash distribution to the partners should be made in accordance
with the:
a. ratio of capital contributions less withdrawals by partners
b. ratio of the original capital contributions plus additional investment
c. balances of the partners’ loan and capital accounts
d. partners’ profit and loss sharing ratio

Statement 1: After the distribution of cash to partners in a partnership liquidation, the business would
have zero assets, liabilities and capital.
Statement 2: Liquidation expenses which are incurred to facilitate the immediate realization of non-cash
assets affect cash but not capital.
a. True; True b. True; False c. False; True d. False; False

The order of partnership liquidation process is:

a. sell assets, disburse cash to partners, pay liabilities b. disburse cash to partners, pay liabilities, sell
assets
c. pay liabilities, sell assets, disburse cash to partners d. sell assets, pay liabilities, disburse cash to
partners

In the liquidation of a partnership, it is necessary to

1) distribute cash to the partners,
2) sell non- cash assets,
3) allocate any gain or loss on realization to the partners,
4) pay liabilities.
These steps should be performed in the following order:
a. 2 3 4 1 b. 1 2 3 4 c. 4 3 2 1 d. 2 3 1 4

2. Peter and John who share P/L equally, decide to liquidate their partnership when their net assets
amounted to 260 000, and capital balances of 170 000 and 90 000, respectively.
If non cash assets were sold for amount equal to its book value, what amount of cash should Peter
and John received?
a. 170 000 ; 90 000 b. 170 000 ; 90 500 c. 175 000 ; 90 000 d. 165 000 ; 95 000

3. The following condensed balance sheet is prepared for the partnership of Smith and Jones, who
share P/L in the ratio of 60:40,

Other assets 450 000 Accounts Payable 120 000

Smith, loan 20 000 Smith, Capital 195 000
Jones, Capital 155 000

The partners decide to liquidate the partnership. If the other assets are sold for 385 000, what
amount of the available cash should be distributed to Smith?

a. 135 000 b. 136 000 c. 156 000 d. 65 000

4. On December 31, 2010, the partners of MNP partnership decided to liquidate their business.
Immediately before liquidation, the ff. condensed balance sheet was prepared:

Cash 50 000 Liabilities 375 000

Non cash assets 900 000 Nieva,loan 80 000
Perez, loan 25 000
Munoz, capital(50%) 312 500
Nieva, Capital(30%) 107 500
Perez, capital(20%) 50 000
Total 950 000 Total 950 000

The non cash assets were sold for 400 000. Assuming Perez is the only solvent partner, what
amount of additional cash will be invested by Perez?
a. 50 000 b.75 000 c. 20 000 d. 25 000

5. As of December 31, the books of AME partnership showed capital balances of 40 000, 25 000
and 5 000, respectively. The P/L ratio is 3:2:1. The partners decided to liquidate. They sold all
non cash assets for 37 000 cash. After settlement of all liabilities amounting to 12000, they still
have 28 000 cash left for distribution. The loss on realization of non cash assets was
a. 40 000 b. 41 000 c. 42 000 d. 43 000

6. Refer to no. 5. Assuming that any partner’s capital deficit balance is uncollectible, the share of A
in the 28 000 cash would be
a. 17 800 b. 17 000 c. 18 700 d. 18 000

1. The partners of Dawes & Epps LLP share net income and losses equally. Both Dawes and
Epps are insolvent. At the time they decided to liquidate the limited liability partnership, its
balance sheet included the following: cash, $1,000; other assets, $19,000; liabilities,
$8,000; Dawes capital, $3,000; and Epps capital, $9,000. The other assets realized $12,000
and the liabilities were paid. The amount Epps received from the liquidation of the
partnership was:
a. $6,500 b. $5,500 c. $5,000 d. $2,500

2. On January 1, 2002, the partners of Snell & Thomas LLP had capital account balances of
$40,000 and $20,000, respectively. They shared net income and losses equally, and the
partnership had a net income of $10,000 during 2002. On December 31, 2002, the
partnership was liquidated. If, after realization of noncash assets and payment of liabilities,
$30,000 remained for distribution to the partnership, Snell received:
a. $15,000 b. $20,000 c. $25,000 d. $30,000

3. After realization of a portion of the noncash assets of Saul, Tapp & Uris LLP, which is being
liquidated, the capital account balances were Saul, $35,000; Tapp, $40,000; and Uris, $43,000.
Cash of $42,000 and other assets with a carrying amount of $78,000 were on hand. Creditors'
claims totaled $2,000. The partners shared net income and losses equally. The cash that may be
paid to Uris at this time is:
a. $43,000 b. $17,000 c. $14,000 d. $13,333

4. The partners of Lon & Mab LLP share net income and losses equally. After the realization of all
noncash assets and payment of all liabilities, Lon had a capital account balance of $3,800, and
Mab had a capital deficit of $3,800. Lon has personal assets of $30,000 and personal liabilities of
$35,000; Mab has personal assets of $20,000 and personal liabilities of $18,000. The total
amount that personal creditors of Lon should expect to receive after marshaling of assets is:

a. $35,000 b. $33,800 c. $32,000 d. $30,000

5. The partners of Cey, Doy & Ebb LLP had capital account balances of $40,000, $50,000, and
$18,000, respectively, and an income-sharing ratio of 4:2:1, respectively. If Cey received only
$8,000 on the liquidation of the partnership, the total amount received by all the partners on
liquidation was:

a. $108,000 b. $56,000 c. $52,000 d. $24,000

6. The liquidation of a limited liability partnership means winding up its activities, usually by
selling assets, paying liabilities, and distributing any remaining cash to the partners.
a. True b. False

7. All creditors must have been paid before distribution of cash.

a. True b. False

8. If the partner is unable to pay the deficit in their capital account the deficit must be absorbed
by other partners.
a. True b. False

9. Inability of a partner to pay the partnership for a capital deficit may cause additional loss to
the other partners.
a. True b. False

10. In installment Payments assume a total loss on all remaining non-cash assets and provide for
all possible losses, including potential liquidation costs and unrecorded liabilities.
A. True b. False