CHAPTER 4

EXERCISES
1. Cea, Eva, Leo and Yulo Partnership
C, E, L, Y Partnership
Statement of Partnership Liquidation
Nov. 15, 2010
Other
Cash Assets Liabilities * Cea * Eva Leo Yulo
Balances before liquidation 25,000 180,000 90,000 30,000 30,000 30,000 25,000
1) Sale of non-cash assets at a
loss 75,000 (180,000) (21,000) (21,000) (42,000) (21,000)
Balances after sale 100,000 - 90,000 9,000 9,000 (12,000) 4,000
2) Payment of liabilities 90,000 (90,000)
Balances after payment 10,000 - 9,000 9,000 (12,000) 4,000
3) Additional investment by 2,000 2,000
Leo
Balances after investment 12,000 9,000 9,000 (10,000) 4,000
4) Absorption of Leos def. (3,333) (3,333) 10,000 (3,334)
Balances after absorption 12,000 5,667 5,667 0 666
Cash distribution (12,000) (5,333) (5,333) (1,334)
* Loan balance already included, this is permitted at liquidation point.
2. C, E, L, Y Partnership
Statement of Partnership Liquidation
Nov. 15, 2010
Other
Cash Assets Liabilities * Cea * Eva Leo Yulo
Balances before liquidation 25,000 180,000 90,000 30,000 30,000 30,000 25,000
1) Sale of non-cash assets at a
loss 53,000 (180,000) (25,400) (25,400) (50,800) (25,400)
Balances after sale 78,000 - 90,000 4,600 4,600 (20,800) (400)
2) Payment of liabilities 78,000 (78,000)
Balances after payment - - 12,000 4,600 4,600 (20,800) (400)
3) Leo & Eva pays creditors (12,000) ______ 10,000 2,000 _______
- 4,600 14,600 (18,800) (400)
4) Leos & Yulos def. ( 4,600) (14,600) 18,800 ( 400)
Absorbed by Cea & Eva

Entries:
1) Cash 53,000 2) Liabilities 78,000
Cea, Capital 15,400 Cash 78,000
Cea, Loan 10,000
Eva, Capital 25,400 3) Liabilities 12,000
Leo, Capital 50,800 Ver, Capital 10,000
Yulo, Capital 25,400 Leo, Capital 2,000
Other Assets 180,000
4) Cea 4,600
Eva 14,600
Yulo 400
Leo 18,800
3. MRR Company
Statement of Partnership Liquidation
April 30, 2011
Other
Cash Assets Liabilities Maceda Roco Roces
Balances before liquidation 35,000 125,000 45,000 38,000 60,000 17,000
1) Sale of non-cash assets at a loss 50,000 (125,000) (22,500) (30,000) (22,500)
Balances after sale 85,000 - 45,000 15,500 30,000 ( 5,500)
2) Payment of liabilities 45,000 (45,000)
Balances after payment 40,000 - 15,500 30,000 ( 5,500)
3) Cash dist. (See Schedule) (40,000) (13,143) (26,857)
Balance after distribution - 2,357 3,143 ( 5,500)
4) Addl. investment by Roces 5,500 5,500
Balance after investment 5,500 2,357 3,143
5) Second cash distribution (5,500) (2,357) (3,143)

MRR Company
Statement of Cash Distribution
April 30, 2011
Maceda Roco Roces
Balances after payment of liabilities 15,500 30,000 ( 5,500)
Restricted interest (possible loss if Roces will not
pay for his deficiency) ( 2,357) (3,143) 5,500
Free Interest 13,143 26,857 -

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Entries:
1) Cash 50,000 3) Maceda, Capital 10,143
Maceda, Capital 22,500 Roco, Capital 26,857
Roco, Capital 30,000 Maceda, Loan 3,000
Roces, Capital 22,500 Cash 40,000
Other Assets 125,000
4) Cash 5,500
2) Liabilities 45,000 Roces, Capital 5,500
Cash 45,000
5) Maceda, Capital 2,357
Roco, Capital 3,143
Cash 5,500
4. VOLT Partnership
Statement of Partnership Liquidation
Dec. 31, 2010
PARTNERS INTEREST
Cash Other Due Liabilities V O L T
Assets From V
Balances before liquidation 10,000 190,000 20,000 90,000 35,000 55,000 25,000) 15,000
1) Sale of other assets at a
loss 100,000 (190,000) (33,750) (22,500) (11,250) (22,500)
Balances after sale 110,000 - 20,000 90,000 1,250 32,500 13,750 ( 7,500)
2) Payment of liabilities ( 90,000) (90,000)
Balances after payment 20,000 20,000 - 1,250 32,500 13,750 ( 7,500)
3) Absorption of due from V (20,000) (20,000)
Balances after absorption 20,000 - (18,750) 32,500 13,750 ( 7,500)
4) Deficiency of Villa 18,750 ( 7,500) ( 3,750) ( 7,500)
Balances 20,000 - 25,000 10,000 (15,000)
5) Additional investment 15,000 15,000
Balances after addl invest. 35,000 25,000 10,000 -
Cash payment to O and L (35,000) (25,000) (10,000)

5. Cash Other Due AP V O L T

Assets From V
Balances before liquidation 10,000 190,000 20,000 90,000 35,000 55,000 25,000) 15,000
1) Sale of other assets 100,000 (190,000) (33,750) (22,500) (11,250) (22,500)
Balances after sale 110,000 - 20,000 90,000 1,250 32,500 13,750 ( 7,500)
2) Payment of liabilities ( 90,000) ( 90,000)
Balances after payment 20,000 20,000 - 1,250 32,500 13,750 ( 7,500)
3) Due from V (20,000) (20,000)
Balances 20,000 - (18,750) 32,500 13,750 ( 7,500)
4) Deficiency of V and T 18,750 (17,500) ( 8,750) 7,500
Balances 20,000 - 15,000 5,000 -
Cash payment to O & L (20,000) (15,000) ( 5,000)

6. ABC Partnership
a) Total Liabilities & Partners Equity 72,000 c) Cash received by C 12,000
Cash bal. Before liq. (35,000 30,000) 5,000 Partners interest 18,000
BV of properties 67,000 Capacity to absorb loss 6,000
Cash proceeds 30,000 Capital ratio 18/60
Loss from sale 37,000 Total loss 20,000
BV of the properties 67,000
b) Cash balance before liquidation 5,000 Proceeds from the sale of properties 47,000
Cash proceeds 30,000 A B C
Total 35,000 Partners Int. 14,000 30,000 18,000
Less: Liabilities 10,000 Loss from Sale ( 4,000) (10,000) ( 6,000)
Cash available for distribution 25,000 Free Interest 10,000 20,000 12,000

A B C Total
Partners Int. 14,000 30,000 18,000 62,000
Loss from Sale ( 7,400) (18,500) (11,100) (37,000)
6,600 11,500 6,900 25,000

7. PQN Company Paras Que Noel

a) Total Liabilities & Partners Equity 88,000 Partners Int. Bal. 14,000 18,000 16,000
BV of properties (30,000 + 40,000) 70,000 Loss on Sale (20,000) (10,000) (10,000)
Cash balance before liquidation 18,000 Total ( 6,000) 8,000 6,000
Cash proceeds 30,000 Absorption of Ps 6,000 ( 3,000) ( 3,000)
def.
Total cash available 48,000 Cash distribution - 5,000 3,000
Less: Liabilities 40,000
Cash available for distribution 8,000

b) Paras Que Noel

Cash balance after liabilities 8,000 14,000 18,000 16,000
Additional investment of Paras 6,000 (20,000) (10,000) (10,000) Share in loss
14,000 ( 6,000) 8,000 6,000
6,000
8,000 6,000
8, Cash Liabilities M N O
160,000 200,000 (100,000) 300,000 (240,000)
Payment of liabilities (160,000) (160,000) ________ _______ ________
Balance 40,000 (100,000) 300,000 (240,000)

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 a) P160,000
b) Creditors of the partnership may collect from O P100,000
c) Personal creditors may collect from N

9.
J M O
250,000 450,000 270,000
Loss on collection of Accounts Receivable ( 3,222) ( 4,833) ( 6,445)
Restricted interest for properties not sold (177,778) (266,667) (355,555)
Restricted cash ( 11,111) ( 16,667) ( 22,222)
Restricted interest due to Os deficiency (45,689) (68,533) 114,222
Free interest 12,200 93,300 105,500

To prove: Cash before liquidation P450,000

Collected Accounts Receivable 85,500
Payment of Accounts Payable (190,000)
Cash balance 345,500
Restricted cash (190,000+50,000) 240,000
P105,500
10. W, X, Y, Z Partnership
Statement of Partnership Liquidation
Other
Cash Assets Liabilities W X Y Z
Balances before liquidation 50,000 235,000 70,000 50,000 75,000 55,000 35,000
Intangible, written-off ( 40,000) (15,000) (15,000) ( 5,000) ( 5,000)
Balances 50,000 195,000 70,000 35,000 60,000 50,000 30,000
Jan. sale of assets 30,000 ( 30,000)
80,000 165,000 70,000 35,000 60,000 50,000 30,000
Liquidation Expenses ( 3,000) ( 1,125) ( 1,125) ( 375) ( 375)
77,000 165,000 70,000 33,875 58,875 49,625 29,625
Payment of Liabilities (25,000) (25,000)
52,000 165,000 45,000 33,875 58,875 49,625 29,625
Feb. Sale of Assets 35,000 ( 35,000)
87,000 130,000 45,000 33,875 58,875 49,625 29,625
Liquidation Expenses ( 2,000) ( 750) ( 750) ( 250) ( 250)
85,000 130,000 45,000 33,125 58,125 49,375 29,375
Payment of liabilities (45,000) (45,000)
40,000 130,000 - 33,125 58,125 49,375 29,375
Cash Dist. (See Schedule 1) (30,000) (25,000) ( 5,000)
10,000 130,000 33,125 58,125 24,375 24,375
March Sale of Assets 25,000 (130,000) (39,375) (39,375) (13,125) (13,125)
35,000 - ( 6,250) 18,750 11,250 11,250
Liquidation ( 1,000) ( 375) ( 375) ( 125) ( 125)
34,000 ( 6,625) 18,375 11,125 11,125
Less: Absorption of deficiency 6,625 ( 3,975) ( 1,325) ( 1,325)
34,000 - 14,400 9,800 9,800
Final Payment (34,000) (14,400) ( 9,800) ( 9,800)

Schedule 1 - Schedule of Cash Distribution to the Partners for the month of February.
W X Y Z
Capital balance before distribution 33,125 58,125 49,375 29,375
Less: PJ possible loss - 130,000 (52,500) (52,500) (17,500) (17,500)
Cash withheld 10,000 140,000
(19,375) 5,625 31,875 11,875
Possible loss of 19,375 19,375 (11,625) ( 3,875) ( 3,875)
- ( 6,000) 28,000 8,000
Possible loss of 6,000 6,000 ( 3,000) ( 3,000)
Free Interest - 25,000 5,000

11. a) Schedule of Cash Payment Albert Banzon Cruz Duran Total

Partners Interest 24,500 21,000 18,000 12,000
Less: Loss on Receivable 10,500
Loss on Inventory 9,300 (7,920) (5,940) (1,980) (3,960)
16,580 15,060 16,020 8,040
Other Assets not yet sold
Inventory 21,300
Equipment 19,800
Restricted Interest 41,100 (16,440) (12,330) (4,110) (8,220)
140 2,730 11,910 ( 180)
Less: Restricted Int. (Def. If Duran will not pay ( 90) ( 67.50) (22.50) 180
Free Interest (14,600) 50 2,662.50 11,887.50 - 14,600
To prove: Cash 200
Proceeds 27,400
Total 27,600
Accounts Payable 13,000
Available Cash 14,600

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b) ABCD Partnership
Priority Program for Cash Distribution
October 1, 2010
P A Y M E N T S
Albert Banzon Cruz Duran Albert Banzon Cruz Duran
Capital Balances 18,500 11,000 18,000 12,000
Loan Balance 6,000 10,000
Total PI 24,500 21,000 18,000 12,000
P & L Ratio 40% 30% 10% 20%
Loss Absorption Bal. 61,250 70,000 180,000 60,000
FirstPriority (110,000) 11,000
61,250 70,000 70,000 60,000
Second Priority ( 8,750) ( 8,750) 2,625 875
61,250 61,250 61,250 60,000
Third Priority ( 1,250) ( 1,250) ( 1,250) 500 375 125
60,000 60,000 60,000 60,000 500 3,000 12,000

Further cash payments to all the partners according to their profit and loss ratio.

c) Cash distribution for Oct. 31 [base on a data]

Albert Banzon Cruz Duran
Cash available 27,600
Payment for liabilities (13,000)
14,600
First priority to C (11,000) 11,000.00
3,600
Second priority ( 3,500) 2,625.00 875.00
100
3rd priority accdg. to the ratio of 4:3:1 ( 100) 50.00 37.50 12.50
50.00 2,662.50 11,887.50 -

d)Cash distribution for Nov. 15

Albert Banzon Cruz Duran
Cash available 18,500
Balance of 3rd priority ( 900) 450 337.50 112.50
17,600
To all the partners (17,600) 7,040 5,280.00 1,760.00 3,520
7,490 5,617.50 1,872.50 3,520
e) 1,000/20% = 5,000
500
5,500
12. a) ABC Partnership
Priority Program for Cash Distribution
June 30, 2011
P A Y M E N TS
Ana Bert Cora Ana Bert Cora
Capital balance 67,000 45,000 31,500
Receivable balance (12,000) ( 75,000)
Total PE 55,000 45,000 24,000
P&L Ratio 50% 30% 20%
110,000 150,000 120,000
First priority ( 30,000) 9,000
110,000 120,000 120,000
Second priority ( 10,000) ( 10,000) 3,000 2,000
110,000 110,000 110,000 12,000 2,000

b) Cash AP Ana Beth Cora

56,000
(17,000) 17,000
39,000
( 9,000) 9,000
30,000
( 5,000) 3,000 2,000
25,000
(25,000) 12,500 7,500 5,000
0 17,000 12,500 19,500 7,000

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13. a) Ana Beth Cora Total
Partners Interest 55,000 45,000 24,000
July loss in Receivable, Inventory,
Liquidation Expenses, P10,500 ( 5,250) (3,150) ( 2,100)
Restricted Cash P8,000 and unsold
equipment of P99,000 (53,500) (32,100) (21,400)
(3750) 9,750 500
Anas def absorbed by Beth and Cora 3,750 (3,250) (500)
Free interest 6,500
Aug loss on plant & equipt. P20,000,
liq. Exp and cash withheld (12,000) ( 7,200) ( 4,800)
Gain on equipt. of P6,000 3,000 1,800 1,200
Equipt. taken by Cora ______ ______ (10,000) ______
Free Interest to be paid 36,750 27,550 6,700 71,000*
Proceeds from Sale 75,000
Less Liq. Exp. paid & cash withheld 4,000
Cash available for distribution 71,000

Schedule of Cash Distribution (July)

b) Cash AP Ana Beth Cora
31,500
(17,000) 17,000
14,500
First priority to Beth ( 6,500) 6,500
Cash withheld P8,000

Schedule of Cash Distribution (August)

b) Cash AP Ana Beth Cora
Beg balance P8,000
Proceeds less liq exp 39,000
Total P47,000
First priority balance ( 2,500) 2,500
Second Priority ( 5,000) 3,000 2,000
Balance to all (37,000) 18,500 11,100 7,400
2,500 1,500 (4,000)
P2,500 21,000 18,100 5,400*

Total payment due is P9,400 but she opted to get equipment with a book value of P4,000.
For September all the partners will receive cash of P37,500 based on their profit and loss ratio.
14. a) Cash available 22,200
Liabilities paid 3,000
Total 25,200
Cash proceeds 23,000
Cash balance before liquidation 2,200
Total liabilities and PE (39,000 + 3,000) 42,000
Book value of non-cash assets 39,800
b) Book value of non-cash assets 39,800
Sales proceeds 23,000
Loss on sale 16,800
P&L ratio of Santos x 3/20
Share of Santos in the loss 2,520
c) Santos Valix Cruz Cabrera
Partners Interest 5,000 15,000 14,000 5,000
Loss on Sale (2,520) ( 2,520) ( 5,040) (6,720)
Balance 2,480 12,480 8,960 (1,720)
Absorption ( 430) ( 430) ( 860) 1,720
Cash Distribution - 12,050 8,100 -
d) Cruz, Capital after sale 8,960
Cash paid 8,100
Cruz, Capital after payment 860
e) Priority Program
Santos Valix Cruz Cabrera Santos Valix Cruz Cabrera
Partners Interest 5,000 15,000 14,000 5,000
P&L Ratio 15% 15% 30% 40%
33,333.33 100,000 46,666.67 12,500
1st Priority (53,333.33) 8,000
33,333.33 46,666.67 46,666.67 12,500
2nd Priority (13,333.34) (13,333.33) 2,000 4,000
33,333.33 33,333.33 33,333.34 12,500
3rd Priority (20,833.33) (20,833.33) (20,833.33) 3,125 3,125 3,125

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 12,500 12,500 12,500 12,500 3,125 13,125 7,125 -

f) Cabrera will receive 2,000

P&L ratio, Cabrera / 8/20
Further cash distribution 5,000
P&L ratio, Valix x 3/20
Vaix will receive 750
Priorities 13,125
Total 13,875

MULTIPLE CHOICE
220,000
1. Total Liabilities & Partners Equity
Cash 40,000
Other Assets 180,000
R, Capital 50,000
Cash to be received 55,200
Gain on Sales of R 5,200
Divide by his P&L ratio 40%
Total gain 13,000
Other Assets 180,000
Proceeds 193,000
Answer: C
2. Ching Chua Chang Total
Partners Interest 6,750,000 5,000,000 5,750,000
Loss on Sale 2,200,000 1,650,000 1,650,000
Answer B 4,550,000 3,350,000 4,100,000 12,000,000

3. X, Capital 80,000
Cash received 52,000
Share in the loss 28,000
Divide by P&L ratio 4/7
Total loss 49,000
Share of Z in the loss 7,000
Z, Capital 36,000
Z will receive 29,000 Answer B
4. 1. Cash from sale (150000 x ) 75,000
Less: Liabilities (150000-115000) 35,000
Cash available for distribution 40,000 Answer D
2. Ben Caloy Dino
Partners Interest 30,000 19,000 66,000
Share in Loss (25,000) (25,000) (25,000)
Balance 5,000 ( 6,000) 41,000
Absorption ( 3,000) 6,000 ( 3,000)
Share of each partner 2,000 - 38,000 AnswerA
3. Caloy Dino
Insolvency (20,000) (70,000)
Partners Interest 19,000 66,000
Deficiency ( 1,000) ( 4,000) Answer: D

5. 1. BV of the asset (1/2) 75,000

Loss on sale (24,000)
Cash proceeds 51,000
Less: liabilties 35,000
Cash available for distribution 16,000
Answer: C

2. Dinos capital 22,000

Share in loss (8,000)
Share in restricted interest (25,000)
None Answer C

6. C, Capital 19,000
Cash distribution 5,000
Share in loss 14,000 / 1/3
Total loss 42,000 x 1/3
Share of Ben 14,000
Ben Capital and Loan 30,000
Share in Cash 16,000 a)

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7. C D E
Partners Interest 80,000 90,000 70,000
Loss (15,000) ( 9,000) ( 6,000)
Other Assets (50,000) (30,000) (20,000)
Free Interest a) 15,000 51,000 44,000

8. R S T U
Partners Interest 15,000 10,000 (20,000) (18,000)
Def. Of U absorbed by R, S, T ( 6,000) ( 6,000) ( 6,000) 18,000
Free Interest 9,000 4,000 (26,000)
26,000
9,000 4,000 0 0 Answer: D

9. Cash X Y Z
Balances 20,000 30,000 15,000 5,000
Loss (12,000) ( 7,500) (10,500)
20,000 18,000 7,500 ( 5,500) Answer: C

10. Q K P Q K P
45,000 25,000 25,000
30% 50% 20%
150,000 50,000 A) 125,000
25,000 ______ _______ 7,500
125,000 50,000 125,000
75,000 ______ 75,000 22,500 15,000
30,000 15,000
Addtl dist to all the partners acc to their profit ratio:

Cash available to partners (65,000-15,000) P15,000

To Queen (7,500 + 3/5 of P7,500) P12,000 Answer A

Most vulnerable is King with the lowest LAB Answer A

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