(Cash priority program; Statement of liquidation)

On January 1, 2002, Partners Kho, Lagman, and Magno decided to liquidate their
partnership. Prior to their liquidation ,the partners had a cash of P12,000,non-
cash assets of P146,000,liabilities to outsider of P36,000 and the notes payable
to partner Magno of P14,000 .The capital balances of the partners were : Kho –
P36,000 ; Lagman –P54,000 ; Magno –P18,000.The partners share profit and
losses in the ratio of 3:3:4,respectively.

During January 2009, the partnership received cash of P30, 000 from the sale of
assets with a book value of P38, 000 and paid P3, 600 of liquidation expenses.
During February ,the partnership realized P44,000 from the sale of assets with
the book value of P35,000 and paid Liquidation expenses of P8,400 .During
March ,the remaining assets were sold for P36,000 .The partners agreed to
distribute cash at the end of each month.

Instructions:

1. Prepare a cash priority program.

2. Prepare a statement of liquidation.
3. Prepare the necessary journal entries to record the liquidation process.

(Distribution of cash)

Aguilar and Bernardo share earnings in a 60:40 ratio. They have decided to
liquidate their partnership. A portion of the assets has been sold but other asses
with the carrying amount of P84, 000 still must be realized .All liabilities have
been paid, and cash of P40, 000 is available for distribution to partners. The
capital accounts show balance of P80, 000 for Aguilar and P44, 000 for Bernardo.

Instructions: Determine how should the cash of P40, 000 be divided.