CHAPTER 6 Partnership Liquidation – Lump-sum Exercise 6-1
E2 Partnership Statement of Liquidation June 1 - 3! "1# Non-cash Cash Assets Profit and loss ratio #alances before liquidation Sale of non-cash assets and distribution of loss #alances Pa*ment of liabilities #alances Pa*ment to partners
P 25$!!! '5!$!!! P'"5$!!! ( &25$!!!) P25!$!!! ( 25!$!!!)
P%!!$!!! ( %!!$!!!)
Liabilities P&25$!!! P&25$!!! ( &25$!!!)
CAPITAL Encabo Elorde 2255!! 2"55!! P225$!!! P2"5$!!! ( &&2$5!!) (&'"$5!!) P &&2$5!! P&'"$5!! P &&2$5!! ( &&2$5!!)
P&'"$5!! (&'"$5!!)
Exercise 6-"
&+ Elias$ Enrico and Ener Statement of Liquidation ,anuar* & '&$ 2!&5 Non-cash Non-cash Cash Assets Liabilities Profit and loss ratio #alances before liquidation Sale of non-cash assets and distribution of loss Pa*ment of liquidation e1penses #alances Pa*ment of liabilities #alances Additional inestment of Elias #alances Pa*ment to partners
P .! .!$!!! %'0$!!! ( 20$!!!) P%/!$!!! (2"!$!!!) P02!$!!! &5$!!! P0'5$!!! ( 0'5$!!!)
P.&!$!!! (.&!$!!!)
P2"!$!!!
P2"!$!!! (2"!$!!!)
Elias '. P%!$!!! (%%$!!!) ( /$!!!) (P&5$!!!) (P&5$!!!) &5$!!!
C A P I T A L Enrico Ener '. 2. P2/!$!!! P2"!$!!! ( %%$!!!) ( 00$!!!) ( /$!!!) ( %$!!!) P2&5$!!! P22!$!!! P2&5$!!!
P22!$!!!
P2&5$!!! ( 2&5$!!!)
P22!$!!! ( 22!$!!!)
2+
Elias $ Enrico and Ener Statement of Liquidation ,anuar* & '&$ 2!&5 Cash Profit and loss ratio #alances before liquidation Sale of non-cash assets and distribution of loss Pa*ment of liquidation e1penses #alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in the capital balance of Elias #alances Pa*ment to partners
P .!$!!! %'0$!!! (20$!!!) P%/!$!!! (2!!$!!!) P0/!$!!!
Non-cash Non-cash Assets P.&!$!!! (.&!$!!!)
P0/!$!!! (0/!$!!!)
Note Pa*able Pa*able to Elias
C A P I T A L Liabilities
Elias
Enrico
Eer
'. P%!$!!! (%%$!!!) ( /$!!!) (P&5$!!!)
'. P2/!$!!! ( %%$!!!) ( /$!!!) P2&5$!!!
2. P2"!$!!! ( 00$!!!) ( %$!!!) P22!$!!!
P"!$!!!
(P&5$!!!)
P2&5$!!!
P22!$!!!
( &5$!!!) P55$!!! ( 55$!!!)
&5$!!! P2&5$!!! ( 2&5$!!!)
P22!$!!! ( 22!$!!!)
P"!$!!!
P2!!$!!!
P"!$!!!
P2!!$!!! (2!!$!!!)
Elias $ Enrico and Ener
'+
Statement of Liquidation ,anuar* & '&$ 2!&5 N from Cash Profit and loss ratio #alances before liquidation Sale of non-cash assets and distribution of loss
P
t f li
id ti
P .!$!!! %'0$!!! (20 !!!)
Enrico P&&!$!!!
Non-cash Non-cash Assets P"!!$!!! ("!!$!!!)
NP to Elias P"!$!!!
C A P I T A L Liabilities P2!!$!!!
El Elias '. P%!$!!! (20$"5!) ( / !!!)
Enrico '. P2/!$!!! ( 20$"5!) ( / !!!)
Eer 2. P2"!$!!! ( &%$5!!) ( % !!!)
Elias $ Enrico and Ener Statement of Liquidation ,anuar* & '&$ 2!&5 Non-cash Non-cash Assets
Cash Profit and loss ratio #alances before liquidation Sale of non-cash assets and distribution of loss Pa*ment of liquidation e1penses #alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in the capital balance of Elias #alances Pa*ment to partners
P .!$!!! %'0$!!! (20$!!!) P%/!$!!! (2!!$!!!) P0/!$!!!
P.&!$!!! (.&!$!!!)
P0/!$!!! (0/!$!!!)
Note Pa*able Pa*able to Elias
C A P I T A L Liabilities
Elias
Enrico
Eer
'. P%!$!!! (%%$!!!) ( /$!!!) (P&5$!!!)
'. P2/!$!!! ( %%$!!!) ( /$!!!) P2&5$!!!
2. P2"!$!!! ( 00$!!!) ( %$!!!) P22!$!!!
P"!$!!!
(P&5$!!!)
P2&5$!!!
P22!$!!!
( &5$!!!) P55$!!! ( 55$!!!)
&5$!!! P2&5$!!! ( 2&5$!!!)
P22!$!!! ( 22!$!!!)
P"!$!!!
P2!!$!!!
P"!$!!!
P2!!$!!! (2!!$!!!)
Elias $ Enrico and Ener
'+
Statement of Liquidation ,anuar* & '&$ 2!&5 N from Cash Profit and loss ratio #alances before liquidation Sale of non-cash assets and distribution of loss
Pa*ment of liquidation e1penses #alances Pa*ment of liabilities #alances 3ffset of receiable a4ainst credit balance in the capital of Enrico #alances Pa*ment to partners Exercise 6-3 Case &
#alances before liquidation Sale of other assets 8 dist+ of loss
#alances Pa*ment of liabilities #alances
P .!$!!! %'0$!!! (20$!!!) P%/!$!!! (2!!$!!!) P0/!$!!!
Enrico P&&!$!!!
Non-cash Non-cash Assets P"!!$!!! ("!!$!!!)
&+
2+
C A P I T A L Liabilities
P"!$!!!
P2!!$!!!
P&&!$!!!
P"!$!!!
P2!!$!!! (2!!$!!!)
P&&!$!!!
P"!$!!!
El Elias
Enrico
P0/!$!!! (0/!$!!!)
Cash P 0!$!!! 2%.$!!! P '!.$!!! (2%0$!!!) P 00$!!!
P"!$!!! ( "!$!!!)
Enten4 and Estrel Statement of Liquidation ,anuar* & '&$ 2!&5 3ther Loans6666666 Assets Liabilities Enten4 Estrel P 0!!$!!! P 2%0$!!! P '%$!!! P 0!$!!! (0!!$!!!) P 2%0$!!! P '%$!!! P 0!$!!! (2%0$!!!) P '%$!!! P 0!$!!!
'. P2/!$!!! ( 20$"5!) ( /$!!!) P25%$25!
2. P2"!$!!! ( &%$5!!) ( %$!!!) P20"$5!!
P2%$25!
P25%$25!
P20"$5!!
P2%$25! ( 2%$25!)
( &&!$!!!) P&0%$25! ( &0%$25!)
P20"$5!! ( 20"$5!!)
Capital666666 Enten4 (/!7) Estrel (&!7) P .!$!!! P 2!$!!! (&&.$.!!) ( &'$2!!) (P '.$.!!) P %$.!! (P '.$.!!)
P %$.!!
'%$!!! 2$.!!) 2$.!!
P %$.!! ( 2$.!!)
( '%$!!!) P 00$!!!
P 0!$!!!
P 00$!!! ( 00$!!!)
P 0!$!!! ( 0!$!!!)
Cash Enten4$ Capital Estrel$ Capital 3ther Assets
2%.$!!! &&.$.!! &'$2!!
Liabilities Cash
2%0$!!!
0+
Estrel$ Capital Enten4$ Capital
Eer
'. P%!$!!! (20$"5!) ( /$!!!) P2%$25!
(&&!$!!!)
3ffset of loan a4ainst debit balance in the capital of Enten4
#alances Additional loss to Estrel for the deficienc* of Enten4 #alances Pa*ment to partners
NP to Elias
(P
P 0$!!! ( 0$!!!) 2$.!! 2$.!!
0!!$!!! 5+ 2%0$!!!
Estrel$ Loan Estrel$ Capital Cash
0!$!!! 0$!!! 00$!!!
#alances before liquidation Sale of other assets 8 dist+ of loss
#alances Pa*ment of liabilities #alances
Cash P 0!$!!! 2%.$!!! P '!.$!!! (2%0$!!!) P 00$!!!
Enten4 and Estrel Statement of Liquidation ,anuar* & '&$ 2!&5 3ther Loans6666666 Assets Liabilities Enten4 Estrel P 0!!$!!! P 2%0$!!! P '%$!!! P 0!$!!! (0!!$!!!) P 2%0$!!! P '%$!!! P 0!$!!! (2%0$!!!) P '%$!!! P 0!$!!!
3ffset of loan a4ainst debit balance in the capital of Enten4
#alances Additional loss to Estrel for the deficienc* of Enten4 #alances Pa*ment to partners &+
2+
'+
Capital666666 Enten4 (/!7) Estrel (&!7) P .!$!!! P 2!$!!! (&&.$.!!) ( &'$2!!) (P '.$.!!) P %$.!! (P '.$.!!)
P %$.!!
'%$!!! 2$.!!) 2$.!!
P %$.!! ( 2$.!!)
( '%$!!!) P 00$!!!
P 0!$!!!
P 00$!!! ( 00$!!!)
P 0!$!!! ( 0!$!!!)
Cash Enten4$ Capital Estrel$ Capital 3ther Assets
2%.$!!! &&.$.!! &'$2!!
Liabilities Cash
2%0$!!!
Enten4$ Loan Enten4$ Capital
0+
(P
Estrel$ Capital Enten4$ Capital
P 0$!!! ( 0$!!!) 2$.!! 2$.!!
0!!$!!! 5+ 2%0$!!!
Estrel$ Loan Estrel$ Capital Cash
0!$!!! 0$!!! 00$!!!
'%$!!! '%$!!!
Case 2 Enten4 and Estrel Statement of Liquidation
,anuar* & '&$ 2!&5
#alances before liquidation Sale of other assets and distribution of loss #alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in capital account #alances Pa*ment to partners
&+
2+
Cash P 0!$!!! 2%.$!!! P '!.$!!! (2%0$!!!) P 00$!!!
3ther Assets P 0!!$!!! (0!!$!!!)
Liabilities P 2%0$!!! P 2%0$!!! ( 2%0$!!!)
P 00$!!! ( 00$!!!)
Cash Enten4$ Capital Estrel$ Capital 3ther Assets
2%.$!!! /2$0!! '/$%!!
Liabilities Cash
2%0$!!!
'+
0!!$!!! 0+ 2%0$!!!
Loans6666666 Enten4 Estrel P '%$!!! P 0!$!!! P '%$!!!
P 0!$!!!
Capital666666 Enten4 Estrel P .!$!!! P 2!$!!! ( /2$0!!) ( '/$%!!) (P &2$0!!) (P &/$%!!)
P '%$!!!
P 0!$!!!
(P &2$0!!)
(&2$0!!) P 2'$%!! ( 2'$%!!)
( &/$%!!) P 2!$0!! ( 2!$0!!)
&2$0!!
Enten4$ Loan Estrel$ Loan Enten4$ Capital Estrel$ Capital
&2$0!! &/$%!!
Enten4$ Loan Estrel$ Loan Cash
2'$%!! 2!$0!!
(P &/$%!!) &/$%!!
&2$0!! &/$%!!
00$!!!
,anuar* & '&$ 2!&5
#alances before liquidation Sale of other assets and distribution of loss #alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in capital account #alances Pa*ment to partners
&+
2+
Cash P 0!$!!! 2%.$!!! P '!.$!!! (2%0$!!!) P 00$!!!
3ther Assets P 0!!$!!! (0!!$!!!)
Loans6666666 Enten4 Estrel P '%$!!! P 0!$!!!
Liabilities P 2%0$!!! P 2%0$!!! ( 2%0$!!!)
P 00$!!! ( 00$!!!)
Cash Enten4$ Capital Estrel$ Capital 3ther Assets
2%.$!!! /2$0!! '/$%!!
Liabilities Cash
2%0$!!!
'+
0!!$!!! 0+ 2%0$!!!
P '%$!!!
P 0!$!!!
Capital666666 Enten4 Estrel P .!$!!! P 2!$!!! ( /2$0!!) ( '/$%!!) (P &2$0!!) (P &/$%!!)
P '%$!!!
P 0!$!!!
(P &2$0!!)
(&2$0!!) P 2'$%!! ( 2'$%!!)
( &/$%!!) P 2!$0!! ( 2!$0!!)
&2$0!!
Enten4$ Loan Estrel$ Loan Enten4$ Capital Estrel$ Capital
&2$0!! &/$%!!
Enten4$ Loan Estrel$ Loan Cash
2'$%!! 2!$0!!
(P &/$%!!) &/$%!!
&2$0!! &/$%!!
00$!!!
Case ' Enten4 and Estrel Statement of Liquidation ,anuar* &- '&$ 2!&5
#alances before liquidation Sale of other assets 8 distribution of loss #alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in the capital of Estrel #alances
Cash P 0!$!!! 2%.$!!! P '!.$!!! (2%0$!!!) P 00$!!!
3ther Assets P 0!!$!!! (0!!$!!!)
Liabilities P 2%0$!!! P 2%0$!!! ( 2%0$!!!)
Loans6666666 Enten4 Estrel P '%$!!! P 0!$!!! P '%$!!!
P 0!$!!!
Capital666666 Enten4 Estrel P .!$!!! P 2!$!!! ( %%$!!!) ( %%$!!!) P &0$!!! (P 0%$!!!)
P '%$!!!
P 0!$!!!
P &0$!!!
(0!$!!!) P 00$!!!
P '%$!!!
P 00$!!! ( 00$!!!)
P '%$!!! ( '%$!!!)
Additional loss to Enten4 for the deficienc* of Estrel
#alances Pa*ment to partners
&+
2+
'+
Cash Enten4$ Capital Estrel$ Capital 3ther Assets
2%.$!!! %%$!!! %%$!!!
Liabilities Cash
2%0$!!!
Estrel$ Loan Estrel$ Capital
0$
Enten4$ Capital Estrel$ Capital
P &0$!!! ( %$!!!) P .$!!! ( .$!!!)
(P 0%$!!!) 0!$!!! P ( %$!!!) %$!!!
%$!!! %$!!!
0!!$!!! 5+ 2%0$!!! 0!$!!! 0!$!!!
Enten4$ Loan Enten4$ Capital Cash
'%$!!! .$!!! 00$!!!
#alances before liquidation Sale of other assets 8 distribution of loss #alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in the capital of Estrel #alances
Cash P 0!$!!! 2%.$!!! P '!.$!!! (2%0$!!!) P 00$!!!
3ther Assets P 0!!$!!! (0!!$!!!)
Liabilities P 2%0$!!! P 2%0$!!! ( 2%0$!!!)
Loans6666666 Enten4 Estrel P '%$!!! P 0!$!!! P '%$!!!
P 0!$!!!
Capital666666 Enten4 Estrel P .!$!!! P 2!$!!! ( %%$!!!) ( %%$!!!) P &0$!!! (P 0%$!!!)
P '%$!!!
P 0!$!!!
P &0$!!!
(0!$!!!) P 00$!!!
P '%$!!!
P 00$!!! ( 00$!!!)
P '%$!!! ( '%$!!!)
P &0$!!! ( %$!!!) P .$!!! ( .$!!!)
Additional loss to Enten4 for the deficienc* of Estrel
#alances Pa*ment to partners
&+
2+
'+
Cash Enten4$ Capital Estrel$ Capital 3ther Assets
2%.$!!! %%$!!! %%$!!!
Liabilities Cash
2%0$!!!
Estrel$ Loan Estrel$ Capital
0$
Enten4$ Capital Estrel$ Capital
(P 0%$!!!) 0!$!!! P ( %$!!!) %$!!!
%$!!! %$!!!
0!!$!!! 5+ 2%0$!!!
Enten4$ Loan Enten4$ Capital Cash
'%$!!! .$!!! 00$!!!
0!$!!! 0!$!!!
Exercise 6-#
Capital balances before liquidation Loan from partners Total partners9 interest Loss on reali:ation (P0%$!!! P&2$!!!) #alances Additional loss to partners #alances Additional loss to partners ;istribution of cash to partners
Es4uerra P &&$!!! 2$!!! P &'$!!! ( & '$%!!) (P %!!) %!! ----------------
Esteban P &!$'!!
Estrada P &'$"!!
Eu4enio P /$!!!
P &!$'!! ( & !$2!!) P &!! ( '!!) (P 2!!) 2!! ---------
P &'$"!! ( % $.!!) P %$/!! ( 2!!) P %$"!! ( &'') P %$5%"
P /$!!! ( '$0!!) P 5$%!! ( &!!) P 5$5!! ( %") P 5$0''
Exercise 6-#
Capital balances before liquidation Loan from partners Total partners9 interest Loss on reali:ation (P0%$!!! P&2$!!!) #alances Additional loss to partners #alances Additional loss to partners ;istribution of cash to partners
Es4uerra P &&$!!! 2$!!! P &'$!!! ( & '$%!!) (P %!!) %!! ----------------
Esteban P &!$'!!
Estrada P &'$"!!
Eu4enio P /$!!!
P &!$'!! ( & !$2!!) P &!! ( '!!) (P 2!!) 2!! ---------
P &'$"!! ( % $.!!) P %$/!! ( 2!!) P %$"!! ( &'') P %$5%"
P /$!!! ( '$0!!) P 5$%!! ( &!!) P 5$5!! ( %") P 5$0''
Pro$%em 6-1
Ester$ Edna$ Emma$ and Ea Statement of Liquidation 3ctober &-'&$2!&0
#alances before liquidation Sale of asset and distribution of loss
Cash P 5!$!!! 5!!$!!! P 55!$!!! ( 05!$!!!) P &!!$!!!
3ther Assets P/5!$!!! ( /5!$!!!)
#alances Pa*ment of liabilities #alances 3ffset of receiable a4ainst credit balance in the capital account of Ester #alances P &!!$!!! Additional loss to the partners for the deficienc* of Edna shared 0=&=& #alances P &!!$!!! 3ffset of loan a4ainst debit balance in the capital account of Ea #alances P &!!$!!! Pa*ment to partners ( &!!$!!!) #alances Additional inestment b* Emma /$'"5 #alances P /$'"5 Pa*ment to partners ( /$'"5)
ec
Liabilities P 05!$!!! P 05!$!!! ( 05!$!!!)
P%2$5!!
Ea$ Loan P'"$5!! P'"$5!!
Ester (0) P'.&$25! ( 225$!!!) P&5%$25!
C A P I T A L Edna (2) Emma (&) P /'$"5! P5!$!!! ( &&2$5!!) ( 5%$25!) (P &.$"5!) (P %$25!)
Ea (&) P5!$!!! ( 5%$25!) (P %$25!)
P'"$5!!
P&5%$25!
(P &.$"5!)
(P %$25!)
(P %$25!)
P'"$5!!
( %2$5!!) P /'$"5!
(P &.$"5!)
(P %$25!)
(P %$25!)
( &2$5!!) P .&$25!
&.$"5!
P'"$5!!
( '$&25) (P /$'"5)
( '$&25) (P /$'"5)
( /$'"5) P2.$&25 (2%$25!) P &$."5
P .&$25! ( "'$"5!) P "$5!!
P &$."5 ( &$."5)
P (
(%2$5!!)
/$'"5 (P /$'"5) (P /$'"5) /$'"5
"$5!! "$5!!)
,ournal entries to record the liquidation of the partnership &+
2+
'+
0+
Cash Ester$ Capital Edna$ Capital Emma$ Capital Ea$ Capital 3ther Assets
5!!$!!! 225$!!! &&2$5!! 5%$25! 5%$25!
Liabilities Cash
05!$!!!
/5!$!!!
05!$!!!
Esters$ Capital eceiable from Ester
%2$5!!
Ester$ Capital Emma$ Capital Ea$ Capital
&2$5!! '$&25 '$&25
%2$5!!
,ournal entries to record the liquidation of the partnership &+
2+
'+
0+
5+
%+
"+
.+
Cash Ester$ Capital Edna$ Capital Emma$ Capital Ea$ Capital 3ther Assets
5!!$!!! 225$!!! &&2$5!! 5%$25! 5%$25!
Liabilities Cash
05!$!!!
/5!$!!!
05!$!!!
Esters$ Capital eceiable from Ester
%2$5!!
Ester$ Capital Emma$ Capital Ea$ Capital Edna$ Capital
&2$5!! '$&25 '$&25
Ea$ Loan Ea$ Capital
/$'"5
Ea$ Loan Ester$ Capital Cash
%2$5!!
&.$"5!
/$'"5 2%$25! "'$"5! &!!$!!!
Cash Emma$ Capital
/$'"5
Ea$ Loan Ester$ Capital Cash
&$."5 "$5!!
/$'"5
/$'"5
Pro$%em
&+
6-"
Esteban$ Capital Esteban$ ;ra>in4 Total interest of Esteban Cash receied b* Esteban
P &00$!!! ( &2$!!!) P &'2$!!! &&&$!!! P 2&$!!! 2&! P &!5$!!!
Share of Esteban in the loss on liquidation
?ractional share of Esteban Total loss on liquidation
'+
a+
b+
Cash Eu4enio$ Capital Earisto$ Capital Esteban$ Capital 3ther Assets
0%'$!!! 52$5!! '&$5!! 2&$!!!
Liabilities Cash
2!!$!!!
Earisto$ Loan Eu4enio$ Capital Earisto$ Capital Esteban$ Capital Cash
0!$!!! "/$5!! &!2$5!! &&&$!!!
c+
5%.$!!!
2!!$!!!
'''$!!!
2+ Eu4enio $ Earisto and Esteban Statement of Liquidation ,anuar* & '&$ 2!&5
#alances before liquidation Sale of other assets 8 distribution of loss #alances Pa*ment of liabilities #alances Pa*ment to partners
Cash P "!$!!! 0%'$!!! P 5''$!!! (2!!$!!!) P '''$!!! ( '''$!!!)
3ther Assets P 5%.$!!! ( 5%.$!!!)
Liabilities P 2!!$!!! P 2!!$!!! ( 2!!$!!!)
Earisto$ Loan P 0!$!!!
C AP I TAL Earisto Esteban ('&!) (2&!) P &'0$!!! P&'2$!!! ( '&$5!!) ( 2&$!!!) P &!2$5!! P &&&$!!!
P 0!$!!!
Eu4enio (5&!) P &'2$!!! ( 52$5!!) P "/$5!!
P 0!$!!! ( 0!$!!!)
P "/$5!! ( "/$5!!)
P &!2$5!! (&!2$5!!)
A N Espiritu P .$!!!
P
P .$!!!
C A Estrella (2) P /5$!!! ('%$!!!) P 5/$!!!
I T Espino (2) P %!$!!! ('%$!!!) P 20$!!!
A L Espiritu (&) P .!$!!! (&.$!!!) P %2$!!!
P .$!!! (.$!!!)
P 5/$!!! (5/$!!!)
P 20$!!! ( 20$!!!)
P %2$!!! (%2$!!!)
P &&&$!!! ( &&&$!!!)
Pro$%em 6-3
Case &
#alances before liquidation Sale of assets 8 distr ibution of loss
#alances Pa*ment of liabilities #alances Pa*ment to partners
Cash P 2!$!!! 25!$!!! P 2"!$!!! ( &&2$!!!) P &5.$!!! ( &5.$!!!)
Estrella$ Espino and Espiritu Statement of Liquidation ,anuar* &- '&$ 2!&5 3ther L 3 Assets Liabilities Espino P '0!$!!! P &&2$!!! P 5$!!! ( '0!$!!!) P &&2$!!! P 5$!!! (&&2$!!!) P 5$!!! (5$!!!)
Case 2 Estrella$ Espino and Espiritu Statement of Liquidation ,anuar* & - '&$ 2!&5
#alances before liquidation Sale of assets 8 distribution of loss #alances Pa*ment of liabilities #alances
Cash P 2!$!!! &.5$!!! P 2!5$!!! (&&2$!!!) P /'$!!!
3ther Assets P '0!$!!! ('0!$!!!)
Liabilities P &&2$!!! P &&2$!!! (&&2$!!!)
L 3 A N Espino Espiritu P 5$!!! P .$!!! P 5$!!!
P .$!!!
C Estrella (2) P /5$!!! (%2$!!!) P ''$!!!
P 5$!!!
P .$!!!
P ''$!!!
A P I Espino (2) P %!$!!! ( %2$!!!) (P 2$!!!) (P 2$!!!)
TA
L Espiritu (&) P .!$!!! ('&$!!!) P 0/$!!! P 0/$!!!
Case &
#alances before liquidation Sale of assets 8 distr ibution of loss
#alances Pa*ment of liabilities #alances Pa*ment to partners
Cash P 2!$!!! 25!$!!! P 2"!$!!! ( &&2$!!!) P &5.$!!! ( &5.$!!!)
Estrella$ Espino and Espiritu Statement of Liquidation ,anuar* &- '&$ 2!&5 3ther L 3 Assets Liabilities Espino P '0!$!!! P &&2$!!! P 5$!!! ( '0!$!!!) P &&2$!!! P 5$!!! (&&2$!!!) P 5$!!! (5$!!!)
A N Espiritu P .$!!!
P
P .$!!!
C A Estrella (2) P /5$!!! ('%$!!!) P 5/$!!!
I T Espino (2) P %!$!!! ('%$!!!) P 20$!!!
A L Espiritu (&) P .!$!!! (&.$!!!) P %2$!!!
P .$!!! (.$!!!)
P 5/$!!! (5/$!!!)
P 20$!!! ( 20$!!!)
P %2$!!! (%2$!!!)
Case 2 Estrella$ Espino and Espiritu Statement of Liquidation ,anuar* & - '&$ 2!&5
#alances before liquidation Sale of assets 8 distribution of loss #alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in the capital of Espino #alances Pa*ment to partners
Cash P 2!$!!! &.5$!!! P 2!5$!!! (&&2$!!!) P /'$!!!
3ther Assets P '0!$!!! ('0!$!!!)
Liabilities P &&2$!!! P &&2$!!! (&&2$!!!)
L 3 A N Espino Espiritu P 5$!!! P .$!!! P 5$!!!
P .$!!!
C Estrella (2) P /5$!!! (%2$!!!) P ''$!!!
P 5$!!!
P .$!!!
P ''$!!!
( 2$!!!) P '$!!! ('$!!!)
P /'$!!! ( /'$!!!)
A P I Espino (2) P %!$!!! ( %2$!!!) (P 2$!!!) (P 2$!!!)
TA
L Espiritu (&) P .!$!!! ('&$!!!) P 0/$!!! P 0/$!!!
2$!!! P .$!!! (.$!!!)
P ''$!!! (''$!!!)
P 0/$!!! (0/$!!!)
Case ' Estrella$ Espino and Espiritu Statement of Liquidation
,anuar* & -'&$ 2!&5
#alances before liquidation Sale of assets 8 distribution of loss
Cash P 2!$!!! &"!$!!! P &/!$!!! ( &&2$!!!) P ".$!!!
#alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in the capital of Espino #alances P ".$!!! Pa*ment to partners ( ".$!!!) #alances Additional inestment b* Espino '$!!! #alances P '$!!! Pa*ment to partners ( '$!!!)
3ther Assets P '0!$!!! ('0!$!!!)
Liabilities P &&2$!!! P &&2$!!! (&&2$!!!)
L 3 Espino P 5$!!!
A
N Espiritu P .$!!!
P 5$!!!
P .$!!!
C Estrella (2) P /5$!!! (%.$!!!) P 2"$!!!
P 5$!!!
P .$!!!
P 2"$!!!
P .$!!! ( .$!!!)
P 2"$!!! ( 25$!!!) P 2$!!!
( 5$!!!)
A
P I T Espino (2) P %!$!!! ( %.$!!!) (P .$!!!) (P .$!!!)
5$!!! (P '$!!!) (P '$!!!)
A
L Espiritu (&) P .!$!!! ('0$!!!) P 0%$!!! P 0%$!!!
P 0%$!!! ( 05$!!!) P &$!!!
'$!!! P 2$!!! ( 2$!!!)
P
&$!!! ( &$!!!)
,anuar* & -'&$ 2!&5
#alances before liquidation Sale of assets 8 distribution of loss
Cash P 2!$!!! &"!$!!! P &/!$!!! ( &&2$!!!) P ".$!!!
#alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in the capital of Espino #alances P ".$!!! Pa*ment to partners ( ".$!!!) #alances Additional inestment b* Espino '$!!! #alances P '$!!! Pa*ment to partners ( '$!!!)
3ther Assets P '0!$!!! ('0!$!!!)
Liabilities P &&2$!!! P &&2$!!! (&&2$!!!)
L 3 Espino P 5$!!!
A
N Espiritu P .$!!!
P 5$!!!
P .$!!!
C Estrella (2) P /5$!!! (%.$!!!) P 2"$!!!
P 5$!!!
P .$!!!
P 2"$!!!
P .$!!! ( .$!!!)
P 2"$!!! ( 25$!!!) P 2$!!!
( 5$!!!)
A
P I T Espino (2) P %!$!!! ( %.$!!!) (P .$!!!) (P .$!!!)
5$!!! (P '$!!!) (P '$!!!)
A
L Espiritu (&) P .!$!!! ('0$!!!) P 0%$!!! P 0%$!!!
P 0%$!!! ( 05$!!!) P &$!!!
'$!!! P 2$!!! ( 2$!!!)
P
Estrella$ Espino and Espiritu Schedule to Accompan* Statement of Liquidation Amounts to be Paid to Partners
Capital balances before cash distribution Add loan balance Total partners9 interest estricted interest - possible loss to Estrella and Espiritu in the ratio of 2=& if Espino fails to pa* his deficienc* ?ree interests - amounts to be paid to partners Pa*ment to appl* on= Loan Capital Cash distribution
Estrella (2) P 2"$!!!
Espino (2) (P '$!!!)
P 2"$!!!
(P '$!!!)
( 2$!!!) P 25$!!!
P 25$!!! P 25$!!!
'$!!!
Espiritu (&) P 0%$!!! .$!!! P 50$!!! ( &$!!!) P 5'$!!! P .$!!! 05$!!! P 5'$!!!
&$!!! ( &$!!!)
Capital balances before cash distribution Add loan balance Total partners9 interest estricted interest - possible loss to Estrella and Espiritu in the ratio of 2=& if Espino fails to pa* his deficienc* ?ree interests - amounts to be paid to partners Pa*ment to appl* on= Loan Capital Cash distribution
Estrella (2) P 2"$!!!
Espino (2) (P '$!!!)
P 2"$!!!
(P '$!!!)
( 2$!!!) P 25$!!!
'$!!!
Espiritu (&) P 0%$!!! .$!!! P 50$!!! ( &$!!!) P 5'$!!! P .$!!! 05$!!! P 5'$!!!
P 25$!!! P 25$!!!
Case 0 Estrella$ Espino and Espiritu Statement of Liquidation ,anuar* & '&$ 2!&5
#alances before liquidation Sale of assets 8 distr ibution of loss
#alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in the capital of Espino #alances Pa*ment to partners #alances Additional inestment b* Espino #alances Pa*ment to partners
Cash P 2!$!!! &25$!!! P &05$!!! ( &&2$!!!) P ''$!!!
3ther Assets P '0!$!!! ( '0!$!!!)
Liabilities P &&2$!!! P &&2$!!! (&&2$!!!)
L 3AN Espino Espiritu P 5$!!! P .$!!! P 5$!!!
P .$!!!
CAPTIAL Estrella (2) Espino (2) P /5$!!! P %!$!!! (.%$!!!) (.%$!!!) P /$!!! (P2%$!!!)
P 5$!!!
P .$!!!
P /$!!!
(P2%$!!!)
P .$!!! ( .$!!!)
P /$!!!
5$!!! (P2&$!!!)
( 5$!!!) P ''$!!! ( ''$!!!)
P /$!!! 2&$!!! P 2&$!!! ( 2&$!!!)
P /$!!! ( /$!!!)
(P2&$!!!) 2&$!!!
Espiritu (&) P .!$!!! (0'$!!!) P '"$!!! P '"$!!!
P '"$!!! ( 25$!!!) P &2$!!! P &2$!!! ( &2$!!!)
#alances before liquidation Sale of assets 8 distr ibution of loss
#alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in the capital of Espino #alances Pa*ment to partners #alances Additional inestment b* Espino #alances Pa*ment to partners
Cash P 2!$!!! &25$!!! P &05$!!! ( &&2$!!!) P ''$!!!
3ther Assets P '0!$!!! ( '0!$!!!)
Liabilities P &&2$!!! P &&2$!!! (&&2$!!!)
L 3AN Espino Espiritu P 5$!!! P .$!!! P 5$!!!
P .$!!!
CAPTIAL Estrella (2) Espino (2) P /5$!!! P %!$!!! (.%$!!!) (.%$!!!) P /$!!! (P2%$!!!)
P 5$!!!
P .$!!!
P /$!!!
(P2%$!!!)
P .$!!! ( .$!!!)
P /$!!!
5$!!! (P2&$!!!)
( 5$!!!) P ''$!!! ( ''$!!!)
P /$!!! 2&$!!! P 2&$!!! ( 2&$!!!)
(P2&$!!!) 2&$!!!
P /$!!! ( /$!!!)
Espiritu (&) P .!$!!! (0'$!!!) P '"$!!! P '"$!!!
P '"$!!! ( 25$!!!) P &2$!!! P &2$!!! ( &2$!!!)
Estrella$ Espino and Espiritu Schedule to Accompan* Statement of Liquidation Amount to be Paid to Partners
Capital balances before cash distribution Add loan balance Total partners9 interest estricted interest - possible loss to Estrella and Espiritu in the ratio of 2=& if Espino fails to pa* his deficienc* #alances estricted interest - possible loss to Espiritu if Estrella fails to pa* his deficienc* ?ree interests - amounts to be paid to partners Pa*ment to appl* on= Loan Capital
Estrella (2) P /$!!!
Espino (2) (P 2&$!!!)
P /$!!!
(P 2&$!!!)
(&0$!!!)
2&$!!!
Espiritu (&) P '"$!!! .$!!! P 05$!!! ( "$!!!)
(P 5$!!!)
P '.$!!!
5$!!!
( 5$!!!) P ''$!!! P .$!!! 25$!!!
Estrella$ Espino and Espiritu Schedule to Accompan* Statement of Liquidation Amount to be Paid to Partners
Capital balances before cash distribution Add loan balance Total partners9 interest estricted interest - possible loss to Estrella and Espiritu in the ratio of 2=& if Espino fails to pa* his deficienc* #alances estricted interest - possible loss to Espiritu if Estrella fails to pa* his deficienc* ?ree interests - amounts to be paid to partners Pa*ment to appl* on= Loan Capital Cash distribution
Estrella (2) P /$!!!
Espino (2) (P 2&$!!!)
P /$!!!
(P 2&$!!!)
(&0$!!!)
2&$!!!
Espiritu (&) P '"$!!! .$!!! P 05$!!! ( "$!!!)
(P 5$!!!)
P '.$!!!
5$!!!
( 5$!!!) P ''$!!! P .$!!! 25$!!! P ''$!!!
Case 5
#alances before liquidation Sale of assets 8 distribution of loss #alances Pa*ment of liabilities #alances 3ffset of loan a4ainst debit balance in the capital of Espino #alances Additional inestment b* Estrella and Espino #alances Pa*ment of liabilities and pa*ment to partners
Cash P 2!$!!! /!$!!! P &&!$!!! ( &&!$!!!)
Estrella$ Espino and Espiritu Statement of Liquidation ,anuar* & - '&$ 2!&5 3ther 3ther L3AN Assets Liabilities Espino Espiritu P '0!$!!! P &&2$!!! P 5$!!! P .$!!! ('0!$!!!) P &&2$!!! P 5$!!! P .$!!! (&&!$!!!) P 2$!!! P 5$!!! P .$!!!
CAP I TAL Estrella (2) Espino (2) Espiritu (&) P /5$!!! P %!$!!! P .!$!!! (&!!$!!!) (&!!$!!!) (5!$!!!) (P 5$!!!) (P 0!$!!!) P '!$!!! (P 5$!!!)
(P 0!$!!!)
P '!$!!!
(P 5$!!!) 5$!!!
5$!!! (P '5$!!!) '5$!!!
P '!$!!!
( 5$!!!) P
2$!!!
P .$!!!
0!$!!! P 0!$!!! ( 0!$!!!)
P 2$!!! ( 2$!!!)
P .$!!! (.$!!!)
P '!$!!! ( '!$!!!)
Problem 6 – 4
&+ Asset
#oo@ alue
Accounts eceiable erchandise Inentor* Prepaid Adertisin4 achiner* and Equipment
P %!$!!! 5!$!!! 2$!!! 0!$!!! P&52$!!!
Cash eali:ed P%0$!!! 25$!!! .!! 20$!!! P&&'$.!!
(Bain) Loss (P 0$!!!) 25$!!! &$2!! &%$!!! P '.$2!!
2+ Easco-Ellor Partnership Statement of Liquidation ,anuar* & '&$ 2!&5 Cash #alances before liquidation Sale of assets and distribution of loss #alances
3ther Assets
P &$!!!
P&52$!!!
&&'$.!! P&&0$.!!
(&52$!!!)
Accounts Pa*able P2!$!!!
P2!$!!!
Notes Pa*able
CAPITAL Easco (0) Ellor (%)
P .%$!!!
P '!$!!!
P &"$!!!
P .%$!!!
(&5$2.!) P &0$"2!
(22$/2!) (P 5$/2!)
Problem 6 – 4
&+ Asset
#oo@ alue
Accounts eceiable erchandise Inentor* Prepaid Adertisin4 achiner* and Equipment
P %!$!!! 5!$!!! 2$!!! 0!$!!! P&52$!!!
Cash eali:ed P%0$!!! 25$!!! .!! 20$!!! P&&'$.!!
(Bain) Loss (P 0$!!!) 25$!!! &$2!! &%$!!! P '.$2!!
2+ Easco-Ellor Partnership Statement of Liquidation ,anuar* & '&$ 2!&5 Cash #alances before liquidation Sale of assets and distribution of loss #alances Dnrecorded liabilities #alances Pa*ment of liabilities #alances Additional inestment of Ellor #alances Additional loss to Easco for the deficienc* of Ellor #alances Pa*ment to Easco
3ther Assets
P &$!!!
P&52$!!!
&&'$.!! P&&0$.!!
(&52$!!!)
Accounts Pa*able
CAPITAL Easco (0) Ellor (%) P '!$!!!
P &"$!!!
(&5$2.!) P &0$"2! ( &$2!!) P &'$52!
(22$/2!) (P 5$/2!) ( &$.!!) (P "$"2!)
P &'$52!
(P "$"2!)
0$!!! P /$.!!
P &'$52!
0$!!! (P '$"2!)
P /$.!! ( /$.!!)
( '$"2!) P /$.!! ( /$.!!)
P&&0$.!! (&!/$!!!) P 5$.!!
P2!$!!!
Notes Pa*able
P2!$!!! 2$!!! P22$!!! (22$!!!)
P .%$!!!
P .%$!!! &$!!! P ."$!!! (."$!!!)
'$"2!
'+ a+
b+
c+
Cash Easco$ Capital Ellor$ Capital Allo>ance for Dncollectible Accounts Accumulated ;epreciation Accounts eceiable erchandise Inentor* Prepaid Adertisin4 achiner* and Equipment
Easco$ Capital Ellor$ Capital Accounts Pa*able Notes Pa*able Accounts Pa*able Notes Pa*able Cash
&&'$.!! &5$2.! 22$/2! 2!$!!! %!$!!! .!$!!! 5!$!!! 2$!!! &!!$!!!
&$2!! &$.!! 2$!!! &$!!! 22$!!! ."$!!! &!/$!!!
d+
e+
f+
Cash Ellor$ Capital
0$!!!
Easco$ Capital Ellor$ Capital
'$"2!
Easco$ Capital Cash
/$.!!
0$!!!
'$"2!
/$.!! &'LT(PLE CH)(CE
&+
C
2+
#
'+
#
Total assets Total capital F Total liabilities P%!$!!! F P '$!!! Less Cash P'$!!! F P22$2!! - P2'$2!! #oo@ alue of noncash assets P%&$!!! - P2'$2!! P'"$.!! 1 02&
Capital bal+ before liquidation Loss on reali:ation #alances Add9l loss to Espinosa and Esteban Cash pa*ments to partners 0+
C
5+
A
P %'$!!! 6662$!!! P %&$!!! P "$2!! Espina P&$!!! ( 5$0!!) (P0$0!!) 0$0!!
"+
;
A
# #alances before liquidation Loss from sale of non-cash assets #alances Additional loss for deficienc* of Escano #alances Add Loan balance Cash to be receied b* Ender
Estrellita P /$!!! ( &0$0!!) (P5$0!!) 5$0!!
P"!$!!! 2.$!!! P 02$!!! E& P 0!$!!! ( 2&$!!!) P &/$!!! ( &$2!!) P &"$.!!
E2 P 25$!!! (&0$!!!) P &&$!!! ( .!!)
Total capital (P'%!$!!! F P"2$!!!) Total liabilities Total loss on liquidation
Capital balances ;ra>in4 ;istribution of net income Loss on liquidation #alances Additional loss to Elor and Este Cash to be distributed to Este .+
Esteban P25$!!! ( &!$.!!) P&0$2!! ( 5$..!) P .$'2!
Total capital Less Cash left for distribution Loss on reali:ation
Capital bal+ before liquidation Loss on reali:ation #alances Addl loss to E& 8 E2 for the deficienc* of E' Cash pa*ment to E& %+
Espinosa P25$!!! ( "$2!!) P&"$.!! ( '$/2!)
E' P 5$!!! ( "$!!!) P( 2$!!!) 2$!!!
P0'2$!!! .0$!!! P5&%$!!! Espera P &!!$!!! ( %!$!!!) 20$!!! (&"2$!!!) (P&!.$!!!) &!.$!!!
Escano P&!$!!! ( &%$!!!) (P %$!!!) %$!!!
Elor P .!$!!! ( 0!$!!!) 20$!!! (&"2$!!!) P(&!.$!!!) ( 50$!!!)
Ender P'5$!!! ( &2$!!!) P2'$!!! ( '$!!!) P2!$!!! &0$!!! P'0$!!!
Eelo P0&$!!! ( &2$!!!) P2/$!!! ( '$!!!) P2%$!!!
Este P '!!$!!! (2!$!!!) 20$!!! (&"2$!!!) P &'2$!!! ( 50$!!!) P ".$!!!
/+
# #alances before liquidation Loss on liquidation - P05$!!! #alances Additional loss for deficienc* of Escano (P.$!!! - P5$!!! P'$!!!) Pa*ment to Eelo
Escano P&!$!!! ( &.$!!!) (P .$!!!)
Ender P'5$!!! ( &'$5!!) P2&$5!!
Eelo P0&$!!! ( &'$5!!) P2"$5!!
'$!!!
( &$5!!)
( &$5!!) 2%$!!!
&!+
;
Cash to be receied b* Escano Escano capital before liquidation Escano9s share in the 4ain on reali:ation Escano
P&2$!!! &!$!!! P 2$!!! 0!7 P 5$!!! "!$!!! P"5$!!!
&&+
C
Capital of Echo before liquidation Share in loss from liquidation (P%!$!!! 1 %&!) Amount to be receied b* Echo
&2+
#
Echo Capital balances P5!$!!! Loss on reali:ation (&2$!!!) P'.$!!! Addl loss for the deficienc* of Elma (&'$!!!) Amt to be receied b* E4a*
&'+ &0+ &5+
A A #
Esmer Estrel Capital and loan balances P 5!$!!! P 5!$!!! Loss on reali:ation ( &&2$!!!) ( 5%$!!!) #alances (P %2$!!!) (P %$!!!) Add9l loss for the def of Estrel ( '$!!!) %$!!! Amount to be receied from the partnership Personal assets Amount aailable to personal creditors of Elmer
P5!$!!! ('%$!!!) P&0$!!! E4a* P5!$!!! (&2$!!!) P'.$!!! (&'$!!!) P25$!!!
Elma P&!$!!! ('%$!!!) (P2%$!!!) 2%$!!!
Ellea P5!$!!! ( 5%$!!!) (P %$!!!) ( & $5!!)
Elmer P "5$!!! ( 5%$!!!) P &/$!!! ( &$5!!) P &"$5!! 2!!$!!! P2&"$5!!
TE*T &ATER(AL* Test &ateria% +o, &+ ? &&+ 2+ ? &2+ '+ T &'+ 0+ T &0+ 5+ T &5+ %+ ? &%+ "+ T &"+ .+ T &.+ /+ ? &/+ &!+ T 2!+
"1 T T ? T T ? T ? T T
Test &ateria% +o, "3
&+
A
Test &ateria% +o, "" &+ Loan pa*able &&+ arshalin4 of assets 2+ Lump-sum liquidation &2+ Capital deficienc* '+ i4ht of offset &'+ Bain on reali:ation 0+ Liquidation &0+ Liquidation e1penses 5+ eali:ation &5+ Loss to the other partner %+ Loan rec9l from partner &%+ Capital balance "+ Installment liquidation &"+ Personal creditors .+ ;eficient partner &.+ Additional inestment /+ Statement of liquidation &/+ Addition to capital &!+ Insolent partner 2!+ Profit and loss ratio
2+ '+ 0+ 5+ %+ "+ .+ /+ &!+ &&+ &2+ &'+ &0+ &5+ &%+
; ; C ; C # A C ; ; A # C ; A
P&!!$!!!0 P25$!!! P&2!$!!! 1 2' P.!$!!!G P&2!$!!! 1 &' P0!$!!! P.!$!!! 1 '5 P0.$!!!G P.!$!!! 1 25 P'2$!!! P%!$!!! F P/!$!!! P2!$!!! P&'!$!!! Em* El* Capital balances before liquidation P2.!$!!! P&%!$!!! ;istribution of loss on reali:ation ( "!$!!!) ( 02$!!!) #alances P2&!$!!! P&&.$!!! Additional loss for the deficienc* of E* ( 5$!!!) ( '$!!!) #alances P2!5$!!! P&&5$!!! Cash pa*ments to partners ( 2!5$!!!) ( &&5$!!!)
&"+
C
P'2!$!!! - (P&2!$!!! 1 0&!) P2"2$!!!
&.+
A
Eden Capital balances before liquidation P'2!$!!! ;istribution of loss on reali:ation ( &00$!!!) #alances P&"%$!!! Additional loss for the deficienc* of Elisa ( "2$!!!) Pa*ment to Elma
&/+
C Capital balances Loan Cash pa*ment to partners
2!+
A
P&0!$!!! F P&!$!!! P&5!$!!! P&2!$!!! P'!$!!!0!7 P"5$!!!
Elisa P /!$!!! ( &.!$!!!) (P /!$!!!)
Estacio (P2&$!!!) 05$!!! P20$!!!
/!$!!!
E* P2!$!!! ( 2.$!!!) (P .$!!!) .$!!!
Elma P&&!$!!! ( '%$!!!) P "0$!!! ( &.$!!!) P 5%$!!! Estioco P2&$!!! P2&$!!!
Test &ateria% "# Pro$%em A
Cash #alances before liquidation Sale of assets and dist+ of loss #alances Pa*ment of liabilities #alances 3ffset of loan a4ainst deficienc* of Empo* #alances Additional loss to Esto* and Empo* for the deficienc* of Elo* #alances Additional inestment b* Empo* and Elo* #alances Pa*ment to Esto*
2+ a$
P 25$!!! 2%!$!!! P 2.5$!!! ( 20!$!!!) P 05$!!!
EEE Partnership *tatement o Liquidation Januar. 1 – 31! "1/ Non-cash Accounts Loan Pa*able to Assets Pa*able Empo*
P 0"5$!!! (0"5$!!!)
P 05$!!!
P 20!$!!! P 20!$!!! ( 20!$!!!)
P
'!$!!!
Esto*
CAPITAL Empo*
Elo*
P 5!$!!! (.%$!!!) (P'%$!!!)
P %!$!!! (.%$!!!) (P 2%$!!!)
P
'!$!!!
P&2!$!!! (0'$!!!) P ""$!!!
P
'!$!!!
P ""$!!!
(P'%$!!!)
(P 2%$!!!)
(
'!$!!!) P ""$!!!
'!$!!! (P %$!!!)
(P2%$!!!)
( %%") (P %$%%")
&$!!! (P25$!!!)
%$%%"
25$!!!
(
P 05$!!!
''') P "%$%%"
'&$%%" P "%$%%" ( "%$%%")
P "%$%%" ("%$%%")
Cash
Esto*$ Capital Empo*$ Capital Elo*$ Capital
2%!$!!! 0'$!!! .%$!!! .%$!!!
Accounts eceiable Inentories Propert*$ Plant and Equipment b+
c+
d+
e+
Accounts Pa*able Cash Loan Pa*able to Empo* Empo*$ Capital
Esto*$ Capital Empo* Capital Elo*$ Capital Cash Empo*$ Capital Elo*$ Capital
"5$!!! &!! !!! '!!$!!! 20!$!!! 20!$!!! '!$!!! '!$!!! ''' %%" &$!!! '&$%%" %$%%" 25$!!!
2+ a$
Cash
2%!$!!! 0'$!!! .%$!!! .%$!!!
Esto*$ Capital Empo*$ Capital Elo*$ Capital Accounts eceiable Inentories Propert*$ Plant and Equipment b+
c+
d+
e+
f+
"5$!!! &!! !!! '!!$!!!
Accounts Pa*able Cash
20!$!!! 20!$!!! '!$!!!
Loan Pa*able to Empo* Empo*$ Capital
'!$!!! ''' %%"
Esto*$ Capital Empo* Capital Elo*$ Capital
&$!!!
Cash Empo*$ Capital Elo*$ Capital
'&$%%"
Esto*$ Capital
"%$%%"
%$%%" 25$!!!
Cash
"%$%%"
'+
Personal assets Applied to Personal liabilities Partnership liabilities #alances
Esto*
Empo*
Elo*
P25!$!!!
P'!!$!!!
P'5!$!!!
( 2'!$!!!)
( 20!$!!!) ( %$%%") P 5'$'''
( '25$!!!) ( 25$!!!) ---
P 2!$!!!
Pro$%em 0
&+ a+ Capital balances before liquidation (eceiables) Pa*ables Total partners9 interest Loss on reali:ation #alances Additional inestment of Escobar
Escobar P/!$!!! ( "5$!!!) P&5$!!! ( '2$2!!) (P&"$2!!) &"$2!!
Elloso P /!$!!! 0!$!!! P&'!$!!! ( '2$2!!) P /"$.!!
Echaes P '!$!!! %!$!!! P /!$!!! ( &%$&!!) P "'$/!!
Pa*ment to partners b+ Capital balances before liquidation (eceiables) Pa*ables Total partners9 interest Loss on reali:ation #alances Additional loss to Elloso and Echaes #alances Additional inestment of Escobar Pa*ment to partners c+ Capital balances before liquidation (eceiables) Pa*ables Total partners9 interest Loss on reali:ation Liquidation e1penses #alances Additional loss to Elloso and Echaes Pa*ment to partners 2+
( /"$.!!) Escobar P/!$!!! ( "5$!!!) P&5$!!! ( 00$2!!) (P2/$2!!) 25$2!! (P 0$!!!) 0$!!!
Escobar P/!$!!! ( "5$!!!) P&5$!!! ( 00$2!!) ( /$/5!) (P'/$&5!) '/$&5!
( "'$/!!)
Elloso P /!$!!! 0!$!!! P&'!$!!! ( 00$2!!) P .5$.!! ( &%$.!!) P %/$!!!
Echaes P '!$!!! %!$!!! P /!$!!! ( 22$&!!) P %"$/!! ( .$0!!) P 5/$5!!
( %/$!!!)
( 5/$5!!)
Elloso P /!$!!! 0!$!!! P&'!$!!! ( 00$2!!) ( /$/5!) P "5$.5! ( 2%$&!!) ( 0/$"5!)
Echaes P '!$!!! %!$!!! P /!$!!! ( 22$&!!) ( 0$/"5) P %2$/25 ( &'$!5!) ( 0/$."5)
Partnership assets of P055$5!! (e1cludin4 cash) less partnership liabilities of P'!.$5!! is partnership net assets of P&0"$!!!+ Price offered is P&0!$!!!G the loss on sale of the business is P"$!!!+ Therefore$ it is >iser to accept the offer for the purchase of the business for P&0!$!!!+ The loss shall be P"$!!! compared >ith liquidatin4 the business and sellin4 the other assets for P'!!$!!! incurrin4 loss on reali:ation of P&55$5!!+
