PARTNERSHIP DISSOLUTION AND LIQUIDATION 2.

Kill the capital of the Partners (A, B) – since it is not

Partnership Dissolution – Dissolution of a partnership is the
change in the relation of partners caused by any partner ceasing
to be associated in the carrying out of the business. (Art. 1825)
On dissolution, the partnership is not terminated but continues
until the winding up of partnership affairs is completed. (Dissolve
only)
Winding up – as distinguished against dissolution, is the process of
settling business affairs after dissolution.
Termination: is the point where all the partnership affairs have
been wound up.
Dissolution does not always result to liquidation but Liquidation is
ALWAYS PRECEDED by dissolution.
No partner can be admitted to the partnership without the
consent of all partners (Delectus Personae).
-Why? Because partnership is bound by mere trust and
confidence. Consent is needed from ALL partners.
CONDITIONS RESULTING TO PARTNERSHIP DISSOLUTION
In RFBT – Classified in 2 Major Classification
1.) Automatic
2.) Dissolution by the Judicial Degree – one partner filed in
court. The moment it is granted, dissolution will prevail.
In AFAR,
1. Admission of a New Partner – but with the consent of
ALL partners.
a. By Purchase of Interest – A new partner
will buy a portion of the interest or capital
of an existing partner/s. or;
b. By Investment
c. Combined Purchase of Interest and
Investment
2. Withdrawal of Retirement of a Partner – If the
withdrawal or dissolution is unlawful (or it affected the
partnership), claiming damages will be possible.
3. Death of Incapacity of a Partner
Note:
(2)(3) has same ACCOUNTING PROCEDURES
4. Incorporation of a Partnership – In Dissolution, there is
just a change in the relation among the partners but the
partnership is still there or exists/ continuing.
Incorporation – From partnership, it became a
corporation.
allowed to have capital in the corporation.
What is the capital? Since it is a corporation, it needs to
issue SHARES.
Assume there are 10,000 Shares of each P1 par
Par – is the one who is included/pumapasok sa share
capital credit.
Share Premium – the balancing premium
A, Capital 45,000
B, Capital 45,000
SC [10k shares x 2 (A,B) x 1 (par) 20,000
Share premium 70,000
10,000 Shares each – each of the A, and B has 10,000
shares
10,000 for 2 of them – good for both of them. Assuming
5k each (A, B)
Q: Is the Capital the basis of the division of shares if the
only given is Total?
 The problem should be provided if out of all the
shares as a whole will be given to A or B
respectively. If there is none, pro-rate the 10k
shares based on their capital.
 It will appear that their division of shares will
correspond to their capital prior to the
incorporation. (45k/90k)
General Procedures in Dissolution
1. Adjustment of the partners’ capital for their share in
profit or loss at the date of the dissolution based on the
original P/L Ratio.
Ex. Month of December 01 (Dissolving)
 The profit earned from January to December 01
should be distributed based on their P/L ratio.
2. Adjustment of the partners’ capitals for any agreed
adjustments at the date of dissolution. To be allocated
based on the original P/L Ratio. (Unless the situation
stated a different manner of allocation)
 If there any adjustments needed to fix like the
revaluation, need to fix first.
3. Recording of the dissolution

Steps of Incorporating a Partnership

1. Update to FV the Assets
Assuming FV is 130k & P/L is EQUAL
30k – divided equally among the partners
Updated
A – 100k 130,000
L – 40k 40,000
A, Cap - 30k + 15 45,000
B, Cap - 30k +15 45,000
*The first column and the updated should be matched -
Checked
 Total Capital: P480,000(remains the same)

ADMISSION OF A NEW PARTNER Additional: A needs money & agrees to assign ¼

1. By Purchase Assignment – The capital of A was ASSIGNED to D.
 Purchase of an interest from one or more Therefore, D is a mere ASSIGNEE.
partnership’s existing partners is a personal
transaction between the incoming partner and the In connection with RFBT – Rights of an ASSIGNEE
selling partners.  The ASSIGNEE will NOT have a better right than a
partner since they are only a mere assignee.
 Regardless of the amount paid by the incoming
partner, there is no gain or loss to be recognized in Assignment of Contract
the partnership.  ASSIGNEE - The person who is an assignee will
just wait for the share of profit because that is
a contract between them only. (Partnership is
Macho Gwapito Partnership (A,D,J) not involved)
Capital: 100k (A’s Capital)  Assignee will not automatically become a
K wants to become a partner and buy half of A’s capital. partner
Then A agreed.
So: 100k x ½ II. SOLUTION – ANP (BY PURCHASE/BY INVESTMENT)
K will buy it for P1, magkano papasok sa capital niya?
50k
Loans
If for 100M, magkano papasok sa capital? Still 50k.
 An Asset like Loans Receivable and in the column
of Assets.
Note:
 Loan Accounts will not be used in the ADMISSION
Regardless of the amount paid by the newly admitted
OF PARTNER.
partner, whether it is higher or lower than the capital
Q: When will you use the Loan?
acquired, there are no connections involved since it is a
 In retirement – needed to pay it to the partners if
personal transaction between A and K.
s/he leaves.
 In Liquidation
Q: HM is the loss or gain of the partnership?
 Need to settle before leaving. Either we are the
 0, since it is a personal transaction and what is
one paying that partner or s/he will be the one
included there is the PERSONAL GAIN/LOSS.
who will pay
 No additional money or property is invested in the
NOTE:
partnership.
 All payables and receivables OF THE PARTNERS will
 Since there is no additional money or property
not be included.
included, the total assets will NOT change.
 If that is payables and receivables from THIRD
What entry should we see? PARTY, which is NOT THE PARTNER, or liabilities to
the other parties that are not the partner, they are
A, Capital 50,000 (sa 50k na nabawas) parts of the assets and liab.
K, Capital 50,000 (sa kanyang na gain)
SITUATION 1
 The only entry made on the partnership’s book is the
B4 Adm. After Adm.
transfer of an amount from the selling partners’ capital
Xx 20,000 x ¼ (5,000) 15,000
accounts to the new partner’s capital account.
Yy 10,000 x ¼ (2,500) 7,500
Q: Is it always like this that the total assets will not Zz 7,500 7,500
change? Total 30,000 x ¼ - 30,000

 EXCEPTION: If there is a revaluation/adjustment of Note: The total capital should still be equal and in the 2 nd
assets needed prior to purchase. column, it should always be 0.
 The reason why the upcoming new partner pays
you cheaper or higher than the interest acquired is Amount paid 7,500
if the problem stated that the UNP believes that Interest Acquired 7,500
there are ASSETS that need to be revalued. Difference 

Q: Is the transfer of capital considered a Bonus? *The 80:20 Ratio will be disregarded
 Cannot call a bonus. IF PURCHASE OF INTEREST
 kung ilan yung kinuha ni Partner ZZ, that would be
I. SOLUTION: Assignment of Interest the SAME PERCENTAGE na igive up ni XX and YY.
Capital of D:  If ¼ was given to ZZ, that you get from the 30,000
A’s Capital: P168,000 (which also came from the capital of XX and YY)
X ¼  To be fair, get it also to the ¼s of Partners XX and
D’s Capital: P 42,000 YY.
  You will follow paano nabawasan si XX and YY Therefore: In Zz pov, he believes that the capital is 40k.
unless the problem said otherwise.
In 40k, dun ka kumuha ng ¼ = 10k (e) and same procedure na kunin ang ¼
BY DEFAULT: It should be proportionate. Based on ilan sa Xx and Yy.

ginive up.
Revaluation Assets – those are related to assets that have already
SITUATION 2
existed even prior to the admission of Zz. So, the increase in the
value of assets has nothing to do with Zz.
DEFAULT:
Book Value Method: wala kang pake magkano man binayad ni
Entry:
newly admitted. Kung ilang yung inacquire niyang interest or
Asset 10,000
percentage interest, yun lang mapupunta sa kanya. Regardless of
X, Capital 8,000
the amount paid.
Y, Capital 2,000
B4 Adm. After Adm. Then, transfer the capital of X =7k, Y =3k then Z= 10k
Xx 20,000 x ¼ (5,000) 15,000 X, Capital 7,000
Yy 10,000 x ¼ (2,500) 7,500 Y, Capital 3,000
Zz 7,500 7,500 Z, Capital 10,000
Total 30,000 x ¼ - 30,000
SITUATION: 3
Amount paid 10,000 Same situation in 2 #1, the only difference is the loss (Personal) of
Interest Acquired 7,500
Xx and Yy.
Gain (Personal) 2,500
Amount paid 6,000
Interest Acquired 7,500
*Personal Gain will not be included in the Partnership Books.
Loss (Personal) (1,500)

To compute for the GAIN:

#4 (Downward Revaluation)
10k – Binayad
Si X and Y naggive up ng 5k & 2.5k respectively total 7.5k. Then,
B4 Reva.80:2 Aft Rev. Aft Ad.
the GAIN 2.5k will be split into 80:20 and add it to respective 0

partners. Xx 20,000 (4.8k) 15.2k x 1/4 (3.8k) 11.4k

Yy 10,000 (1.2k) 8.8k x 1/4 (2.2k) 6.6k
AMOUNT PD: 10K GAIN: 2,500 (80:20) Zz 6k (e) 6k
X = 5k + 2000 Total 30,000 (6k) (a) 24k (c) x ¼ 24k
Y = 2.5K + 1500
Entry:
So, bigyan mo muna si x and y dun sa 5k and 2.5k na nawala the X, Capital 4,800
yung gain. Unless there is agreement. Y, Capital 1,200
Assets 6,000
#4 Then, transfer the capital upon the admission of Zz
B4 Reva.80:2 Aft Rev. Aft Ad. X, Capital 3,800
0 Y, Capital 2,200
Xx 20,000 8k 28k x 1/4 (7k) 21k Z, Capital 6,000
Yy 10,000 2k 12k x 1/4 (3k) 9k
Zz 10k (e) 10k
Total 30,000 10k (a) 40k (c) x 1/4 40k
(b) 2. By Investment
Amount paid 10,000  If assets are invested, the admission is recorded by
Interest Acquired 7,500 debiting the assets invested at their fair value and
Difference (a) 2,500 adjusting the net capital interest in the partnership by a
2,500 divide 1/4 corresponding amount.
General Rule: If may kulang or sobra na binayad, wala tayong  An incoming partner may acquire an interest in the
pakialam dun. Unless there is Revaluation. partnership based on the following situations:
 No Bonus (absence of revaluation) or no
*Nung bibilhin ni Zz yung capital partnership na ¼, naniniwala si Zz revaluation approach
na ang ¼ na capital ng partnership is 10k. Di sya naniniwala na 7.5k  Bonus (absence of revaluation) approach; and
yun. Kaya sya nagbabayad ng sobrang 2.5k. There are certain  Revaluation approach
assets we need to revisit.  Hence, the analysis must be made among the following:
 TCC, TAC, CC, AC
Yung Difference na 2,500 = that is the EXCESS of ¼ na inacquire ni Recall:
Zz. Since sobra yan, divide mo by ¼. (a) = 10,000 (That is your 1. IF TCC = TAC:
revaluation to be shared by Xx and Yy in 80:20 a. And if CC = AC (Full Investment Approach)
b. If CC is not equal to AC (Bonus Method to
You can also compute the capital after revaluation. (30k +10k) (b) either New or Existing Partner/s)
2. IF TCC > TAC:
Or:
a. Withdrawal (Possibly, any of the partners. But
10k that Zz paid (That is ¼) divide it to ¼ you would likewise get (c)
normally, existing partners)
b. Downward Rev (Existing Partners)
 3. IF TCC < TAC
a. Add. Inv. Requirement (Possibly, any of the
partners. But normally, existing partners)
b. Upward Revaluation (Existing Partners)
c. Goodwill (Either new or existing Partners)
Next, 35% will be used in the bonus and ¼ is the P/L
43,750 X 35%
Note: If there is no TAC given, assume they are equal. Bcs if they
are not equal. It has to be mentioned.

SITUATION 4 (TCC = TAC)

TCC Rev. Bonus TAC
Xx 20k 20k
Yy 10k 10k
Zz 15k(a) 15k SITUATION 7
Tot. 45k 45k(b)(c) x 1/3 TCC Rev. Bonus TAC P/L
Xx 20k 2,000 (3,600) 18,400 64%
TCC = lahat ng contribute nila. May 15k kasi invest na pero pag Yy 10k 500 (900) 9,600 16%
purchase of interest walang 15k jan(a) Zz (a)7,500 4,500 12,000 20%
 Next step: Ask yourself if the TCC = TAC? – problem Tot. 37,500 2,500 - 40,000
stated 45k (b)
*Aside from the revaluation, there is additional info added. You
 Next step: Will the 15k Zz invested will be the same need to get the 4,500 for ZZ. Next, the 4,500 will be shouldered by
amount included in his AGREED CAPITAL(AC)? (c) the existing partners (80:20)
45k divide 1/3 *Revaluation – dapat may laman
*Bonus – wala
*AC should be based in TAC, dun mo kunin ang 1/3
Therefore: If the TCC = TAC is equal, then the CC = AC is also equal SITUATION 8
TCC Rev. Bonus TAC
SITUATION 5 (TCC = TAC but CC is not equal to AC) – BONUS Xx 20k (6k) 14k
Meth. Yy 10k (1.5k) 8.5K
TCC Rev. Bonus TAC PL Ratio Zz 7.5K 7.5K 15,000
Xx 20k 1,500 21,500 60% Tot. 37,500 37,500
Yy 10k 375 10,375 15%
Zz 12.5k(a) (1,875) 10,625 25% Goodwill
Tot. 42.5k - 42.5k TCC Goodwill Bonus TAC
Xx 20k 10k (10k) 20k
 Bonus to the Existing Partners. (1,500&375) Yy 10k 2.5k (2.5) 10k
Zz 7.5K 12,500 20,000
New P/L Ratio in Admission of New Partner Tot. 37,500 12,500 50,000
 First, check the problem if there is a new Good will – wala na sa partnership. According to PFRS 3, goodwill
agreement. If none: can be obtained in Business Combi. The dissolution does not
 How many percent does the new partner acquire? constitute business combi.
ZZ = `1/4.
 If there is no given info about the new P/L ratio, ¼ = Since TAC is not given, asses it.
25% a. The 7,500 of ZZ get it and divide to 40%: 18,750
 Now, since the 25% acquired by Zz, the overall b. The CC of Xx and Yy (30k) divide it to 60%: 50,000
sharing of Xx and Yy will be only 75%. Hence: Why 60%? Because the 40% is already in Zz.
 80% x 75% c. Now you have 18,750 & 50,000, what will u choose?
 20% x 75% Choose 50k because TAC should be higher than TCC.
Then distribute to Xx and Yy.
Additional: d. Distribute the bonus also to Xx and Yy from the 20k.
Capital Ratio – their shares or claims over the new capital.
21,500/42,500 = 51% #3 (This is an Independent Scenario)
10,375/42500 = 24% TCC Goodwill TAC
10,625/42,500 =25% Xx 20k 4,000 24,000
Yy 10k (a)1,000 11,000
SITUATION 6 Zz 7.5k 7,500
TCC Rev. Bonus TAC P/L Tot. 37,500 (b)5,000 42,500
Xx 20k (1,250) 18,750 60%
Yy 10k (313) 9,687 15% Note: The Goodwill allocated YY 1k. – pag binigyan yung isang
Zz (a)13,750 1,563 15,313 25% partner, binibigyan din yung ibang partner. (same sa above ex)
Tot. 43,750 - (b) 43,750
How to identify how much will be given to Xx? (a)
(a) FV of 16,250 – 2,500  Yy na may 1,000 (that is the 20% of goodwill that
(b) If TAC is not given, check if there is a clue, (bonus he received) 1,000 divided 20% to get the total
method is used). which is: 5000 (b)
Where does BM fall? Therefore, the problem just shows that when an existing partner
In the TCC = TAC but CC is not equal to AC (Bonus receives goodwill, all of them should be given as well.
Method)
Therefore, TCC and TAC are equal. (b) SITUATION 9
TCC Bonus TAC
Xx 20k 4k 24,000 Nan 70k 18k 88k (3.6k) 84,400
Yy 10k 1k 11,000 Ole 40k 12k 52k(b)
Zz 20k (5k) 15,000 Total 160k 60k (a) 260k 260k
Tot. 50k 50,000
SITUATION 10 – GW in the New partner Note: Loans Rec/Payable = matter only on retirement or
TCC Goodwill TAC liquidation
Xx 20k 20k Lon: 30k negative kasi Dr.
Yy 10k 10k Revaluation = 60k (Increase) (a)
Zz 20k 6k 26k Since silent, assume that TCC is equal to TAC kaya 260k gilagay sa
Tot. 50k 56k (Cap.B. Aft adm) then x20% = (that is the agreed capital of Ole)(b)

SITUATION 11 *The Revaluation was BEFORE the Admission kaya di muna nilagay
TCC Withdrawal TAC P/L si 40k.
Xx 20k 20,000 50%
VI- Admission by Purchase and Investment (Independent
Yy 10k (5,000) 5,000 12.5
Scenario)
Zz 15 15,000 37.5%
k
Cash Paid: 22k (17k +5k)
Tot. 45k 40,000
Note: wala tayong pake sa binayad EXCEPT if may revaluation.
In the problem, it was stated that the capital ratio must be equal 1.
to P/R.
B4 Reva. Aft Rev. Aft Ad.
Since P/R of Zz is 37.5%
(3:1)
Allen 70k 15k 85k (17,000 68k
II – Admission by Purchase (PERSONAL)
)
Amount paid 132,000
Danie 20k 5k 25k (5,000) 20k
Cap Acquired (44k x1/5) 88,800
l
Combined Gain (N and S only) 43,2
David 22,000 22k
00
Total 90k 20k(a) 110k - 110k
III – Admission by Purchase (Partnership)
*Walang nakalagay ky David kasi Purchase of Interest to.
X¾
EE 80,000 60k
Amount paid 22,000
GG 40,000 30k
Interest Acquired 18,000
DD 20,000 15k
Difference 4,000
TOTAL 140,000 140k
*By what amount the land was increased? 4k / .20 (a)
WW – 140k x ¼ = 35k
2. Investment -DOWNWARD (TRIAL AND ERROR)
IV – Admission by Purchase (Partnership)
TCC Reva. Bonus TAC
Allen 70k (7,500) 62,500
B4 Reva. Aft Rev. Aft Ad.
Danie 20k (2,500) 17,500
Ll 25k 7.5k 32,500 (15,000) 17,500
l
Qq 35k 7.5k 42,500 (15,000) 27,500
David 20k 20k
Dd 30,000 30,000
Total 110k (10k) (a) 100k
Total 60k 15k 75,000 - 75,000
Invest – so, may laman na si david sa first column.
*walang nakalagay sa Dd kasi purchase of interest into not by
NEXT OBJECTIVE
investment
 What is the TAC? (Assessment Method) Kpaag di given
Amount paid 30,000
TAC.
Interest 24,000
 20k / 20% = 100k & 90k/ 80% =112,500
Acquired(30x .40)
 10k = Amount of written down (a)
Gain(Personal) 6,000
VII – Admission by Purchase and Interest
60,000 x .40 = 6k Pur. Inv. TCC Rev Bonus
Gross up natin. MM 60k 60k 10k 2.5k 72,500
6,000 / .40 or 30k /.30 = 75,000 TT 80k (20k) 60k 20k 5k 85,000
Profit and Loss = Equally RR 200k 200k 10k 2.5k 212,500
15 / 2 = 7.5k LL 20k 140k 160k (10k) 150k
Total 340k - 480k 40k - 520k
Kanina, diba kapag kumuha ka ng .40 sa 75k (after rev) kuha kadin
.40 sa 42,500 & 32,500. Yan yung DEFAULT pag walang sinabi. *Note:
However, the problem is clear, it stated that LL and QQ transfer LL gets ¼ of interest to TT for 24k (la tayo pake sa 24k na
EQUAL AMOUNTS OF CAPITAL TO DD. So tag 15k sila. binayad unless the problem said that there is revaluation
then gross up ang 24k)
V – Admission by Investment
Cap. B4 Reva. TCC Cap.B. Next, the 20k you get from TT is transferred it to LL.
Aftadm Purchase total is 0 kasi lipatan lang naman yan. Then, LL
Lon (30k) 30k 0 (6k) (6k) also invest 140k.
Mac 120k 12k 132k (2.4k) 129,600
 Next, since given na ang total capital, latag nalang no a. Payment: BV of the Interest of Retiring Partner
need to asses or trial and error. Then since malaki ang Ex: Payment (P10) = BV of RP (10) (Payment of Book
TAC, there is revaluation of 40k. (distribute to the Value)
partners.
b. Payment > Interest of Retiring
Next, it was given that 150k is the AC of LL so deduct a  Bonus to Retiring Partner
10k bonus from LL and distribute to the partners.  Upward Revaluation (All or Specific)
 Goodwill (Total or Partial)
FOR PL RATIO: Ex: Payment (15) > Interest of Retiring (10)
LL: 1/3 = 33% (33% - 100%) = 66.67% (to be the denominator of
the remaining partners) c. Payment < Interest of Retiring
“Other partners continue to participate in P/L ratio in the orig Ex: Payment (6) < Interest of Retiring (10)
capital” – Use this method.  Bonus to Remaining Partners
 Downward Revaluation (All or Specific)
VIII – Admission by Investment Comparing Bonus and Goodwill  1 and 2: Personal Transaction / Reverse of Admission of
P/L – EQUALLY Purchase
 3: Pasok sa Partnership Books since Partnetship ang
Under Bonus Method bibili / Reverse of Admission By Investment
TCC BONUS TAC
XX 300k 31,500 331,500 FORMULA FOR THE INTEREST OF RETIRING PARTNER
YY 240k 21,000 261,500
ZZ 250k (52,500) 197,500 Investments +
TOT. 790k - 790k Withdrawals -
*Note: Share in partnership profit to date of retirement +
Pag Bonus Method, malamang ang TAC is 790 din. (TCC = TAC) Share in partnership losses to date of retirement -
Loans and advances to the partnership (Loans Payable) +
Under Goodwill Method (Upward) Loans and advances from the partnership (Loans -
TCC GW TAC Receivable)
XX 300k 126,000 426k Revaluation of Assets increasing their record values +
YY 240k 84,000 324k Revaluation of Assets decreasing their record values -
ZZ 250k 250k INTEREST UPON RETIREMENT
TOT. 790k 210,000 1M
INT OF RETIRING PARTNER:
*Note: Since same steps lang sila nung bonus but since goodwill  CAPITAL + LOANS PAYABLE – LOANS RECEIVABLE =
ito so dapat upward method. Since walang TAC na mas HIGHER na CAPITAL INTEREST
binigay. Assessment ulit /
Death and Incapacity = Same lang yan. The Difference lang is sa
COMPARISON: BONUS VS. GOODWILL DEATH (Interest/ Capital Interest of the Partner will be part of his/
XX YY ZZ her Gross Estate)
Cap. Bal: Goodwill is Chosen 426k 324k 250k
GW if written off as a loss (equal) (70k) (70k) (70k) X – Payment from Partnership Ends
Cap. Bal after write off of GW 356k 254k 180k
Cap. Bal if Bon Meth is Chosen 331.5 261k 197.5(a) Loan – The Loan of the Partners will be included because of
retirement na.
COMPARISON BETWEEN BONUS AND GOODWILL METHOD
DD(50%) EE(30%) FF(20%) Total
If P&L Ratio = Capital Ratio Unad. Cap 70,000 60,000 30,000 160,000
 Bonus & Goodwill Method will yield the same results Drawings (2,000) (2,000)
Net Inc 15,000 9,000 6,000 30,000
If P&L Ratio > Capital ratio (a)Inv (2,500) (1,500) (1,000) (5,000)
 New Partner should prefer the BONUS Method (b)F&F 7,500 4,500 3,000 15,000
(c)Patents (7,500) (4,500) (3,000) (15,000)
If P&L Ratio < Capital Ratio Adj. Cap 82,500 67,500 33,000 183,000
 New Partner should prefer the GOODWILL Method +LP/-LR (3,000) (3,000)
Cap. Int 82,500 67,500 36,000
Partner ZZ
P&L Ratio Capital Ratio *Note:
33% 25% If Loans Payable ni Partnership =Kasama ito sa babayaran niya kay
BONUS METHOD partner. (utang ng partnership ky partner)
If Loans Receivable =right of offset compensation.

WTHDRAWAL OR RETIREMENT OF A PARTNER (SAME WITH CAPITAL INTEREST

DEATH OR INCAPACITY DD 82,500
1. Sale of retiring partner’s interest to a NEW PARTNER. EE 67,500
(dapat may consent na mag agree ang LAHAT sa NP) FF 36,000
2. Sale of retiring partner’s interest to CONTINUING TOTAL 186,000
PARTNERS (partners ang bibili)
3. Sale of retiring partner’s interest to PARTNERSHIP PAYMENT OF BOOK VALUE
 CAP. INT BONUS PAYMENT BAL. A. RETI CAP. INT BONUS PAYMENT BAL. A. RETI
DD 82,500 82,500 DD 82,500 937.5 83,437.5
EE 67,500 67,500 EE 67,500 562.5 68,062.5
FF 36,000 (36,000) - FF 36,000 (1,500) (34,500) 0
TOTAL 186,000 (36,000) 150,000 TOTAL 186,000 - (34,500) 151,500
JE:
FF, Capital 33,000 JE
FF, Loan 3,000 FF, Capital 33,000
Cash 36,000 FF, Loan 3,000
DD, Capital 937.50
EE, Capital 562.50
Cash 34,500

BONUS METHOD (MORE THAN THE BV)

CAP. INT BONUS PAYMENT BAL. A. RETI SPECIFIC ADJUSTMENTS IN ASSET (LESS THAN BV)
DD 82,500 (1,250) 81,250 CAP. INT BONUS PAYMENT BAL. A. RETI
EE 67,500 (750) 66,750 DD 82,500 82,500
FF 36,000 2,000 (38,000) 0 EE 67,500 67,500
TOTAL 186,000 - (38,000) 224,000 FF 36,000 (1,500) (34,500) 0
*Note: Pag di lahat ng partners involved, gamitin mo yung residual TOTAL 186,000 (34,500) 150,000
PL. 50/80 and 30/80 *Note:
F – 0 (kasi sya yung nagretire) Kapag Specific Adjustment, that would be REVALUATION
(either upward or downward).
JE
FF, Capital 33,000 In revaluation, there are two types; All and Specific.
FF, Loan 3,000 Specific: Upward or Downward.
DD, Capital 1,250 The 1,500 na downward and specific adjustments,
EE, Capital 750 kamukha sya ng partial goodwill na kung ano yung
Cash 38,000 binawas, yun na ilalagay mo sa baba. (Balancing figure)

PARTIAL GOODWILL METHOD JE

CAP. INT GOODWILL PAYMENT BAL. A. RETI FF, Capital 33,000
DD 82,500 82,500 FF, Loan 3,000
EE 67,500 67,750 Assets 1,500
FF 36,000 2,000 (38,000) 0 Cash 34,500
TOTAL 186,000 2,000 (38,000) 150,000
Note: Kapag partial, initially, yan na yung 2k di na idistribute sa ASSETS WRITE-DOWN TRACEABLE TO THE ENTIRE ENTITY
exisiting partners. Parang Balancing Figure. CAP. INT BONUS PAYMENT BAL. A. RETI
DD 82,500 (3,750) 78,750
JE EE 67,500 (2,250) 65,250
FF, Capital 33,000 FF 36,000 (1,500) (34,500) 0
FF, Loan 3,000 TOTAL 186,000 (7,500) (34,500) 144,000
Goodwill 2,000 *Note: Assets write down to the entire entity is another term for
Cash 38,000 ALL in the REVALUATION.
1,500: is only the share of FF dun sa downward revaluation.
TOTAL (IMPLIED) GOODWILL Kamukha nung TOTAL GOODWILL. 1,500/20%. (50/80 & 30/80)
CAP. INT GOODWILL PAYMENT BAL. A. RETI
DD 82,500 5,000 87,500 JE
EE 67,500 3,000 70,500 DD, Capital 3,750
FF 36,000 2,000 (38,000) 0 EE, Capital 2,250
TOTAL 186,000 10,000 (38,000) 158,000 FF, Capital 1,500
*Note: Kapag Total Goodwill, yang 2000 na yan ay proportionate Assets 7,500
share palang FF sa Total Goodwill.
FF, Capital 31,500 (33k – 1500)
*2,000 / 20%: 10,000 FF, Loan 3,000
Cash 34,500
JE
Goodwill 10,000 IF SILENT: GOODWILL (TRY ALL OR SPECIFIC)
DD, Capital 5,000
EE, Capital 3,000
FF, Capital 2,000 PARTNERSHIP LIQUIDATION

FF, Capital 35,000 (dating 33 pero inadd yung  Winding up of the affairs of the business
2k)  The non-cash of the partnership will be realized
FF, Loan 3,000 into cash. Binebenta natin and from the proceeds,
Cash 38,000 babayaran natin yung mga external creditors.

BONUS METHOD (LESS THAN BV)

  Process of converting non-cash assets into cash
(realization), paying the outside creditors, and partner
 External Creditors have priority on any distribution
NOTE:
NO DISTRIBUTION IS TO BE MADE TO PARTNERS UNTIL ALL
POSSIBLE LOSSES AND LIQUIDATION EXPENSES HAVE BEEN PAID
OR PROVIDED FOR.
 Liquidation may be categorized as LUMP-SUM or
INSTALLMENT
METHODS OF LIQUIDATION
 Lump-sum (simple or total) liquidation
 One in which all assets are converted into cash
within a very short time.
 Creditors are paid and a single, lump-sum payment
is made to the partners for their capital interests.
 For partners: there is no guarantee that all of them
will receive cash (either one only among the
partners, or all, or none) unless there is an EXCESS
after paying everything to the creditors or the
externals. (The worst will be when you do not
receive cash but you shall share an ambag)
 Lump-sum liquidations are rare and non-existent.
Non-cash that does not need to be realized: Cash, Loans
Receivable to the partner (Offset to get the capital)
 Installment (piece-meal) liquidation
 Process of realizing some assets, paying creditors,
paying the remaining available cash to partners,
realizing additional assets, and making additional
cash payments to partners.
 The liquidation continues until all noncash assets
have been realized and cash has been distributed
to partnership creditors and partners.
 Because of the lengthier conversion period, cash
may become available for distribution to partners
long before the last non-cash asset is sold.
A - STEPS IN LUMP-SUM LIQUIDATION
1. Realization of non-cash assets – Gain or Loss is
distributed to partners: P&L Ratio
2. Pay actual liquidation expenses, if any. Shared by
Partners: P&L Ratio (Debit: Expenses, Credit: Cash)
(Debit: Capital, Credit: Cash)
3. Payment of Liabilities to third parties – pay the
creditors. There is no sharing of Loss and Gai since:
(Debit: Liab, Credit: Cash) No absorption in G/L
4. Elimination of capital deficiencies (or negative capital
balance)
o If deficient partner has a LOAN BALANCE – RIGHT
OF OFFSET
- Check if we have LOANS PAYABLE to that
partner,
Baka may LP tayo sa partner na yon. we are
the debtor in the partnership’s POV. (may
utang ang partnershipnsa partner)
- In that partner’s pov, s/he has the
responsibility to the partnership, that is
why offsetting is the key.
- Extinguishment Compensation
o If deficient partner is SOLVENT – ADDITIONAL
INVESTMENT
- Check if his/her personal assets are
greater than his personal liability. (PA >
PL)
o If deficient partner is INSOLVENT – ABSORPTION by
other partners based on remaining P&L Ratio (PA <
PL)
5. Payment to Partners (ORDER OF HIERARCHY)
o Partners’ Loan
o Partners’ Capital
B - STEPS IN INSTALLMENT LIQUIDATION
1. Realization of some non-cash assets – Gain or Loss – P&L Ratio
2. Pay actual liquidation expenses, if any. Shared By Partners:
P&L Ratio
3. Actual Payment of Liabilities to third parties
- You can pay your creditors isang bagsakan (full) or
pwedeng half muna.
- If you only pay half of the total payment, make it s that
the other half intented to pay for the liabilities are
already reserved in your side.
4. Cash settlement to partners is now equal to the partners’
capital balances after possible future losses (unsold non-cash
assets plus any cash withheld) have been proportioned to the
partners or in accordance with an advance cash distribution plan.
ISSUE: HOW SHALL I SAFELY DISTRIBUTE THE CASH TO PARTNERS
WITHOUT COMPROMISING ANY REMAINING UNPAID LIABILITIES
TO THIRD PARTIED, UNSOLD NON-CASH ASSETS, AND FUTURE
ANTICIPATED EXPENSE?
SCHEDULES MAY BE USED TO DETERMINE THE CASH PAYMENT
TO PARTNERS
1. Schedule of Safe Payments
2. Cash Priority Program
Note:
Whether (1) or (2), the same cash payment will result.
SCHEDULE OF SAFE PAYMENTS
 Anticipate worst case scenarios:
1. Assume total loss on all remaining unsold non-cash
assets. (TOTAL LOSS OF BV)
2. Provide for all cash withheld on:
 Unpaid expenses/ remaining liabilities to
third parties
 Anticipated/ Potential liquidation expenses –
hypothetically anticipated (it may or may not
happen)
Note: The Loss (1) and (2) will be called HYPOTHETICAL LOSS and
shouldered to the existing partners in P&L Ratio
*Upon absorption of hypothetical loss, a partner becomes deficit,
we call it:
- HYPOTHETICAL DEFICIT: Presumed as personally INSOLVENT and
Absorbed by the other partners: remaining P&L Ratio
CASH PRIORITY PROGRAM
1. Also called as CASH DISTRIBUTION PLAN
2. PARTNERS are being RANKED
How to rank? (Partner’s Capital Interest / Respective P/L
Ratio)
Ex: Partner has a capital of 50 with 50% Capital ratio
(50/50%: 100)
 Called MAXIMUM ABSORPTION CAPACITY: That is
the maximun amount that s/he can tolerate as a
LOSS before s/he become negative.
 Ex: Capital of Partner is 50, his/her loss is (101) and with 1. Those to creditors, including limited partners, in the order of
a cap ratio of 50% (101 x 0.50: 50.50) priority as provided by law, except those to limited partners on
Cap 50 account of their contributions, and to general partners.
(50.5) (101) 2. Those to limited partners by way of their share of the profits
(0.50) and other compensation by way of income on their contributions.
3. Those limited partners in respect to the capital of their
contributions.
What does MAXIMUM ABSORPTION CAPACITY reveals? 4. Those to general partners other than for capital and profits.
REVEALS: 5. Those to general partners in respect of profits.
1) Partners in terms of who could absorb the largest and 6. Those to general partners in respect of capital.
smalles loss (VULNERABILITY TO LOSSES) XI – STATEMENT OF LIQUIDATION: LUMP-SUM
2) order in which cash should be distributed to them as SHORT METHOD
it becomes available
Step 1: Identify the Capital Interest of the Partners
ABSORPTION CAPACITY VERSUS VULNERABILITY Q R S Total
INVERSE RELATIONSHIP Capital 12,000 (a) 48,000 36,000 96,000
LOWEST ABSORPTION CAPACITY = MOST VULNERABLE Interest
HIGHEST ABSORPTION CAPACIYY = LEAST VULNERABLE
(a) Q: 9,600 + 2,400
Ex: (1)
 If you have the HAC, and your AC is 100 it means: Step 2: Compute Cash Available
any loss lower than 100, di pa sya mag nenegative. Cash, Beginning 24,000
 Saka lang siya mag nenegative pag yung loss is 100 Proceeds from Sale 1,200
kasi sakto nung yung 50% ng 100 is 50 rin. (refer to Payment of Liab (Actual) (12,000)
previous example) Remaining/Unpaid Liab (b) -
 Kaya naman, bago pa sya mga loss, marami na Actual Liquid. Expenses (14,400)
siyang puhunan. Remaining Anticipated/ -
Ex: (2) Future Liquidation Expense
 MAC of the partner is: 30, whereas the previous TOTAL CASH AVAILABLE (1,200)
partner we stated has 100 MAC; the partner who
has the absorption capacity of 30, kapirasong loss (b) If ever may remaining or unpaid liab, ibawas mo na rin. Kasi
lang, magnenegative na siya. ang logic natin, bago tayo mamigay ng cash dapat freely available
 Like midterms and final concept. Puhunan kana sa yun.
midterms para di ka vulnerable sa final if may
grading na. (ikaw una) STEP 3 & 4 TOTAL CASH AVAILABLE ALLOCATION
Q R S Total
DOCTRINE OF MARSHALLING OF ASSETS
Capital 12,000 (a) 48,000 36,000 96,000
The order of priorit concerning the availability of the
Interest
assets for each class of creditors is as follows:
(29,160) (48,600) (19,440) (97,200)
PARTNERSHIP ASSETS PERSONAL ASSETS
(c)
1) Partnership Creditors 1) Personal Creditors
(1,200)
2) Personal Creditors that did 2) Partnership creditors who
not recover their claims in full were not satisfied from
Note: Ano yung amount na nung binawasan natin yung total
from the personal assets of partnership assets
capital interest nila na 96k, we arrived at (1,200) (c) then distribute
the partner
to 3:5:2
3) Amounts owed to partners
by way of contribution (due to
STEP 5: TOTAL COMPUTATION
deficit) (reimburse them)
Q R S Total
Capital 12,000 (a) 48,000 36,000 96,000
Note:
Interest
(2): Yung mga personal creditor na di nakarecover ng full sa
(29,160) (48,600) (19,440) (97,200)
personal assets will be transferred sa partnership assets.
(c)
Add info: the personal creditor of the partner kinulang pa yung
claims niya mula sa personal assets dun sa debtor-partner na yon, (17,160) (600) 16,560 (1,200)
pwede nila habulin yung partnership assets but up the extent of 97,200: COMBINED TOTAL LOSS
that partners interest only. (same sa kabila, personal to
partners) STEP 6: PARTNER THAT HAS NEGATIVE (DEFICIT) & TOTAL
Q R S Total Cash Av
SUMMARY OF ORDER OF PAYMENTS OF PARTNERSHIP UNDER Capital 12,000 (a) 48,000 36,000 96,000
OUR CIVIL CODE: Interest
IF IT IS A GENERAL PARTNERSHIP: (29,160) (48,600) (19,440) (97,200) (c)
1. Those owing to creditors other than partners (17,160) (600) 16,560 (1,200)
2. Those owing to partners other than for capital and profits 17,160 17,160
3. Those owing to partners in respect of capital 600 600
4. Those owing to partners in respect of profit. - - 16,560 16,560
Note: If there are partners who are negative or deficit, check if
IF IT IS A LIMITED PARTNERSHIP: they are solvent or not.
Q: Yes (36k) then add the 17,160 (his deficit)
R: Yes (24k) Then add the 600 (his deficit)
S: Not necessary bcs he is positive. Interest
Tot. Loss (41,400) (27,600) (69,000) (138,000)(a)
Called SHORTER or SHORT SCHEDULE OF SAFE PAYMENT Tot. (1,400) 17,400 (4,000) 12,000
- The 97,200 (c) composed of Loss on Realization: 72,000 + 10,800
Liquidation Expenses: 14,400 (a) 138k – Total Loss and composed of 3 parts. Since ang given
Anticipated Expenses: 0 raman is liquidation expenses then walan may anticipated
expenses therefore:
Q: Loss on Realization? Bibiakin mo ang 97,200. Pwede mong Loss on Re: 132,000
iassume na solely loss on realization yan if walang liquidation Actual Liq. Exp: 6,000
expense, anticipated expense. Anticipated: 0
Proceeds: 85k
Q: Pano pag si partner Q is 17,160 sya pero insolvent siya? Pag BV: 217,000
insolvent, pashoulder mo sa dalawang partner. Loss: (132,000)
Q: Pano pag sa cash available given ito, pero ang nawawala
PROCEEDS? – Squeeze mo lang as long as the beginning and Cash, Beginning 8,000
ending portion of the formula is available, kung gitna nawawala, Proceeds from Sale 85,000
puzzle lang. Payment of Liab (Actual) (75,000)
Remaining/Unpaid Liab (b) -
Actual Liquid. Expenses (6,000)
1 LIMITATION ON THIS SHORTCUT Remaining Anticipated/ Future -
- pag maraming buwan yung tanong. Mas prefer to use the cash Liquidation Expense
priority program. TOTAL CASH AVAILABLE 12,000

XII – LUMP-SUM: INCOMPLETE DATA XIV: LUMP-SUM: INCOMPLETE DATA

Silverio Domingo Reyes Pasko Total cs av.
M N 0 Total Cash Av
Capital 500 12,500 12,500 4,500 30,000
Capital 61,875 81,562.50 61,875 205,312.50 Interest
Interest Loss (2,700) (3,600) (5,400) (7,200) (18,900)(b)
Total (24,609.38) (14,765.63) (9,843.75) (49,218.75)(c) Cash (2,200) 8,900 7,100 (2,700) 11,100
Loss (b) avail
2,200 (880) (1,320) -
Tot. if 37,265.62 66,796.87 52,031.25 156,093.75(f) (1,080) (1,620) 2,700 -
solvent (a) - 6,940 4,160 - 11,100
or not
M: 76,875 – 15,000 b. 18,900 – since walang anticipation and liquidation expense,
N: 62,812.50 + 18,750 lahat to is loss on realization.
O: 67,500 – (5,625) Proceeds: 11,600
BV: 30,500
Total Assets: 299,062.50 Then Cash is 32,812.50, How much is the Loss: (18,900)
Non-Cash Asset? 266,250 (BV)
Remember: Kapag insolvent yung isa or dalawa, pa absorb mo sa
(a): Since it was stated in the problem that OO received this mga solvent partners. Since dalawa lang sila nag aabsorb. 40% and
amount, how much would we deduct or add to arrived to this 60%
total?
- 9,843.75 (share for OO only) Cash, Beginning 1,000(a)
(b) In relation to 9,843.75. Since there was no total amount for this Proceeds from Sale 11,600
Payment of Liab (Actual) (1,500)
column and we need to deduct something or distribute. Simply,
Remaining/Unpaid Liab (b) -
divide 9,843.75 to 20% to get the total. (WORKBACK) Actual Liquid. Expenses -
(c) Since ang Total Loss composed of 3 parts (Loss on Realization, Remaining Anticipated/ Future -
Liquidation Expenses, Anticipated Expenses/Cash Withheld), on Liquidation Expense
TOTAL CASH AVAILABLE 11,100
this problem, there is no L.E and A.E, therefore, total loss on
realization to siya.
D. Cap Bal
(d) Now, when you have (c) as your total loss on realization, and Beg: 12,500
we already compute the BV of the non-cash assets worth 266,250, Loss: (3,600)
how much is the proceeds we get? Absorption: (6,940)
Proceeds: 217,031.25 (e)
BV:266,250 XVI LUMP-SUM: INCOMPLETE DATA:
Loss: (49,218.75) *Note: Since the data was on Jan, 20x9. The 4,500 operating profit
is not yet close kasi beginning datas palang ito.
Cash, Beginning 32,812.50 Fleming Durano Mart Total Cash Av
Proceeds from Sale 217,031.25(e) (33.33%) (33.33%) (33.33%)
Payment of Liab (Actual) (93,750) Capital 6,250 5,000 18,750 30,000
Remaining/Unpaid Liab (b) - Dr (3,750) (2,500) (1,250) (7,500)
Actual Liquid. Expenses - Sh. In NI 1,500 1,500 1,500 4,500
Remaining Anticipated/ - T. Cap. 4,000 4,000 19,000 27,000
Future Liquidation Expense Interest
TOTAL CASH AVAILABLE 156,093.75 (f) Liquidation (10,750) (10,750) (10,750) (32,250)
Loss
XIII – LUMP-SUM: INCOMPLETE DATA Total (6,750) (6,750) 8,250 (5,250)
Aa (30%) Bb(20%) Cc(50%) Total Cash Av payment
Capital 40,000 45,000 65,000 150,000 for
creditors *After that one, since insolvent si Fleming, ipa absorb nyo muna
Absorbtion 6,750 (3,375) (3,375) - sa kanya (6,750) and when mag hingi tayo ng additional
Add. Inv - 10,125 - - investment ky D and M, kasama na yung inabsorb nila galing ky
Total: - - 4,875 4,875 fleming.

*After they exhaust everything, they still get deficit and owe *After absorption, magkano yung need iinvest ni D, para mawala
5,250. Now, ano yung ilalagay mo sa taas to get the total of yung negative niya?
(5,250)?

XVI – STATEMENT OF LIQUIDATION: INSTALLMENT; SAFE PAYMENTS & CASH PAYMENT PRIO PROGRAM

CASH PRIO A – 40% B – 20% C – 20% D – 20% A – 40% B – 20% C – 20% D – 20%

Cap Bal. 26,400 25,800 20,400 16,200

Loan 6,000 - - 3,000

Cap Int. 32,400 25,800 20,400 19,200

PL Ratio 40% 20% 20% 20%

81,000 129,000 102,000 96,000

Prio – I (27,000) (b) 5,400 (c)

81,000 102,000 (a) 102,000 96,000

Prio – II (6,000) (6,000) 1,200 1,200

81,000 96,000 96,000 96,000

Prio III (15,000) (15,000) (15,000) 3,000 3,000 3,000

81,000 81,000 81,000 81,000 P/L RATIO

STEP 1
*Maximum Absorption: Capital Interest / Capital Ratio:
 Partner B (129,000) (Highest Absorption Capacity)
 Partner A (81,000) (Most Vulnerable) (LAC)

*Next, the highest (Partner B), irereduce mo sya sa 2nd highest (Partner C)(a)
Then, anong ibabawas mo kay partner B para maging 102k siya? – 27k (PRIORITY #1) (b)
But that 27,000 was derived because we divided 25,800 by 20%.
To get the cash payment receive by partner B on PRIORITY #1, we multiply it by the P/L again (27,000 x 20%) = 5,400 (c) (This is what
partner B receives)
*Next,
Since, equal na si Partner B and C, same na silang level. Si B and C naman they need to go with the 3 rd highest. Then repeat the steps
to Priority #3.
*Next,
For Priority #4, P/L Ratio

STEP 2 – CASH AVAILABLE

A – 40% B – 20% C – 20% D – 20% JAN FEB MAR APR MAY

Cash, Beg - 4,800 1,800 1,200 600

Sale of NCA 72,000 21,600 19,200 6,000 2,400

Liq. Exp (1,200) (1,320) (1,440) (4,800) (960)

Payment of (66,000) (18,000) - - -

Liab – Actual

5,400 Remaining (18,000) - - - -

Liab
 1,200 1,200 Cash (4,800) (1,800) (1,200) (600) -
Withheld

3,000 3,000 3,000 - 5,280 18,360 1,800 2,040

Note: The total liab is 84,000 talaga, diba need mo sya paghandaan in advance so deduct mo
na rin ang 18k.
4,800 Cash withheld mo for Jan, that would be your beg, capital for feb. then repeat in the nest
months. In the last month, no cash withheld na.

JAN FEB MAR APR MAY A – 40% B – 20% C – 20% D – 20%

Cash, Beg - 4,800 1,800 1,200 600

Sale of NCA 72,000 21,600 19,200 6,000 2,400

Liq. Exp (1,200) (1,320) (1,440) (4,800) (960)

Payment of Liab – Actual (66,000) (18,000) - - -

Remaining Liab (18,000) - - - - 5,400

1,200 1,200
Cash Withheld (4,800) (1,800) (1,200) (600) -

3,000 3,000 3,000

- 5,280 18,360 1,800 2,040

A B C D TOTAL
January - - - - -
February 5,280 5,280
March
Prior. I 120 120
Prior. II 1,200 1,200 2,400
Prior. III 3,000 3,000 3,000 9,000
Excess 2,736 1,368 1,368 1,368 6,840 P/L RATIO
2,736 5,688 5,568 4,368 18,360
April 720 360 360 360 1,800
May 816 408 408 408 2,040

XVII

DD EE FF Total cash available

Capital 27,000 39,000 10,000 76,000 Cash, Beginning 6,000
Loan 4,000 4,000
Unrecorded (200) (200) (100) (500)
Proceeds from Sale 30,700
Liab Payment of Liab (Actual) (20,500)
Cash Interest 26,800 42,800 9,900 79,500 Remaining/Unpaid Liab (b) -
(25,320) (25,320) (12,660) (63,300) Actual Liquid. Expenses -
1,480 17,480 (2,760) 16,200
(1,380) (1,380) 2,760 -
Remaining Anticipated/ -
100 16,100 - 16,200 Future Liquidation Expense
TOTAL CASH AVAILABLE 16,200

XIII – STATEMENT OF LIQUIDATION: INSTALLMENT

Aaron Ben Chris Total cash available

Capital 310,000 250,000 330,000 890,000 Cash, Beginning 20,000
Loan 25,000 (15,000) 10,000
Proceeds from Sale 570,000
Cap Interest 335,000 235,000 330,000 900,000
Total Loss (131,600 (394,800) (131,600) (658,000) Payment of Liab (Actual) (320,000)
) Remaining/Unpaid Liab (b) -
Cash Bal: B4 203,400 (159,800) 198,400 242,000 Actual Liquid. Expenses (10,000)
dis. of loss& A.E
(79,900) 159,800 (79,900) -
Remaining Anticipated/ (18,000)
123,500 - 118,500 242,000 Future Liquidation Expense
General Rule: Kapag Silent: Ipa asborb natin. TOTAL CASH AVAILABLE 242,000

XIV – INCAPACITATED

Ray Conniff Total

Capital 35,500 27,000 62,500 Cash, Beg 17,500
Unrecorded Liab (400) (600) 1,000 Payment of Liab (11,000)
Liquidation Expenses (2,500)
Anticipated (1,500)
TOTAL CASH 2,500
Cap. Interest 35,100 26,400 61,500
(23,600) (35,400 (59,000)
)
11,500 (9,000) 2,500
(9,000) 9,000 -
2,500 - 2,500

XX
A B C Total
Capital 5,000 6,250 2,500 13,750
Unrecorded 250 (500) 250 - If 91,500 yan yung 0 lang matatanggap niya so dapat more than
Earning/ Net
91,500 which is letter D.
Income
Loans 3,750 1,250 5,000
Cap. Interest 9,000 5,750 4,000 18,750
(5,000) (5,000) (2,500) (12,500)
4,000 750 1,500 6,250

XXI XXIII
Duro Kemp Ruth Total
T K D Total
Cap. Interest 85,000 90,000 40,000 215,000
Cap. Interest 11,000 7,750 7,000 25,750
(100,000) (60,000) (40,000) (200,000)
Loss: (7,875) (3,938) (3,938) (15,750)
Total Cash (a)(15,000) 30,000 - 15,000 Total cash 3,125 3,813 3,063 10,000
15,000 15,000
- 30,000 - 30,000

Cash, Beg 6,000

Cash, Beg 60,000 Proceeds 16,000
Proceeds 102,500 Payment of Liab (2,700)
Payment of Liab (125,000) Remaining liab (7,300)
Liquidation Expenses (2,500) Liquidation Expenses (500)
Anticipated (5,000) Anticipated (1,500)

TOTAL CASH 30,000 TOTAL 10,000

(a)Kapag may isang nag negative sa total cash, reconstructive ito, Anticipated: 1,500
so magtulak ka. Unpaid Liab: 7,300
(b) kemp: siya lang may given Total: 8,800

CONSTRUCTIVE METHOD XXIV

July Aug Sept
Cash Beg 3,000 4,000 1,250
Duro Kemp Ruth Total Sales of NCA 13,250 - 37,500
Cap. Interest 85,000 90,000 40,000 215,000 Liab. Pd. (8,500) - -
(92,500) (55,500 (37,000) (185,000) Act. Liq. Exp (500) (750) (500)
) Unpd. Liab. - - -
(7,500) 34,500 3,000 30,000 Cash Wh. (4,000) (1,250) -
Cash Av. 3250 2,000 38,250
7,500 (4,500) (3,000) -
- 30,000 - 30,000 AIKO BARNEY CLINTON
Cap. Int 27,500 22,500 12,000
XII /PL Ratio 50% 30% 20%
PP QQ RR Total Loss Ab. Cap 55,000 75,000 60,000
Priority I (15,000)
Cap. Interest 35,000 25,000 50,000 110,000
55,000 60,000 60,000
(25,000 (62,500) Priority II (5,000) (5,000)
) 55,000 55,000
0 47,500
AIKO BARNEY CLINTON
Priority I 4,500
Priority II 1,500 1,000
Last 50% 30% 20%
>i-0 mo muna then try to put any excess na amount on the
choices AIKO BARNEY CLINTON Total
Cash, Beg 45,000 July – 3,250
Prior I
Proceeds 91,500
August 1,250
Payment of Liab (85,000) Prior I
Liquidation Expenses (4,000) Prior II 750 2,000
Anticipated - Septme 38,250

TOTAL CASH 47,500

750 – 1500:1000 ratio (distri to barney and clinton)
Clinton received a special equipment so di na sunod ang order of cash priority. So diba kapag nag
withdraw ang partner ng noncash drawing, the bv must update to fv and even himself that
withdraws the asset shall also SHARE in the N.I or increase in the FV.
*The moment na nasira yung CPP, ibigay mo lahat dun sa kalevel niya.
*Dahil ginalaw niya, gagalaw ang mga capital ng partners.
Revised Capital Interest:

AIKO BARNEY CLINTON Total

Cap. Int, July 27,500 22,500 12,000 62,000

Bad Debts (1,375) (825) (550) (2,750)
Loss on Sale (1,000) (600) (400) (2,000)
(inv)
Liquid Exp (250) (150) (30) (500)
Pyt. To Prtns. (3,250)
Bal, July 31 24,875 17,675 10,950 53,500
+ in Fv or Invt (375) (225) (150) (750)
Pyt. To Prtns. 1,500 900 600 3000
Bal. Aug 31 (2,000) (5,000)
26,000 16,350 6,400 48,750
(5,250) (3,150) (2,100) (10,500)
13,200 38,250

3000 ( BV: 2,000, FV:5,000) DIFFERENCE