Problems - Partnership Liquidation

Multiple Choice Questions: Partnership Liquidation 1) As of December 31,2008, the books of XYZ Partnership showed capita baance of! X P"0,000# P"0,000# P$%,000 P$%,000 # Z P1%,000& P1%,000& 'he( share profits profits and osses osses in the ratio ratio of $!$!2, $!$!2, respec respecti tie( e(&& After After some some time, time, the( the( decide decided d to i*+id i*+idate ate sod sod a nonca noncash sh assets assets of  P$1,000& -iabiities were paid amo+ntin. to P1",000 and P33,000 each is aaiabe for  distrib+tion& Ass+min. that an( capita debit baance is +ncoectibe, the share of each  partner in the cash distrib+tion wo+d be! a)  b) c) d)

XP2 XP2$,0 $,000 00 # Y YP/,00 P/,000 0 # Z Z  XP2%,200 # Y YP10,200# ZP2,$00 XP3 XP3$,8 $,800 00 # YP3$,8 P3$,800# 00# Z Z  XP1 XP1,$ ,$00 00 # Y YP10,2 P10,200# 00# ZP ZP1, 1,200 200

2) 4it and 4at are partne partners rs sharin sharin. . profit profitss and osses osses e*+a( e*+a(&& 'heir 'heir books books of the  partnership showed capita baances of! 4itP$2,000 and 4atP"$,000& 5ash, iabiities and nonca noncash sh assets assets amo+nt amo+nted ed to P1",000, P1",000, P20,000 P20,000 and P110, P110,000, 000, respect respectie ie( (&& n December 31,2008, the partnership is dissoed and i*+idated of instaments, and the first reai6ation of P30,000 cash is on the sae of noncash asset of book a+e a +e of P"0,000& After pa(ment of iabiities, the aaiabe and sha be distrib+ted to 4it and 4at as foows! a)  b) c) d)

4it 4itP" P",0 ,000 00 # 4at 4atP P22 22,0 ,000 00 4itP2%,000# 4atP2%,000 4it 4itP2 P22, 2,00 000# 0# 4at 4atP P ",0 ",000 00 4it 4itP2 P2,0 ,000 00 # 4at 4atP2 P2$, $,00 000 0

3) n ctober 31,200, A,7, and 5 decided to dissoe the partnership& 'heir capita  baances and profits and osses ratio on this date are as foows! 5ash 7aance

P- 9atio

A

$0,000

20:

7

0,000

%0:

5

$0,000

30:

5ash and -iabiities are P20,000 and P$%,000, respectie(& et income form ;an+ar( to ctober is P28,000&

receie that time= 9

>

a)

/,800

3,300

 b)

3,300



c)



3,300

d)





") 'he partner most aaiabe to partnership osses on i*+idation is! a)  b) c) d)

9  9 and > e*+a( > '

) D, , and @, partners hae capita baances of P/,800, P12,000 and P%,200 and respectie( and share profits in the ratio of $!2!1& Prepare a sched+e showin. how aai cash wi be .ien to the partners as it becomes aaiabe& ho amon. the partners sha  be paid first with an aaiabe cash of P1,200= a)  b) c) d)

D  @ D and @

8) After operatin. for 3 (ears, the books of Bi.o( Partnership showed the foowin.  baances!  et Assets Bi., 5apita Bo(, 5apita

130,000 20,000 %0,000

?f i*+idation takes pace at this point and net assets are reai6ed at book a+e, the  partners are entited to! a)  b) c) d)

Bi.P20,000 # Bo(P%0,000 Bi.P$2,8%0 # Bo(P%8,2%0 Bi.P/",$00 # Bo(P1,000 Bi.P/1,$%0 # Bo(P"/,00

/) 'he baance sheet of the firm of ;4- partnership shows the foowin.= A>>'> 5ash

20,000

ther Assets /0,000

-?A7?-?'?> Acco+nts Pa(abe 2%,000 ;,5apita 4, 5apita -,5apita

Total Assets 110,000

Total  110,000

2,000 23,000 3%,000

Liabilities

'he partners decided to i*+idate b( instaments the 1st sae of noncash assets with a book a+e of P$0,000 reai6es P2%,000&

ae E0,000 F 28,000 C %0:G $)

(100, 000

D?B

DB

''A-

7aance before i*+idation -oss on reai6ation  /,000 H 1%,000 )

3,000

12,000

1%,000

3,600)

2,400)

6,000)

7aance

"00)

/,"00

/,000

-oss for possibe insoenc(

"00

"00)



0

!,000

!,000

5apita 7aance after oss on reai6ation

/,"00

-ess! 5ash 9eceied

/,000)

Ca*ital Bala+#e ate- #as" settle.e+t

600

Cas" Re#ei$e%

%)

R

Bala+#e beo-e Lii%atio+

2%,800

(-oitLoss -atio

2"

Loss Abso-*tio+ Ca*a#it/

,$00

S

2$,000 1",200 3" $8,000

(-io-it/ '

Cas" (a/.e+t 9 2")

$8,000

2/,$00) 4,000

? 1")

/,200 3,300)  (-io-it/

1

,$00 2/,$00)

4,000

> 3")

1"

1/,800) ,$00

(-io-it/ ''

T

/,800

$,/00

4,000

6) S is t"e .ost $l+e-able *a-t+e- si+#e "e "as t"e loest abso-*tio+ #a*a#it/ .ea+i+ t"at "is eit/ ol% be -e%#e% to e-o it" a total *a-t+e-s"i* loss o+ lii%atio+ o (4,000

)

D

E



Cas" (a/.e+t

7aance before i*+idation

/,800

12,000

%,200

D

P- 9atio

%0:

30:

20:

-ess! Absorption 5apacit( 1/,"00

$0,000

2",000

Priorit( ?

1$,000)



@

4,200

Priorit(1  

(-io-it/ ''

1/,"00

1/,"00

2",000

2",000

",$00)

",$00)



1,/20

1,280

1/,"00

1/,000



",120

1,280

8) 'he partners are entited to receie an amo+nt e*+a to their capita baances since the noncash assets are reai6ed at book a+e, meanin. there is no .ain or oss in sein. the assets& /)

;

4

-

''A-

7aance before i*+idation

2,000

23,000

3%,000

8%,000

-oss on reai6ation /0,000$0,000) 3!%!2

1%,000)

2%,000)

10,000)

%0,000)

7aances

12,000

2,000)

2%,000

3%,000

-oss for possibe insoenc(

1,200)

2,000

800)



Cas" -e#ei$e%

10,00

24,200

35,000

8

10)

9

&

L

7aance before i*+idation

2,000

23,000

3%,000

-oss on reai6ation 3!%!$ E/,000$,000) F1,800G

1%,%$0)

2%,/00)

10,3"0)

7aance

11,$"0

2,/00)

2$,"$0

-oss on possibe insoenc( 3!2

1,$0)

2,/00

1,1"0)

Cas" -e#ei$e%

!,720

8

23,40