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Partnership Liquidation Analysis

1. The document shows the liquidation of a partnership between Calma, Daza, and Esteban over multiple cases. It provides the balances of cash, other assets, liabilities, partner loans, and each partner's capital account at various stages of the liquidation process as assets are sold, losses are distributed, liabilities are paid, and payments are made to partners. 2. The final case shows an additional investment by Calma and Daza, payment of remaining liabilities and loans, and zero balances across all accounts at the conclusion of the liquidation. 3. The problems at the end involve calculating partnership profit/loss ratios and distributing liquidation proceeds accordingly based on capital account balances.

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Mark Kenneth Chan Balicanta
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450 views13 pages

Partnership Liquidation Analysis

1. The document shows the liquidation of a partnership between Calma, Daza, and Esteban over multiple cases. It provides the balances of cash, other assets, liabilities, partner loans, and each partner's capital account at various stages of the liquidation process as assets are sold, losses are distributed, liabilities are paid, and payments are made to partners. 2. The final case shows an additional investment by Calma and Daza, payment of remaining liabilities and loans, and zero balances across all accounts at the conclusion of the liquidation. 3. The problems at the end involve calculating partnership profit/loss ratios and distributing liquidation proceeds accordingly based on capital account balances.

Uploaded by

Mark Kenneth Chan Balicanta
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

AA1 -Chapter 3 (2008 edition))s

page 1

Exercise 3 7

Balances before liquidation


Sale of other assets & distribution of loss
Balances
Payment of liabilities
Balances
Offset of loan
Additional investment by Velasco
Balances
Asset distributed to Viola
Balances
July sale of assets and distribution of loss
Balances
Payment of liabilities
Balances
Possible loss on remaining other assets
Cash distribution to partners

Cash
P 80,000
200,000
P280,000
( 280,000)
--90,000
P 90,000
P 90,000
540,000
P630,000
(350,000)
P280,000
P280,000

Other
Assets
P960,000
( 300,000)
P660,000
P660,000
P660,000
( 200,000)
P460,000
( 400,000)
P 60,000
P 60,000
( 60,000)
-----

Liabilities
P630,000

Velasco
Loan
P 50,000

P630,000
( 280,000)
P350,000

P 50,000

P350,000

----

P350,000

-----

P350,000
( 350,000)
------

-----

-----

----

P 50,000
( 50,000)

----

Viola
P470,000
( 60,000)
P410,000
P410,000

CAPITAL
Velasco
(P140,000)
( 20,000)
(P160,000)

Vicente
P30,000
( 20,000)
P10,000
P10,000

P410,000
( 212,000)
P198,000
84,000
P282,000

(P160,000)
50,000
90,000
(P 20,000)
6,000
(P 14,000)
28,000
P 14,000

P282,000
( 36,000)
P246,000

P 14,000
( 12,000)
P 2,000

P44,000
( 12,000)
P32,000

P10,000
6,000
P16,000
28,000
P44,000

PROBLEMS
Problem 3-1
1.

Profit and loss ratio


Balances before liquidation
Sale of non-cash assets and distribution of loss
Payment of liquidation expenses

Elma, Erica and Edna


Statement of Liquidation
January 1 31, 2008
Non-cash
Cash
Assets
Liabilities
P 80,000
634,000
( 24,000)

P810,000
(810,000)

P270,000

C A P I T A L
Elma
Erica
Edna
3/8
3/8
2/8
P60,000
P290,000
P270,000
(66,000)
( 66,000) ( 44,000)
( 9,000)
( 9,000) ( 6,000)

Chapter 3 Partnership Liquidation


Suggested Answers

page

Balances
Payment of liabilities
Balances
Additional investment of Elma
Balances
Payment to partners

P690,000
(270,000)
P420,000
15,000
P435,000
( 435,000)

2.

Cash
Profit and loss ratio
Balances before liquidation
Sale of non-cash assets and distribution of loss
Payment of liquidation expenses
Balances
Payment of liabilities
Balances
Offset of loan against debit balance in the
capital balance of Elma
Balances
Payment to partners

P 80,000
634,000
(24,000)
P690,000
(200,000)
P490,000

Elma , Erica and Edna


Statement of Liquidation
January 1 31, 2008
Non-cash Note Payable
Assets
to Elma
P810,000
(810,000)

P490,000
(490,000)

(P15,000)

P215,000

P220,000

(P15,000)
15,000

P215,000

P220,000

P215,000
( 215,000)

P220,000
( 220,000)

C A P I T A L
Liabilities

Elma

Erica

Edna

3/8
P60,000
(66,000)
( 9,000)
(P15,000)

3/8
P290,000
( 66,000)
( 9,000)
P215,000

2/8
P270,000
( 44,000)
( 6,000)
P220,000

P70,000

(P15,000)

P215,000

P220,000

( 15,000)
P55,000
( 55,000)

15,000
P215,000
( 215,000)

P220,000
( 220,000)

P70,000

P200,000

P70,000

P200,000
(200,000)

Elma , Erica and Edna

3.

Cash
Profit and loss ratio
Balances before liquidation

P270,000
(270,000)

P 80,000

Statement of Liquidation
January 1 31, 2008
NR from
Non-cash
Assets
Erica
P110,000

P700,000

NP
to Elma
P70,000

C A P I T A L
Liabilities

Elma

Erica

Edna

P200,000

3/8
P60,000

3/8
P290,000

2/8
P270,000

Chapter 3 Partnership Liquidation


Suggested Answers

Sale of non-cash assets and distribution of


loss

page

634,000

Payment of liquidation expenses


(24,000)
Balances
P690,000
Payment of liabilities
(200,000)
Balances
P490,000
Offset of receivable against credit balance in
the capital of Erica
Balances
P490,000
Payment to partners
(490,000)
Problem 3 2 (Case 1)

(700,000)

P 20,000
250,000
P 270,000
( 112,000)
P 158,000

( 24,750)

( 16,500)

( 9,000)
P26,250

( 9,000)
P256,250

( 6,000)
P247,500

P110,000

P70,000

P110,000

P70,000

P26,250

P256,250

P247,500

P70,000
( 70,000)

P26,250
( 26,250)

( 110,000)
P146,250
( 146,250)

P247,500
( 247,500)

(110,000)

Calma, Daza and Esteban


Statement of Liquidation
January, 2009
Other
Cash
Assets
Liabilities
Balances before liquidation
Sale of assets & distribution of loss
Balances
Payment of liabilities
Payment of to partners

P200,000
(200,000)

(24,750)

P 340,000
(340,000)
-

L O A N
Daza
Esteban

P 112,000

P 5,000

P 8,000

P 112,000
(112,000)
-

P 5,000

P 8,000

C
A
Calma
(2/5)
P 95,000
(36,000)
P 59,000

P 5,000

P 8,000

P 59,000

I
T
Daza
(2/5)
P 60,000
(36,000)
P 24,000

A L
Esteban
(1/5)
P 80,000
(18,000)
P 62,000

P 24,000

P 62,000

Problem 3 2 (Case 2)
Calma, Daza and Esteban
Statement of Liquidation
January, 2009
Other
Cash
Assets
Liabilities

L O A N
Daza
Esteban

C
A
Calma

I
T A L
Daza
Esteban

Chapter 3 Partnership Liquidation


Suggested Answers

Balances before liquidation


Sale of assets & distribution of loss
Balances
Payment of liabilities
Balances
Offset of loan against debit balance in the
capital account
Payment to partners

page

P 20,000
185,000
P 205,000
( 112,000)
P 93,000
P 93,000

P 340,000
(340,000)
-

P 8,000

(2/5)
P 95,000
(62,000)
P 33,000

(2/5)
P 60,000
(62,000)
P( 2,000)

(1/5)
P 80,000
(31,000)
P 49,000

P 5,000

P 8,000

P 33,000

P( 2,000)

P 49,000

(2,000)
P 3,000

P 8,000

P 33,000

2,000
-

P 49,000

P 112,000

P 5,000

P 8,000

P 5,000

P 112,000
(112,000)
-

Problem 3 2 (Case 3)

Cash
Balances before liquidation
Sale of assets & distribution of loss
Balances
Payment of liabilities
Balances
Offset of loan against debit balance in the
capital account
Balances
Payment to partners
Balances
Additional investment by Daza
Payment to partners

Calma, Daza and Esteban


Statement of Liquidation
January, 2009
Other
Assets
Liabilities
P 112,000

P 5,000

P 8,000

P 5,000

P 8,000

P 112,000
(112,000)
-

C
A
Calma
(2/5)
P 95,000
(68,000)
P 27,000

P 5,000

P 8,000

P 27,000

(5,000)
-

P 8,000
( 8,000)
-

P 27,000
( 25,000)
P 2,000

P 2,000

P 20,000
170,000
P 190,000
( 112,000)
P 78,000

P 340,000
(340,000)
-

P 78,000
( 78,000)
3,000
P 3,000

L
Daza

O A N
Esteban

P I
T A L
Daza
Esteban
(2/5)
(1/5)
P 60,000
P 80,000
(68,000)
(34,000)
P( 8,000) P 46,000
P( 8,000)
5,000
P(3,000)
P(3,000)
3,000
-

P 46,000
P 46,000
(45,000)
P 1,000
P 1,000

Chapter 3 Partnership Liquidation


Suggested Answers

page

Problem 3- 2 (Case 4)
Calma, Daza and Esteban
Statement of Liquidation
January, 2009
Cash
Balances before liquidation
Sale of assets & distribution of loss
Balances
Payment of liabilities
Balances
Offset of loan against debit balance in the
capital account
Balances
Payment to partners
Balances
Additional investment by Daza
Payment to partners

Other
Assets

Liabilities

L
Daza

O A N
Esteban

P 112,000

P 5,000

P 8,000

P 5,000

P 8,000

C A
Calma
(2/5)
P 95,000
(86,000)
P 9,000

P 5,000

P 8,000

P 9,000

P(26,000)

P 9,000

5,000
P(21,000)

P 9,000

P 20,000
125,000
P 145,000
( 112,000)
P 33,000

P 340,000
(340,000)
-

P 112,000
(112,000)
-

P 33,000
( 33,000)
21,000
P 21,000

(5,000)
-

P 8,000
( 8,000)
-

P 9,000

P I
T
Daza
(2/5)
P 60,000
(86,000)
P(26,000)

A L
Esteban
(1/5)
P 80,000
(43,000)
P 37,000
P 37,000

P(21,000)
21,000
-

P 37,000
(25,000)
P 12,000
P 12,000

Chapter 3 Partnership Liquidation


Suggested Answers

page

Problem 3 2 (Case 5)
Calma, Daza and Esteban
Statement of Liquidation
January, 2009
Other
Cash
Assets
Liabilities
Balances before liquidation
Sale of assets & distribution of loss
Balances
Payment of liabilities
Balances
Offset of loan against debit balance in the
capital account
Balances
Additional investment by Calma and Daza
Payment of liabilities, loan and capital

Problem
1.

P 20,000
90,000
P 110,000
( 110,000)
-

P 340,000
(340,000)
-

40,000
P 40,000

L O A N
Daza
Esteban

P 112,000

P 5,000

P 8,000

P 112,000
(110,000)
P 2,000

P 5,000

P 8,000

C A
Calma
(2/5)
P 95,000
(100,000)
P( 5,000)

P 5,000

P 8,000

P( 5,000)

P(40,000)

P( 5,000)
5,000
-

5,000
P(35,000)
35,000
-

2,000

(5,000)
-

2,000

P 8,000
P 8,000

I
T
A L
Daza
Esteban
(2/5)
(1/5)
P 60,000 P 80,000
(100,000)
(50,000)
P(40,000) P 30,000
P 30,000
P 30,000
P 30,000

3-4

Estrella, Capital
Estrella, Drawing
Total interest of Estrella
Cash received by Estrella

P 144,000
( 12,000)
P 132,000
111,000
Share of Estrella in the loss on P 21,000

liquidation
Fractional share of Estrella

2/10

3.

a.

Cash
Eugenio, Capital
Esteban, Capital
Estrella, Capital
Other Assets

463,000
52,500
31,500
21,000
568,000

Chapter 3 Partnership Liquidation


Suggested Answers

Total loss on liquidation

page

P 105,000

b.
c.

Liabilities
Cash

200,000

Esteban, Loan
Eugenio, Capital
Esteban, Capital
Estrella, Capital
Cash

40,000
79,500
102,500
111,000

200,000

333,000

2.
Eugenio , Esteban and Estrella
Statement of Liquidation
January 1 31, 2008

Balances before liquidation


Sale of other assets & distribution of loss
Balances
Payment of liabilities
Balances
Payment to partners

Cash
P 70,000
463,000
P 533,000
(200,000)
P 333,000
( 333,000)

Other
Assets
P 568,000
( 568,000)

Liabilities
P 200,000
P 200,000
( 200,000)

Esteban,
Loan
P 40,000
P 40,000

Eugenio
(5/10)
P 132,000
( 52,500)
P 79,500

P 40,000
( 40,000)

P 79,500
( 79,500)

CAPITAL
Esteban
Estrella
(3/10)
(2/10)
P 134,000
P132,000
( 31,500) ( 21,000)
P 102,500
P 111,000
P 102,500
(102,500)

Problem 3 - 6
QRS Partnership
Statement of Liquidation
July to September, 2008
Accounts

Roman,

C A P I T A L

P 111,000
( 111,000)

Chapter 3 Partnership Liquidation


Suggested Answers

Balances before liquidation


July:
Sale of assets
Payment of liabilities
Payment of liquidation expenses
Payment of loan
Balances
August: Sale of assets
Payment of liquidation expenses
Payment of loan and capital
Balances
Sept.: Sale of assets
Payment of liquidation expenses
Additional loss to Roman & Silva
Payment to partners

page

Other Assets
P2,010,000
( 1,530,000)

(
P

Cash
150,000
1,170,000
1,215,000)
7,500)
97,500
67,500)
30,000
66,000
7,500)
88,500
58,500)
30,000
165,000
7,500)
187,500

41,400

187,500

41,400

P
(
(
P
(
P
(
P
(
P

Payable
P1,215,000

Loan
P150,000

Quizon
P300,000
( 180,000)

Roman
P270,000
( 108,000)

Silva
P225,000
( 72,000)

( 3,750)
P116,250

( 2,250)
P159,750

( 1,500)
P151,500

P116,250
( 19,500)
( 3,750)
P 93,000

P159,750
( 11,700)
( 2,250)
P145,800

P 93,000
( 105,000)
( 3,750)
(P 15,750)
15,750
-

P145,800
( 63,000)
( 2,250)
P 80,550
( 9,450)
P 71,100

P151,500
( 7,800)
( 1,500)
P142,200
( 17,400)
P124,800
( 42,000)
( 1,500)
P 81,300
( 6,300)
P 75,000

( 1,215,000)
P 480,000

P 480,000
( 105,000)

P 375,000

P 375,000
( 375,000)

P150,000
( 67,500)
P 82,500
P 82,500
( 41,100)
P 41,400

Chapter 3 Partnership Liquidation


Suggested Answers

page

Problem 3 - 5
JKLM Trading
Statement of Liquidation
February 1 - March 31, 2008
Cash
P 100,320

Balances before liquidation


February:
Sale of assets & distribution of loss
Payment of liabilities
Payment of liquidation expenses
Balances
Payment to partners (sch. 1)
Balances
March:
Sale of assets & distribution of gain
Payment of liabilities
Payment of liquidation expenses
Balances
Payment to partners (sch. 2)
Balances, March 31

49,320
( 17,750)
( 8,220)
P 123,670
( 120,060)
P 3,610
48,330
( 3,610)
( 7,380)
P 40,950
( 40,950)
P ---------

Other
Assets
P 193,530

Liabilities
P 21,360

Jocson
Loan
P 15,000

( 66,060)

C
A
Jocson
P 24,120

P
I
Kaimo
P 96,480

T
A
Legarda
P 109,020

L
Manabat
P 27,870

( 3,348)

( 5,022)

( 5,022)

( 3,348)

( 1,644)
P 19,128

( 2,466)
P 88,992
(49,770)
P 39,222

( 2,466)
P 101,532
( 62,310)
P 39,222

( 1,644)
P 22,878

( 17,750)
P 127,470

P 3,610

P 127,470

P 3,610

P 15,000
( 7,980)
P 7,020

( 44,850)

P 19,128
696

1,044

1,044

P 82,620

p --------

P 82,620

P --------

P 7,020
7,020
P -------

( 1,476)
P 18,348
( 1,824)
P 16,524

( 2,214)
P 38,052
(13,266)
P 24,786

( 2,214)
P 38,052
( 13,266)
P 24,786

Req. 2
Neri, Ordan and Pacia
Statement of Liquidation
January 1 - March 31, 2008

Balances before liquidation

Other
Assets
P 191,000

696

( 3,610)

Problem 3 - 8

Cash
P 19,000

P 22,878

Liabilities
P 77,000

Pacia,
Loan
P 9,000

Sal. Pay.
to Neri
P 6,000

C A P I T
Neri
Ordan
P 50,000
P 28,000

A L
Pacia
P 40,000

( 1,476)
P 22,098
( 5,574)
P 16,524

Chapter 3 Partnership Liquidation


Suggested Answers

January:
Collections from customers
Payment of liquidation expenses
Payment of liabilities
Balances
Payment to partners (see schedule)
Balances
February:
Collections from customers
Payment of liquidation expenses
Payment of liabilities & dist. of gain
Balances
Payment to partners (see schedule)
Balances
March:
Collections from customers & dist. of
loss
Payment of liquidation expenses
Payment to partners

Problem 3 -8
Requirement No 1

Capital balances before liquidation


Add Loan balances

page

112,000
( 4,400)
( 38,000)
P 88,600
( 16,000)
P 72,600

(112,000)

36,000
( 2,800)
(38,000)
P 67,800
( 19,800)
P 48,000

( 36,000)

P 79,000

( 38,000)
P 39,000

P 79,000

P 39,000

P 9,000
( 9,000)
-

P 43,000

( 39,000)
-

P 43,000

35,000

( 43,000)

( 4,000)
P( 79,000)

( 2,200)

( 1,100)

( 1,100)

P 6,000

P 47,800

P 26,900

P 6,000

P 47,800

P 26,900

P 38,900
( 7,000)
P 31,900

P 6,000
( 6,000)
-

( 1,400)
500
P 46,900
( 1,400)
P 45,500

700)
250
P 26,450
( 3,700)
P 22,750

700)
250
P 31,450
( 8,700)
P 22,750

( 4,000)

( 2,000)

( 2,000)

( 2,000)
P 39,500

( 1,000)
P 19,750

( 1,000)
P 19,750

Neri, Ordan and Pacia


Cash Priority Program
January 1, 2008

Neri
P 50,000
6,000

Ordan
P 28,000

Pacia
P 40,000
9,000

Neri

Ordan

Pacia

Chapter 3 Partnership Liquidation


Suggested Answers

page

Total partners interest


P 56,000
Profit and loss ratio
50%
Loss absorption balance
P112,000
allocation I - Cash to Pacia reducing LAB to an amount reported
for Neri and Ordan. Reduction of P84,000 requires payment
of 25% of P 84,000
Balances
P112,000
Allocation II - Further cash distributions may be made in the profit and loss raio
SCHEDULE OF CASH DISTRIBUTION:
Amount
January:
Cash available
P 16,000
Allocation I:
Payable to Pacia
16,000
February:

Cash available
Allocation I:
Payable to Pacia
Allocation II
Payable according
to P & L ratio

Neri
-

Ordan

Pacia

---------

P 16,000

P 28,000
25%
P112,000

P 49,000
25%
P196,000

P112,000

( 84,000)
P112,000

_______
--------

_______
---------

P 21,000
P 21,000

P 19,800
5,000
P 14,800
-

P 5,000
P 7,400
P 7,400

P 3,700
P 3,700

3,700
P 8,700

Problem 3 - 7
Requirement 3
Tabora, Ureta and Veloso
Statement of Liquidation
January 1 to April 30, 2008

Balances before liquidation


January:

Cash
-

Other
Assets
P 338,000

L
Tabora
P 45,000

A
N
Ureta
Veloso
P 30,000 P 13,000

C A P I T A L
Tabora
Ureta
Veloso
P 120,000 P 90,000
P 40,000

Chapter 3 Partnership Liquidation


Suggested Answers

Sale of assets
Payment to partners
Balances
February:
Sale of assets
Payment to partners
Balances
March:
Sale of assets
Payment to partners
Balances
April:
Sale of assets & distribution of loss
Balances
Payment to partners

page

15,000
(15,000)
40,000
( 40,000)

( 15,000)
P 323,000

30,000
P 30,000
(30,000)

(15,000)
P15,000

P 13,000

P 120,000

P 90,000

P 40,000

( 21,250)
P 23,750

(15,000)
-

P 13,000

P 120,000

( 3,750)
P 86,250

P 40,000

(23,750)
-

(13,000)
-

( 23,500)
P 96,500

( 28,350)
P 57,900

( 1,400)
P 38,600

( 81,500)
P 15,000
P 15,000

( 48,900)
P 9,000
P 9,000

(32,600)
P 6,000
P 6,000

( 40,000)
P 283,000

90,000
( 90,000)
-

P 45,000

( 90,000)
P 193,000
( 193,000)
-

Chapter 3 Partnership Liquidation


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