Multiple Choice Questions: Partnership Liquidation 1) As of December 31,2008, the books of XYZ Partnership showed capita baance 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 tie( e(&& After After some some time, time, the( the( decide decided d to i*+id i*+idate ate sod sod a nonca noncash sh assets assets of P$1,000& -iabiities were paid amo+ntin. to P1",000 and P33,000 each is aaiabe for distrib+tion& Ass+min. that an( capita debit baance is +ncoectibe, the share of each partner in the cash distrib+tion wo+d be! a) b) c) d)
XP2 XP2$,0 $,000 00 # Y YP/,00 P/,000 0 # Z Z XP2%,200 # Y YP10,200# ZP2,$00 XP3 XP3$,8 $,800 00 # YP3$,8 P3$,800# 00# Z Z XP1 XP1,$ ,$00 00 # Y YP10,2 P10,200# 00# ZP ZP1, 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 baances of! 4itP$2,000 and 4atP"$,000& 5ash, iabiities and nonca noncash sh assets assets amo+nt amo+nted ed to P1",000, P1",000, P20,000 P20,000 and P110, P110,000, 000, respect respectie ie( (&& n December 31,2008, the partnership is dissoed and i*+idated of instaments, and the first reai6ation of P30,000 cash is on the sae of noncash asset of book a+e a +e of P"0,000& After pa(ment of iabiities, the aaiabe and sha be distrib+ted to 4it and 4at as foows! a) b) c) d)
4it 4itP" P",0 ,000 00 # 4at 4atP P22 22,0 ,000 00 4itP2%,000# 4atP2%,000 4it 4itP2 P22, 2,00 000# 0# 4at 4atP P ",0 ",000 00 4it 4itP2 P2,0 ,000 00 # 4at 4atP2 P2$, $,00 000 0
3) n ctober 31,200, A,7, and 5 decided to dissoe the partnership& 'heir capita baances and profits and osses ratio on this date are as foows! 5ash 7aance
P- 9atio
A
$0,000
20:
7
0,000
%0:
5
$0,000
30:
5ash and -iabiities are P20,000 and P$%,000, respectie(& et income form ;an+ar( to ctober is P28,000&
103,000 100,000 110,000 113,000
$) Din. and Don. are partners who share profits and osses in the ratio of "0!$0, respectie(& 'he( decided to i*+idate and accordin.( sod the noncash assets with a reai6ation of P10,000 cash& -iabiities were paid for P3,000 and aaiabe cash is P/,000& 'heir capita baance is Din. P3,000 and Don. P12,000& after the P/,000was diided, the capita baance of each partner is! a) b) c) d)
$%0 /,"00 /,000 "00
%) 9, >, and ' are partners sharin. profit and osses in the ratio of 2", 3" and 18, respectie(& 'he partners capita baances are! 9P2%,800, >P2$,000, and 'P1",200& 'he iabiities amo+nt to P3",000 inc+din. a aon of 1",000 from >& 'he cash baance is 8,000& A partners are persona( soent& 'he partners pan to se the assets b( instament& ?f ' receied 3,000 from the 1st distrib+tion of each, how m+ch did 9 and > receie that time= 9
>
a)
/,800
3,300
b)
3,300
c)
3,300
d)
") 'he partner most aaiabe to partnership osses on i*+idation is! a) b) c) d)
9 9 and > e*+a( > '
) D, , and @, partners hae capita baances of P/,800, P12,000 and P%,200 and respectie( and share profits in the ratio of $!2!1& Prepare a sched+e showin. how aai cash wi be .ien to the partners as it becomes aaiabe& ho amon. the partners sha be paid first with an aaiabe 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 foowin. baances! et Assets Bi., 5apita Bo(, 5apita
130,000 20,000 %0,000
?f i*+idation takes pace at this point and net assets are reai6ed at book a+e, the partners are entited to! a) b) c) d)
Bi.P20,000 # Bo(P%0,000 Bi.P$2,8%0 # Bo(P%8,2%0 Bi.P/",$00 # Bo(P1,000 Bi.P/1,$%0 # Bo(P"/,00
/) 'he baance sheet of the firm of ;4- partnership shows the foowin.= A>>'> 5ash
20,000
ther Assets /0,000
-?A7?-?'?> Acco+nts Pa(abe 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( instaments the 1st sae of noncash assets with a book a+e of P$0,000 reai6es P2%,000&
;P13,12% # 4P21,8% # - one ;P10,800 # 4one # -P2$,200 ;P12,000 # 4P2,000 # -P2%,000 ; one # 4P1,%00# -P10,000
10) ?f P1,800 cash is withhed for possibe i*+idation eCpenses, how m+ch cash sho+d receie= a) b) c) d)
11,$"0 23,$80 /,20 2$,"$0
ANSWERS:
1) 2) 3) 4) 5) 6) 7) ) !) 10)
A D B D D C B A B B
SOLUTIONS: 1)
X
Y
7aance before -i*+idation -oss on 9eai6ation 33,000120,000) $!$!2 1,$00)
"0,000
3$,800) 3$,800) 8,000)
7aance
2%,200
-oss on possibe insoenc( of Z $!$
1,200)
Cas" Re#ei$e%
$%,000
24,000
Z
TOTL
1%,000
120,000
10,200
2,$00)
33,000
1,200)
2,$00)
0
!,000
0
2)
&'T
&AT
7aance before i*+idation -oss on 9eai6ation "0,00030,000) %0!%0
$2,000
"$,000
1%,000)
1%,000)
7aance
2,000
$/,000
-oss on possibe +nreai6ation of oncash assets 110,000"0,000)
2%,000)
2%,000)
Cas" Re#ei$e%
2,000
24,000
3) 'ota 5apita
P18,000
'ota -iabiities
P $%,000
'ota Assets
P 223,000
-ess! 5ash
P 20,000
on5ash Assets
P203, 000
33,000
-ess! -oss on 9eai6ation 32,%008$,000) %0:
P103, 000)
Proceeds from >ae E0,000 F 28,000 C %0:G $)
(100, 000
D?B
DB
''A-
7aance before i*+idation -oss on reai6ation /,000 H 1%,000 )
3,000
12,000
1%,000
3,600)
2,400)
6,000)
7aance
"00)
/,"00
/,000
-oss for possibe insoenc(
"00
"00)
0
!,000
!,000
5apita 7aance after oss on reai6ation
/,"00
-ess! 5ash 9eceied
/,000)
Ca*ital Bala+#e ate- #as" settle.e+t
600
Cas" Re#ei$e%
%)
R
Bala+#e beo-e Lii%atio+
2%,800
(-oitLoss -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 loest abso-*tio+ #a*a#it/ .ea+i+ t"at "is eit/ ol% be -e%#e% to e-o it" a total *a-t+e-s"i* loss o+ lii%atio+ o (4,000
)
D
E
Cas" (a/.e+t
7aance 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 entited to receie an amo+nt e*+a to their capita baances since the noncash assets are reai6ed at book a+e, meanin. there is no .ain or oss in sein. the assets& /)
;
4
-
''A-
7aance before i*+idation
2,000
23,000
3%,000
8%,000
-oss on reai6ation /0,000$0,000) 3!%!2
1%,000)
2%,000)
10,000)
%0,000)
7aances
12,000
2,000)
2%,000
3%,000
-oss for possibe insoenc(
1,200)
2,000
800)
Cas" -e#ei$e%
10,00
24,200
35,000
8
10)
9
&
L
7aance before i*+idation
2,000
23,000
3%,000
-oss on reai6ation 3!%!$ E/,000$,000) F1,800G
1%,%$0)
2%,/00)
10,3"0)
7aance
11,$"0
2,/00)
2$,"$0
-oss on possibe insoenc( 3!2
1,$0)
2,/00
1,1"0)
Cas" -e#ei$e%
!,720
8
23,40
