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Partnership-Accounting-Handouts

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15 views6 pages

Partnership-Accounting-Handouts

Uploaded by

lanietiol909
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© © All Rights Reserved
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Guiding Notes and Problems

PARTNERSHIP ACCOUNTING

Note: This material is sourced out from several references for the purpose of education only. All rights belong to the respective owners.
Do not distribute and share to any third party in the strongest sense!
Guiding Notes and Problems

Note: This material is sourced out from several references for the purpose of education only. All rights belong to the respective owners.
Do not distribute and share to any third party in the strongest sense!
Guiding Notes and Problems

Note: This material is sourced out from several references for the purpose of education only. All rights belong to the respective owners.
Do not distribute and share to any third party in the strongest sense!
Guiding Notes and Problems

Note: This material is sourced out from several references for the purpose of education only. All rights belong to the respective owners.
Do not distribute and share to any third party in the strongest sense!
Guiding Notes and Problems
SAMPLE PROBLEMS

Problem 1- Lump Sum


On January 1, 2021, the partners of ABC Partnership decided to liquidate their partnership. The following
information were made available:
Cash P20,000
Accounts receivable 60,000
Inventory 120,000
Equipment, net 300,000
Total P500,000

Accounts payable P30,000


Payable to B 20,000
A, Capital (20%) 100,000
B, Capital (30%) 150,000
C, Capital (50%) 200,000
Total P500,000

Requirement: Determine the amount of cash distributed to the partners under the two independent
scenarios below.

Scenario 1: Information on the conversion of non-cash assets is as follows:


a. P50,000 was collected on the accounts receivable, the balance is uncollectible.
b. P70,000 was received for the entire inventory.
c. The equipment was sold for P250,000.
d. P2,000 liquidation expenses were paid.

Scenario 2: Using the same information above but assume that the partnership will be liquidated over a
prolonged period of time. Distributions to the partners will be made as cash becomes available.
Information on the first conversion of non-cash assets is as follows:

a. 75% of the accounts receivable was collected for only P30,000.


b. Half of the inventory was sold for P40,000.
c. Equipment with carrying amount of P200,000 was sold for P120,000.
d. Actual liquidation expenses of P2,000 were paid.
e. Estimated future liquidation expenses totaled P1,000.
f. P9,000 cash was retained in the business for potential unrecorded liabilities and anticipated
expenses.

Problem 2 - Installment
The partnership of A, B and C is currently undergoing liquidation. ABC Partnership has cash of P22,000,
noncash assets with a book value of P264,000 and liabilities of P173,250.

The following information relate to the partners as of January 1, 2021:


• A has capital balance of P129,250, personal assets of P27,500, personal liabilities of P13,750.
• B extended a loan to the partnership in the amount of P13,750, deficit of P38,500, personal
assets of P41,250, personal liabilities of P16,500.
• C has a capital balance of P8,250, personal assets of P68,750 and personal liabilities of P41,250.
• The profit and loss ratio of A, B and C is 3:1:1, respectively.

The following transactions happened in January:


Note: This material is sourced out from several references for the purpose of education only. All rights belong to the respective owners.
Do not distribute and share to any third party in the strongest sense!
Guiding Notes and Problems
• Assets with book value of P82,500 were sold for P55,000 cash. The proceeds were used to pay
off liabilities of the partnership.
• The partners agreed to contribute personal assets, to whatever extent possible, in order to
eliminate their respective deficits.
• Assets with book value of P55,000 and a fair value of P63,250 were distributed to A.
• Additional noncash assets with book value of P110,000 were sold for P148,500.

Requirement: Compute for the cash distributions to partners A, B and C.

Problem 3 – SSP AND CPP


On January 1, 2021, the partners of ABC Partnership decided to liquidate their partnership. The following
information were made available:
Cash P20,000
Accounts receivable 60,000
Inventory 120,000
Equipment, net 300,000
Total P500,000

Accounts payable P30,000


Payable to B 20,000
A, Capital (20%) 100,000
B, Capital (30%) 150,000
C, Capital (50%) 200,000
Total P500,000

The partnership will be liquidated on an installment basis. Distributions to owners will be made as cash
becomes available:

January 2021:
The following transactions occurred in January 2021:
a. 75% of the accounts receivable was collected for only P30,000.
b. Half of the inventory was sold for P40,000.
c. Equipment with carrying amount of P200,000 was sold for P120,000.
d. P2,000 liquidation expenses were paid. Estimated future liquidation expenses totaled P1,000.
e. P9,000 cash was retained in the business for potential unrecorded liabilities and anticipated
f. expenses.

February 2021:
The following transactions occurred in February 2021:
a. P10,000 was collected on the remaining accounts receivable, the balance was deemed
uncollectible.
b. The other half of the inventory was sold for P20,000.
c. The remaining items of equipment were sold for P30,000.
d. P10,000 liquidation expenses and previously unrecorded liabilities were paid.
e. The liquidation process ended on February 28, 2021.

Requirement: Compute for the cash payments to the partners for January and February 2021 using:
a. Safe Payments Schedule
b. Cash Priority Program.

Note: This material is sourced out from several references for the purpose of education only. All rights belong to the respective owners.
Do not distribute and share to any third party in the strongest sense!

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