Paloma Partnership

Statement of Liquidation
October 1 - 31, 2011
Loan
Cash
Profit and loss ratio
Balances before liquidation
Sale of assets and distribution
of loss
Balances
Payment of liabilities
Balances
Exercise of right of offset
Balances
Additional investment
Balances
Payment to partners
Balances after liquidation

80,000 P
288,000
368,000
(301,000)
67,000
67,000
42,000
109,000
(109,000)
-

Other
Assets

920,000 P
(920,000)
-

Liabilities

301,000 P
301,000
(301,000)
-

Patti

9,000 P
9,000
9,000
(9,000)
-

Capital
Lorna

80,000 P
80,000
80,000
(76,000)
4,000
4,000
(4,000)
-

Patti

Lorna

3 (30%)
138,600 P

5 (50%)
240,000 P

(189,600)
(51,000)
(51,000)
9,000
(42,000)
42,000
-

(316,000)
(76,000)
(76,000)
76,000
-

Capital
Martha
2 (20%)
231,400
(126,400)
105,000
105,000
105,000
105,000
(105,000)
-

Paloma Partnership
Statement of Liquidation
October 1 - 31, 2011
Loan
Cash
Profit and loss ratio
Balances before liquidation
Sale of assets and distribution
of loss
Balances
Payment of liabilities
Balances
Exercise of right of offset
Balances
Absorption of capital deficiency
Balances
Exercise of right of offset
Balances
Absorpotion of capital deficiency
Balances
Payment to partners
Balances after liquidation

80,000 P
288,000
368,000
(301,000)
67,000
67,000
67,000
67,000
67,000
(67,000)
-

Other
Assets

920,000 P
(920,000)
-

Liabilities

301,000 P
301,000
(301,000)
-

Patti

9,000 P
9,000
9,000
(9,000)
-

Capital
Lorna

80,000 P
80,000
80,000
(76,000)
4,000
4,000
(4,000)
-

Patti

Lorna

3 (30%)
138,600 P

5 (50%)
240,000

(189,600)
(51,000)
(51,000)
9,000
(42,000)
42,000
-

(316,000)
(76,000)
(76,000)
76,000
(30,000)
(30,000)
4,000
(26,000)
26,000
-

Capital
Martha

2 (20%)
231,400
(126,400)
105,000
105,000
105,000
(12,000)
93,000
93,000
(26,000)
67,000
(67,000)
-

1 Alicia
Betina

210,000
130,000

Note: Since the assets were sold at book value, the final settlement will be equal to the partners' capital balances before the liquidation process.

2
Balances before liquidation
Share in loss on realization
(P427,500*50%)
(P427,500*30%)
(P427,500*20%)
Balances
Absorption of capital deficiency
Balances

Balances before liquidation

Share in loss on realization
(P50,000*30%)
(P50,000*30%)
(P50,000*40%)
Balances

Daryl
212,500 P

Evelyn
137,500 P

Fredrick
87,500

(213,750)
(128,250)

(1,250)
1,250
P

9,250
(750)
8,500 P

Drick
25,000.00 P

Donna
75,000.00 P

(85,500)
2,000
(500)
1,500

Note:
Gain or loss on realization is allocated to partners using their profit and
loss ratio.
If the problem is silent, all partners are deemed insolvent.
Capital deficiency of an insolvent partner after the exercise of right of

3
Daisy
125,000.00

(15,000.00)
(15,000.00)
P

10,000.00 P

60,000.00 P

4
Other assets
Less: Loss on realization
Proceeds from sale of other assets

(note 1)
(note 2)

P
P

322,125
90,000
232,125

Note 1
Liabilities
Josie, loan
Josie, capital
Sylvia, capital
Alice, capital
Total credits
Less: Cash balance
Other assets

75,000
37,500
82,500
93,375
56,250
344,625
22,500
322,125

Balances before liquidation

Share in gain on realization
(P25,000*40%)
(P25,000*30%)
(P25,000*30%)
Balances
Exercise of right of offset
Balances

Noel
150,000 P

(20,000.00)
105,000.00
Note: Using the accounting equation, we could solve for the value of the other assets. However,
note that on the problem, the total liabilities mentioned pertains to outside creditors. If the problem
only mentioned, total liabilities, the Josie, loan will not be included in the computation of the total
credits

Note 2
Josie, capital
Josie, loan
Total interest
Final settlement made
Share in loss
Divided by p&l ratio
Total loss

Adrian
100,000 P

82,500
37,500
120,000
75,000
45,000
50%
90,000

Note: If all partners are personally solvent, the

final settlement will always be equal to the
Capital balance before liquidation plus share in
gain on realization less share in loss on
realization, if that was the case plus any loan
payable to the partner less loan receivable to the
partner.

MJ
95,000

10,000
7,500

160,000
(15,000)
145,000 P

107,500
107,500 P

7,500
102,500
20,000
122,500

Eric
100,000 P

Zach
86,000 P

Emily
90,000

6
A
Balances before liquidation
Share in loss on realization
(P226,000*20%)
(P226,000*50%)
(P226,000*30%)
Balances
Exercise of right of offset
Balances

(45,200)
(113,000)

54,800
32,000
86,800
86,800 P

(27,000)
(27,000)
P

(67,800)
22,200
22,200
22,200

B
Balances before liquidation
Share in loss on realization
(P226,000*20%)
(P226,000*50%)
(P226,000*30%)
Balances
Exercise of right of offset
Balances
Absorption of capital deficiency
Balances

Eric
100,000 P

Zach
86,000 P

(45,200)
(113,000)

54,800
32,000
86,800
(10,800)
76,000 P

(27,000)
(27,000)
27,000
P

s. However,
If the problem
n of the total

solvent, the
al to the
plus share in

s any loan
ceivable to the

Emily
90,000

(67,800)
22,200
22,200
(16,200)
6,000