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Partnership Creditors
A. must collect their claims from Maya and Terry.
B. must collect the entire P40,000 from Cane.
C. must collect their claims from Cane and Terry.
D. may not require Cane to pay since Cane has capital credit balance.
TEST II- Problems (75%) Final Answers on the date and particular column after Test I.
Computations should start on the peso money columns as well as the back part of your work
sheet.
Cesar, Donna, and Dave, partners, share profit and loss 30%, 20% and 50%, respectively. Prior
to the liquidation, the partnership financial position reflected the following book values.
Cash P 21,000
Non-cash assets 248,000
Note payable to Dave P 32,000
Other liabilities 154,000
Cesar, Capital –General Partner 60,000
Donna, Capital- General (10,000)
Partner
Dave, Capital- Limited Partner 33,000
Actual liquidation expenses paid are P18,000 and that non-cash assets are sold for
P218,000. Donna has net personal assets of P8,000, while the other two partners are solvent
by P3,000.
12. How much cash will each partner receive?
The condensed financial position of the partnership of Alex, Jay, and Josh as of March
31, 2017 follows:
Cash P 28,000 Liabilities P 48,000
Other assets 265,000 Alex, capital (2) 95,000
Jay, capital (2) 80,000
________ Josh, capital (4) 70,000
Total P 293,000 Total P 293,000
The partners voted to dissolve their partnership and liquidate by selling other assets in
installments. P70,000 was realized on the first sale of other assets with a book value of
P150,000 net of P5,000 liquidation expenses paid. 50% of the liabilities were paid. Other
assets include a loan due from Alex of P50,000. All partners are solvent. Cash of P10,000 will
be reserved for future liquidation expenses.
13. How much cash is available for distribution to the partners?
14. How much cash will each partner receive?
Partners Pio, Queen, and Rain, who share profit and loss equally, have the following personal
assets,
personal liabilities, and partnership interest:
Bess Bing Bob
Personal assets P 35,000 P 180,000 P 60,000
Personal liabilities 40,000 50,000 75,000
Capital balances 50,000 (70,000) (42,000)
2
The partnership is insolvent with only P68,000 cash available. Outside creditors were
able to collect from Bing.
!2
15. After applying the doctrine of marshalling of assets, how much cash will Bess receive and
retain for herself?
As of December 31,2016 the books of AJM Partnership showed capital balances of: Apple
P44,000;
Jonah P25,000; and Mandy P4,000. The partners’ profit and loss ratio are 3:2:1,
respectively. The partners decided to dissolve and liquidate the partnership. They sold
all the non-cash assets for P37,000. After settlement of all liabilities for P12,000, they
still have P28,000 cash left for distribution. Deficient partners are assumed to be
insolvent.
16. How much was the loss incurred on the sale of the non-cash assets?
17 How much cash will Jonah receive?
After incurring losses resulting from unprofitable operation for the past few years, the
partners decided to liquidate when their capital balances reflected the following:
Chan, P150,000 (2/5); Chua, P80,000 (2/5) and Chin, P70,000 (1/5).
The non cash assets were sold in installment with cash distributed to the partners as this
became available. The second cash distribution gave the partners almost all of what they
should receive in the second priority of the program. At this point, Chan received a total
of P40,000. The third sale resulted in another P50,000 cash for Chan.
18. What was the total amount of cash distributed for the third sale?
19. Assume instead that on the 3rd sale Chua received P25,000, how much did Chin receive?
20. How much was the total liquidation loss incurred by the partnership?
TEST I
1. B 2. A 3. C 4. D 5. D 6. B
7. C 8. B 9. A 10. D 11. C
TEST II
CESAR 3 DONNA DAVE 5 TOTAL
2
60,000 (10,000) 33,000
Loss on Sale incl liq exp 248-200 (14,400) ( 9,600) (24,000)
Def of Donna 19.6 – 8= 11.6 (4,350) (7,250)
Payment for partners’ captl 41,250 1,750 43,000
Payment for Note 32,000 32,000
1. 12.Total cash received by 41,250 33,750 75,000
partners
Total partners’ equity= (62,000) and if total cash= P68,000 then Total liabilities 62 + 68=
130,000
Cash paid by Bing 130 – 68 = P 62,000
!3
Bing paid creditors 62,000
Bob is insolvent (21,000) (21,000)
Bess receives from Bing 29,000
Bess pays personal creditors (5,000)
15. Bess retains cash of 24,000
Cash of 28,000 + 12,000 paid for liabilities - realized 37,000 = beg balance of P3,000
16. Liab + PE = P85,000 - cash beg of P3,000= non cash of 82,000 – 37,000 realized= 45,000
loss
A 3 J 2 M 1 TOTAL
44,000 25,000 4,000
Loss of P45,000 (22,500) (15,000) (7,500)
Deficiency absorbed P3,500 ( 2,100) ( 1,400)
17. Free interest 19,400 8,600 28,000
19. if Chua received P25,000, Chin received P12,500 + 15,000 balance of second priority =
P27,500
20. If capital balance of Chan is P150,000 – total cash received of P90,000 = P60,000 loss/
40%= P150,000
!4
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