68

Chapter 4

CHAPTER 4
MULTIPLE CHOICE
4-1: a
Capital balances before realization
Loss on liquidation, P40,000
Cash distribution

PAR
P 20,000
( 20,000)
P

BOOGIE
P 16,000
( 12,000)
P 4,000

BIRDIE
P 10,000
( 8,000)
P 2,000

Capital balances before liquidation

Gain of P10,000 (150,000-140,000)
Cash distribution

PING
P 50,000
__6,000
P 56,000

PANG
P 50,000
__2,000
P 52,000

PONG
P 10,000
__2,000
P 12,000

Capital balances before liquidation

Loss of P40,000 (P140,000-P100,000)
Cash distribution

PING
P 50,000
( 24,000)
P 26,000

PANG
P 50,000
( 8,000)
P 42,000

PONG
P 10,000
( 8,000)
P 2,000

Capital balances before liquidation

Loss of P70,000 (P140,000-P70,000)
Balances
Absorption of Pong's deficiency, 6:2
Cash distribution

PING
P 50,000
( 42,000)
P8,000
( 3,000)
P 5,000

PANG
P 50,000
( 14,000)
P 36,000
( 1,000)
P 35,000

PONG
P 10,000
( 14,000)
( 4,000)
__4,000

COLT
MARK
Capital balances before liquidation (net of loans)P290,000 P200,000
Loss of P130,000, 4:3:3
( 52,000)
( 39,000)
Cash distribution
P238,000
P161,000

CLOCK
P220,000
( 39,000)
P181,000

4-2: c

4-3: b

4-4: a

4-5: b

4-6: c
Capital balances before liquidation
Loss of P60,000, 40:50:10
Cash distribution

JONAS
P160,000
( 24,000)
P136,000

CARLOS
P 45,000
( 20,000)
P 25,000

TOMAS
P 55,000
( 6,000)
P 49,000

Partnership Liquidation

4-7: a
Capital balances before liquidation
Loss of P100,000, 4:3:3
Cash distribution

ARIEL
P40,000
( 40,000)
P

BERT
P180,000
( 30,000)
P150,000

NORY
P23,000

OSCAR
P 13,500

15,000
( 30,900)
P 7,100

( 20,600)
( P7,100)

CESAR
P 30,000
( 30,000)
P

4-8: b
Capital balances before realization
Additional investment by Nory for
the unpaid liabilities (33,000-18,000)
Loss on realization (schedule 1)
Payment by Oscar to Nory
Schedule 1
Total capital before liquidation
Unpaid liabilities
Total loss on realization

P 36,500
15,000
P 51,500

4-9: d
Capital balances before liquidation (net)
Loss on realization (schedule 1) P27,500
Balances, cash distribution

BLACK
P99,000
( 13,750)
P85,250

Schedule 1:
Capital balances of white (net)
Cash received by White
White's share of total loss (30%)

WHITE
P 91,500
( 27,500)
P 64,000

GREEN
P138,000
_( 5,500)
P132,500

P 91,500
_83,250
P 8,250

Total loss on realization (P8,250/39%)

P 27,500

4-10: c
Capital balances before liquidation (net)
Loss on realization, P63,600
Balances
Unrecorded liabilities, P500
Balances
Elimination of Nora's deficiency
Payment to partners

ANA
P27,000
( 25,320)
P 1,680
( 200)
P 1,480
( 1,380)
P 100

EVA
P 43,000
( 25,320)
P 17,680
( 200)
P 17,480
( 1,380)
P 16,100

NORA
P 10,000
( 12,660)
( 2,660)
( 100)
( 2,760)
__2,760
P

Capital balances before liquidation (net)

Loss on realization (schedule 1) P45,000

ARIES
P33,500
( 22,500)

LEO
P 49,000
( 13,500)

TAURUS
P 36,500
( 9,000)

4-11: d

Payment to partners

P11,000

P 35,500

P 27,500

70
Chapter 4

Schedule 1:
Taurus capital (net)
Payment to Taurus
Share of total loss (20%)

P36,500
( 27,500)
P 9,000

Total loss on realization (9,000/20%)

P45,000

4-12: c
OLGA
Capital balances, June 11
P 4,200
Net loss from operation (squeeze)
( 2,800)
Capital balances, August 30 before
liquidation (48,500-25,600)
P 1,400
Loss on realization (47,500-30,000)
( 5,000)
Balances

TOTAL

MONA

NORA

P32,700

P15,000

P13,500

( 9,800)

( 4,200)

( 2,800)

P22,900

P10,800

P10,700

( 17,500)

( 7,500)

( 5,000)

P 5,400

P 3,300

P 5,700

_1,500

_____

_____

P 6,900

P 3,300

P 5,700

00)
Additional investment by Olga
_1,500
Balances
00)
Elimination of Olga's deficiency
_2,100
Payment to partners

______

( 1,260)

( 840)

P 6,900

P 2,040

P 4,860P

Capital balances before liquidation

Operating loss, P21,000
Drawings
Loans
Loss on realization, P12,000
Balances
Absorption of Tita's deficiency
Payment to Nora

RITA
P49,000
( 3,500)
( 10,000)

( 2,000)
P33,500
__1,500
P32,000

SARA
P18,000
( 7,000)
( 15,000)
8,000
( 4,000)
P

_____
P

TITA
P10,000
( 10,500)
( 20,000)
25,000
( 6,000)
( 1,500)
_1,500
P

CLARO

PEDRO

P45,000

P27,000

4-13: b

4-14: a
ANDRO
Capital balances before liquidation

P50,000
Loss on realization
Accounts Receivable (P50,000 X 40%)
Investment (P30,000 - P20,000)
Equipment (P60,000-P30,000)
Total

P20,000
10,000
_30,000
P60,000

( 24,000)

( 24,000)

P21,000

P 3,000

TOTAL
P47,500

MONA
P28,500

( 38,500)

( 23,100)

P 9,000

P 5,400P

000)
Payment to partners
P38,000
4-15: c
Capital balances before liquidation (inclusive loans)
P19,000
Loss on realization, (squeeze)
( 15,400)
Capital balances - cash distribution
3,600
Partnership Liquidation

Cash after realization

Less Liabilities (P36,000-P7,500)
Total capital after realization

P 37,500
( 28,500)
P 9,000

4-16: a
FF capital before distribution of net loss
Add: share of net loss (P10,000 X 40%)
FF capital before liquidation
Cash settlement to FF
FF share of total loss on realization (40%)

P100,000
_( 4,000)
96,000
( 80,000)
P 16,000

Total loss on realization (P16,000/40%)

P 40,000

Total capital before liquidation (P260,000-P10,000)

Add: Liabilities
Total assets
Cash before liquidation
Non-cash assets
Loss on realization
Cash to be realized

P250,000
_100,000
P350,000
( 50,000)
P300,000
( 40,000)
P260,000

4-17: d
Capital balances before realization (net)
P62,500
Loss on realization (squeeze)
( 25,000)

TOTAL
P100,000

CC
P 15,000

DD
P22,500

( 125,000)

( 62,500)

( 37,500)

Capital balances after realization

(liabilities-unpaid)
P37,500
Elimination of CC's deficiency
( 19,000)
Balances
P18,500
Investment by DD
_____
Payment to EE
P18,500

(P 25,000)

( 47,500)

( 15,000)

_______

__47,500

( 28,500)

(P43,500)

(P 25,000)
__43,500

______

_43,500

P 18,500

4-18: d
Total capital before liquidation
Liabilities
Total assets
Less: Cash balance before realization
Cash after payment of liabilities
payment of liabilities
Cash realized
Non-cash asset
Less: cash realized
Loss on realization

P 30,000
__1,500
P 31,500
P 11,100
1,500
( 11,600)

__1,000
P 30,500
_11,600
P 18,900

72
Chapter 4

4-19: d
TOTAL
Capital balances
P 80,000
Salary of LL (P600 X 8 months)
___4,800
Capital balances before liquidation
P 84,800
Loss on realization
Balances
Additional investment by NN
Payment to partners

LL

MM

NN

P 50,000

P 20,000

P 10,000

__4,800

_______

_______

P 54,800

P 20,000

P 10,000

( 44,880)
P 9,920
______
P 9,920

( 14,960)
P 5,040
_____
P 5,040

( 14,960)
(P 4,960)
__4,960
P

4-20: b
KK's total interest (P60,000-P10,000)
Less: Cash to be paid to KK

P 50,000
__10,000

Share of total loss (1/3)

P 40,000

Total loss on realization (P40,000/1/3)

P120,000

Total assets:
Total interest of the partners before liquidation:
JJ (P70,000+P30,000+P10,000)
KK (P60,000-P10,000)
LL (P30,000+P10,000)
Divide by
Total
Loss on realization
Cash to be realized

P110,000
50,000
__40,000

P200,000
______50%
P400,000
_120,000
P280,000

4-21: a
Capital balances, July 1
P 25,000
Advances to NN, August 1
OO Loan, September 1
Interest, December 31 (6%)
NN (5 mos.)
OO (4 mos.)
Compensation to PP
___2,500
Capital balances before liquidation
P 27,500
Loss on realization (squeeze)
( 17,550)
Cash distribution

TOTAL
P 75,000

NN
P 25,000

( 10,000)
20,000

( 10,000)

250)
400
__2,500

OO
P 25,000

20,000

250)

_______

400
_______

P 87,650

P 14,750

P 45,400

_56,250

( 17,550)

( 17,550)

P 35,000

( 2,800)

P 27,850

9,950
NN should pay P2,800 and this is to be divided to OO & PP equally or P1,400 each.

Partnership Liquidation

4-22: a
Capital balances before realization
P350,000
Loss on realization (squeeze)
_500,000
Capital balances after realization
(unpaid liabilities)
( 150,000)
Elimination of AS's deficiency
P150,000

TOTAL
P 950,000

PG
P350,000

JR
P250,000

( 1,000,000)

__20,000

( 200,000)

(P 50,000)

P 50,000

P 50,000

_______

( 90,000)

( 60,000)

Cash to be absorbed

(P 40,000)

(P 10,000)

RM
P500,000
( 490,000)
P 10,000

ST
P825,000
( 735,000)
P 90,000

TOTAL
P 27,500

LT
P 20,000

AM
P 5,000

__37,500

_18,750

__-9,375

P 65,000

P 38,750

P 14,375

AG
P 420,000

BM
P375,000

CP
P205,000

( 300,000)

( 300,000)

(200,000)

P 120,000

P 75,000

P 5,000

4-23: a
Capital balances before realization (net)
Loss on realization, P1,225,000
Payment to Partners
4-24: a
Capital balances before realization (net)
P 2,500
Gain on realization (squeeze)
__9,375
Capital balances after realization
P 11,875
4-25: c
Capital balances before realization (net)
P150,000
Loss on realization, P1,000,000
(200,000)
Balances
P(50,000)
Additional investment by DJ
50,000
4-26: a
Settlement to Uy
Uy capital before liquidation (net):
Uy capital
Receivable from Uy
Loss of Uy (50%)

P351,500
P553,500
( 132,000)

Total loss on realization (P70,000 50%)

CB before liquidation
Receivable from Uy
Loan to Wi
Salary payable to Vi
Interest before realization
Loss on realization
Settlement to partners
74

__Uy__
553,500
(132,000)

P140,000
__Vi__
452,500

__Wi__
486,000
( 40,500)

421,500
( 70,000)
351,500

421,500
P 70,000

135,000
587,500
( 42,000)
545,500

445,500
( 28,000)
417,500

__Total__
1,492,000
(132,000)
(40,500)
135,000
1,454,500
( 140,000)
1,314,500

Chapter 4

SOLUTIONS TO PROBLEMS
Problem 4 1
Case 1
Rivas and Briones
Statement of Liquidation
December 31, 2008
Partners'
Capitals
Assets

Rivas,

Briones,

Rivas

Loan

Loan

(90%)

Briones
Cash
(10%)
Balances before liquidation. . .
P10,000
Realization of assets and
distribution of loss...........
( 6,600)
Balances................................
3,400
Payment of liabilities.............
______
Balances................................
3,400
Offset Rivas' loan against his
capital deficiency............
______
Balances................................
3,400
Additional loss to Briones......
( 1,400)
Balances................................
2,000
Payment to partner.................
P(2,000)

Others Liabilities

P 20,000 P200,000 P132,000 P 18,000 P 20,000

P40,000

_134,000 ( 200,000) _______ _______ _______

( 59,400)

154,000

132,000

( 132,000) ______ ( 132,000)

22,000

18,000

20,000

______ _______ _______

18,000

20,000

_______ _______ _______ ( 18,000) _______

22,000

( 19,400)

20,000

_______ _______ _______ _______ _______

22,000

P(22,000)

P(20,000)

( 19,400)
_18,000
( 1,400)
__1,400

20,000

Case 2
Rivas and Briones
Statement of Liquidation
December 31, 2008
Partners'
Capitals
Assets

Rivas,

Briones,

Rivas

Briones
Cash
Others Liabilities
Loan
Loan
(30%)
Balances before liquidation. . . P20,000 P200,000 P132,000 P 18,000 P 20,000
P10,000
Realization of assets and
distribution of loss........... 134,000 ( 200,000) _______ ______ _______
( 19,800)
Balances................................ 154,000
132,000
18,000
20,000
9,800
Payment of liabilities............. ( 132,000) _______ ( 132,000) ______ _______
______
Balances................................
22,000

18,000
20,000
9,800
Offset loan against capital
deficiency........................ ________ _______ _______ ( 6,200) ( 9,800)
__9,800
Balances................................
22,000

11,800
10,200
Payment to partner................. P(22,000)

P(11,800) P(10,200)

(70%)
P40,000
( 46,200)
( 6,200)
_______
( 6,200)
__6,200

Partnership Liquidation
Case 3
Rivas and Briones
Statement of Liquidation
December 31, 2008
Partners'
Capitals
Assets

Rivas,

Briones,

Rivas

Briones
Cash
(50%)
Balances before liquidation........ P 20,000
P10,000
Realization of assets and
distribution of loss............... _134,000
( 33,000)
Balances......................................
154,000
23,000)
Payment of liabilities.................. ( 132,000)
Balances......................................
22,000
23,000)
Offset Briones'' loan against
his capital deficiency........... _______
_20,000
Balances......................................
22,000
3,000)
Additional loss to Rivas.............. _______
__3,000

Others

Liabilities

Loan

Loan

(50%)

P200,000

P132,000

P 18,000

P20,000

P40,000

( 200,000) _______

_______

______

( 33,000)

18,000

20,000

( 7,000)

18,000

__
20,000

_
_______
( 7,000)

132,000

_______ ( 132,000)

_______

_______

_______

( 20,000)

18,000

_______

_______

_______

_______

______
7,000
( 3,000)

Balances......................................
Payment to partner......................

22,000
P(22,000)

18,000
P(18,000)

4,000
P( 4,000)

Journal Entries
Case 1:
Cash..............................................................................................................
Rivas, Capital.................................................................................................
Briones, Capital..............................................................................................
Other Assets............................................................................................
Liabilities. .....................................................................................................
Cash........................................................................................................
Rivas, Loan....................................................................................................
Rivas, Capital..........................................................................................
Briones, Capital..............................................................................................
Rivas, Capital..........................................................................................
Briones, Loan.................................................................................................
Briones, Capital..............................................................................................
Cash ....................................................................................................
Case 2:
Cash..............................................................................................................
Rivas, Capital.................................................................................................
Briones, Capital..............................................................................................
Other Assets............................................................................................
Liabilities. .....................................................................................................
Cash........................................................................................................
Rivas, Loan....................................................................................................
Briones, Loan.................................................................................................
Rivas, Capital..........................................................................................
Briones, Capital......................................................................................
Rivas, Loan....................................................................................................
Briones, Loan.................................................................................................
Cash........................................................................................................
76
Chapter 4

Case 3:
Cash...................................................................................................
Rivas, Capital....................................................................................
Briones, Capital.................................................................................
Other Assets................................................................................
Liabilities...........................................................................................
Cash. ...........................................................................................
Briones, Loan....................................................................................
Briones, Capital...........................................................................
Rivas, Capital....................................................................................
Briones, Capital...........................................................................
Rivas, Loan........................................................................................
Rivas, Capital....................................................................................
Cash. ...........................................................................................

134,000
59,400
6,600
200,000
132,000
132,000
18,000
18,000
1,400
1,400
20,000
2,000
22,000
134,000
46,200
19,800
200,000
132,000
132,000
6,200
9,800
6,200
9,800
11,800
10,200
22,000

134,000
33,000
33,000
200,000
132,000
132,000
20,000
20,000
3,000
3,000
18,000
4,000
22,000

Problem 4 2
Blando and Castro
Statement of Liquidation
April 30, 2008
Partners'
Capitals
A s s e t s

Accounts

Blando,

Blando

Others

Payable

Loan

(60%)

Castro
Cash Receivables Inventory
(40%)
Balances before
liquidation.................... P 18,000
P99,000
Collection of
receivables and
distribution of loss........ _37,500
( 15,000)
Balances............................
84,000
Realization of
inventory and
distribution of
loss...............................
,000)
Balances............................
60,000
Realization of other
assets and distribution
of loss...........................
( 17,600)

P75,000

P90,000

P84,000

P42,000

P 24,000

P102,000

( 75,000)

_______ _______

_______

_______

( 22,500)

84,000

42,000

24,000

( 90,000) _______

_______

_______

42,000

24,000

_______

_______

42,000

24,000

17,100

_______

_______

24,000

17,100

55,500

_30,000

_______

85,500

_40,000

_______

_______

Balances............................ 125,500
42,400
Payment of accounts
payable......................... ( 42,000)
_______
Balances............................
83,500
42,400
Payments to partners.. P(83,500)
P(42,400)

_______

90,000

84,000

( 84,000)

_______ _______

( 42,000)

Partnership Liquidation

Problem 4 3
a.

Electric Company
Statement of Partnership Realization and Liquidation
June 30, 2008

79,500

( 36,000)
43,500

( 26,400)

P(24,000) P( 17,100)

Balances
14,000
Sale of
assets at a loss
( 8,000)
6,000
Payment to
creditors
______

Capital Balances
Volt Watt
30% 20%

Cash

Amp.
Loan

Noncash
Assets

Liabilities

Volt,
Loan

Amp
50%

20,000

15,000

135,000

30,000

10,000

80,000

36,000

_95,000

______

(135,000)

______

______

(20,000)

(12,000)

115,000

15,000

-0-

30,000

10,000

60,000

24,000

_(30,000)

______

_______

(30,000)

______

_______

______

10,000

60,000

24,000

85,000
15,000
-06,000
Offset Amp,
receivable
(15,000)
Payments to partners:
Loan
(10,000)
Capitals
_(75,000) ______
_______
,000)
Balances
-0-0-0-0b. (1) Cash
Amp, Capital
Volt, Capital
Watt, Capital
Noncash Assets
Sell noncash assets at a loss of P40,000.

-0-

(15,000)
_______
-0-

(10,000)
______

(45,000)

(24,000)

-0-

-0-

-0-

95,000
20,000
12,000
8,000
135,000

(2) Liabilities
Cash
Pay creditors.

30,000

(3) Amp, Capital

Amp, Loan
Offset receivable from Amp against his capital credit.

15,000

(4) Volt, Loan

Amp, Capital
Volt, Capital
Watt, Capital
Cash
Final lump-sum distribution to partners.

10,000
45,000
24,000
6,000

30,000

15,000

85,000

Note: All partners permitted Amp to offset his receivable against his capital credit. Alternatively, Amp
could be required to pay the partnership the P15,000 receivable; the partnership would then pay him an
additional P15,000 for his capital credit. In this case, an offset of the receivable against the capital credit is
reasonable, provided the receivable is not interest-bearing, Amp has a sufficient capital credit, Amp is
personally solvent, and the note is not secured against specific assts of Amp. The offset is not automatic,
but must be determined by the terms of the initial note, and by the partners.

78
Chapter 4

Problem 4 4
a.

b.

Bina, capital before liquidation.........................................................................................

Payment to Bina................................................................................................................
Loss absorbed by Bina (40%)...........................................................................................

P320,000
_128,000
P192,000

Loss on realization (P192,000 40%)..............................................................................

P480,000

AIDA, BINA & CELIA

Statement of Partnership Liquidation
January 1, 2008

Balances before liquidation.

Realization & dist. of loss. . .
Balances.............................
Settlement to partners..........

Cash

Other Assets

P80,000
240,000
320,000
(320,000)

P720,000
( 720,000)

_______

Aida
(5)
P320,000
( 240,000)
80,000
( 80,000)

Capital
Bina
Celia
(4)
(1)
P320,000
P160,000
( 192,000) ( 48,000)
128,000
112,000
( 128,000) ( 112,000)

Problem 4 5
a.

b.

LL, capital before liquidation...........................................................................................

Settlement to LL...............................................................................................................
Gain realized by LL (20%)...............................................................................................

P 70,000
__98,000
P 28,000

Total gain on realization (P28,000 20%).......................................................................

Other assets sold...............................................................................................................
Selling price ...................................................................................................................

P140,000
_500,000
P640,000

JJ, KK & LL
Statement of Liquidation

Balances before liquidation....

Realization & Dist. of gain....
Balances................................
Payment of liabilities.............
Payment to Partners...............
( 98,000)

Cash
P50,000
640,000
690,000
( 60,000)
(630,000)

Other
Assets
Liabilities JJ (4)
P500,000
P60,000 P180,000
( 520,000) _______ __56,000

60,000
236,000
( 60,000)
_______ _______ ( 236,000)

Capital
KK(4)
(LL(2)
P240,000
P70,000
__56,000
_28,000
296,000
98,000
( 296,000)

Partnership Liquidation

Problem 4 6
a.

BB.................................................... P160,000
CC.................................................... P20,000
DD................................................... P60,000
EE....................................................
P 0

b.

BB, CC, DD, & EE

Statement of Liquidation
Cash Liabilities
P
0
P60,000

Balances before liquidation....

P(180,000)
Advances by BB to pay liabilities
Deposit by DD....................... 60,000
________
Balances................................ 60,000
0)
Elimination of EE's deficiency
Elimination of DD's deficiency
Payment to partners................ 60,000

C a p i t a l
CC (10%)DD (20%)
EE (40%)
P80,000 (P120,000)

BB (30%)
P160,000

( 60,000)
60,000
______ _______

_______

220,000

( 90,000)
______ __( 90,000)

40,000

__60,000

80,000

( 60,000)

( 180,00

( 30,000)
( 30,000)
20,000

( 60,000)
120,000

180,000

Problem 4 7
Sayson and Company
Statement of Liquidation
Date

Assets

Liabilities
Accounts
Notes

Pea

P a r t n e r s' C a p i t a l s
Sayson
Zobel
Ayala

Pea
Cash

Noncash

Payable

Payable

Loan

(45%)

(30%)

(15%)

Balances before liquidation....

P1,650
Realization of assets and
distribution of gain...........
______

P 15,000

P155,250

P11,250

P9,000

P 1,500

P 75,345

185,000

( 155,250)

_______

______

______

17,850

11,900

______

Balances.................................
1,650
Payment of liabilities.............
______

200,000

11,250

9,000

1,500

93,195

98,398

( 14,993)

( 11,250)

( 9,000)

______

______

______

_______

1,500

93,195

98,398

( 14,993)

(10%)

Balances.................................
1,650
Additional loss to Sayson,

( 20,250) ________
179,750

P 86,498 P(14,993)

Zobel and Pea;

45:30:10............................
1,764)
Balances.................................
(114)
Offset Pea's loan against
his capital deficiency........
114
Balances.................................

_______ ________ ________

179,750

_______ ________ ________

179,750

______

______

( 7,937)

( 5,292)

14,993
-

1,500

85,258

93,106

______

( 114)

______

______

1,386

85,258

93,106

Payments to partners.............. P(179,750)

_______
-

P(1,386) P(85,258) P(93,106)

80
Chapter 4

Problem 4 8
a.

Art, Bea and Cid Partnership

Statement of Liquidation
June 4, 2008

(20%)
Balances before liquidation
(including Bea loan, P4,000)......
P10,000
Realization of assets
at a loss of P63,300...................
Unrecorded accounts payable..........
(100)
Payment to creditors........................
______
Balances.........................................
(2,760)
Eliminate Cid's deficit.....................
_2,760
Balances.........................................
Payment to Partners.........................
b.
2008
July 5

Cash

Assets
Other

Liabilities

Partners' Capital
Art (40%) Bea (40%) Cid

P 6,000

P94,000

P20,000

P27,000

P43,000

30,000

( 94,000)

(25,320)
500

(25,320)
(200)

(12,660)
(200)

(20,500)

______

(20,500)

______

______

16,200

1,480

17,480

______

______

______

(1,380)

(1,380)

16,200
(16,200)

100
_( 100)

16,100
( 16,100)

Cash .............................................................................................
Art capital (P63,300 x 40%)...........................................................
Bea capital (P63,300 x 40%)..........................................................
Cid capital (P63,300 x 20%)...........................................................
Other assets...........................................................................
To record realization of other assets at a loss of P63,300.

30,700
25,320
25,320
12,660
94,000

c.

Art capital (P500 x 40%)................................................................

Bea capital (P500 x 40%)...............................................................
Cid capital (P500 x 20%)................................................................
Liabilities..............................................................................
To record trade accounts payable.

200
200
100

Liabilities. ......................................................................................
Cash. .....................................................................................
To record payment of liabilities.

20,500

Art capital.......................................................................................
Bea capital......................................................................................
Cid capital.............................................................................
To eliminate Cid's capital deficit.

1,380
1,380

Art capital.......................................................................................
Bea capital......................................................................................
Cid capital. .....................................................................................
Cash. .....................................................................................
To record payments to partners to complete liquidation.

100
4,000
12,100

500

20,500

2,760

16,200

Cid's loss must be limited to P5,000, or P25,000 for the partnership (P5,000 / 20% = P25,000).
Because the liquidation of liabilities results in a loss of P500, only P24,500 may be lost on the
realization of other assets. This requires that other assets realize P69,500 (P94,000 24,500) to
enable Cid to receive P5,000 from the partnership to pay personal creditors in full.

Problem 4 9
KGB Partnership
Statement of Realization and Liquidation
Lump-sum Liquidation on June 30, 2008
-

Preliquidation balances
Sale of assets
and distribution
of 430,000 loss
Cash contributed
by B
Distribution of deficit
of insolvent partner:
20/60 (P2,000)
40/60 (P2,000)
Offset deficit with loan
Contribution by G
Payment of creditors
Distribution to K
Postliquidation
balances

Capital Balances
K
G
20%
40%
(240,000) (100,000)

B
40% (120,000)

(60,000)

86,000
(154,000)

172,000
72,000

172,000
52,000

(60,000)

(154,000)

72,000

50,000
2,000

Cash
50,000

Noncash
Assets
950,000

Liabilities
(480,000)

G
Loan
(60,000)

520,000
570,000

950,000
-0-

(480,000)

(480,000)

50,000
620,000

-0-

(2,000)
666
620,000
620,000
13,334
633,334
(480,000)
153,334
(153,334)
-0-

-0-0-

(480,000)
(480,000)

(60,000)
60,000
-0-

(153,334)
(153,334)

(480,000)
480,000
-0-

-0-

(153,334)
(153,334)
153,334

-0-0-0-

-0-

-0-

-0-

-0-

1,334
73,334
(60,000)
13,334
(13,334)
-0-

-0-0-0-

-0-

-0-

-0-

-0-

82
Chapter 4
KGB Partnership
Schedule of Distribution of Personal Assets
June 30, 2008
.
Personal assets, excluding partnership
capital and loan interests
Personal liabilities
Personal net worth, excluding
partnership capital and loan
interests
Contribution to partnership
Distribution from partnership
Personal capacity

500,000
(460,000)

600,000
(480,000)

700,000
(650,000)

40,000

120,000
(13,334)
-0- 106,666

50,000

153,334
193,334

-0- -0- -