AA1 -Chapter 3 (2008 edition))s page 1

Exercise 3 7
Other Velasco CAPITAL
Cash Assets Liabilities Loan Viola Velasco Vicente
Balances before liquidation P 80,000 P960,000 P60,000 P !0,000 P"#0,000 $P%"0,000& P0,000
'ale of other assets ( distribution of loss )00,000 $ 00,000& $ 60,000& $ )0,000& $ )0,000&
Balances P)80,000 P660,000 P60,000 P !0,000 P"%0,000 $P%60,000& P%0,000
Pa*+ent of liabilities $ )80,000& $ )80,000&
Balances ,,, P660,000 P!0,000 P !0,000 P"%0,000 $P%60,000& P%0,000
Offset of loan $ !0,000& !0,000
Additional in-est+ent b* Velasco 90,000 90,000
Balances P 90,000 P660,000 P!0,000 ,,,, P"%0,000 $P )0,000& P%0,000
Asset distributed to Viola $ )00,000& $ )%),000& 6,000 6,000
Balances P 90,000 P"60,000 P!0,000 ,,,,, P%98,000 $P %",000& P%6,000
.ul* sale of assets and distribution of loss !"0,000 $ "00,000& 8",000 )8,000 )8,000
Balances P60,000 P 60,000 P!0,000 ,,,,, P)8),000 P %",000 P"",000
Pa*+ent of liabilities $!0,000& $ !0,000&
Balances P)80,000 P 60,000 ,,,,,, ,,,, P)8),000 P %",000 P"",000
Possible loss on re+ainin/ other assets $ 60,000& $ 6,000& $ %),000& $ %),000&
Cash distribution to 0artners P)80,000 ,,,,, ,,,,, ,,,, P)"6,000 P ),000 P),000
Chapter 3 Partnership Liquidation
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PROBLEMS
Problem 3-1
%1 2l+a, 2rica and 2dna
'tate+ent of Liquidation
.anuar* % 3 %, )008
4on,cash C A P I T A L
Cash Assets Liabilities 2l+a 2rica 2dna
Profit and loss ratio 58 58 )58
Balances before liquidation P 80,000 P8%0,000 P)#0,000 P60,000 P)90,000 P)#0,000
'ale of non,cash assets and distribution of loss 6",000 $8%0,000& $66,000& $ 66,000& $ "",000&
Pa*+ent of liquidation e60enses $ )",000& $ 9,000& $ 9,000& $ 6,000&
Balances P690,000 P)#0,000 $P%!,000& P)%!,000 P))0,000
Pa*+ent of liabilities $)#0,000& $)#0,000&
Balances P")0,000 $P%!,000& P)%!,000 P))0,000
Additional in-est+ent of 2l+a %!,000 %!,000
Balances P"!,000 P)%!,000 P))0,000
Pa*+ent to 0artners $ "!,000& $ )%!,000& $ ))0,000&
Chapter 3 Partnership Liquidation
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)1 2l+a , 2rica and 2dna
'tate+ent of Liquidation
.anuar* % 3 %, )008
4on,cash 4ote Pa*able C A P I T A L
Cash Assets to 2l+a Liabilities 2l+a 2rica 2dna
Profit and loss ratio 58 58 )58
Balances before liquidation P 80,000 P8%0,000 P#0,000 P)00,000 P60,000 P)90,000 P)#0,000
'ale of non,cash assets and distribution of loss 6",000 $8%0,000& $66,000& $ 66,000& $ "",000&
Pa*+ent of liquidation e60enses $)",000& $ 9,000& $ 9,000& $ 6,000&
Balances P690,000 P#0,000 P)00,000 $P%!,000& P)%!,000 P))0,000
Pa*+ent of liabilities $)00,000& $)00,000&
Balances P"90,000 P#0,000 $P%!,000& P)%!,000 P))0,000
Offset of loan a/ainst debit balance in the
ca0ital balance of 2l+a $ %!,000&

%!,000
Balances P"90,000 P!!,000 P)%!,000 P))0,000
Pa*+ent to 0artners $"90,000& $ !!,000& $ )%!,000& $ ))0,000&
1 2l+a , 2rica and 2dna
'tate+ent of Liquidation
.anuar* % 3 %, )008
47 fro+ 4on,cash 4P C A P I T A L
Cash 2rica Assets to 2l+a Liabilities 2l+a 2rica 2dna
Profit and loss ratio 58 58 )58
Balances before liquidation P 80,000 P%%0,000 P#00,000 P#0,000 P)00,000 P60,000 P)90,000 P)#0,000
'ale of non,cash assets and distribution of
loss
6",000 $#00,000& $)",#!0& $ )",#!0& $ %6,!00&
Pa*+ent of liquidation e60enses $)",000& $ 9,000& $ 9,000& $ 6,000&
Balances P690,000 P%%0,000 P#0,000 P)00,000 P)6,)!0 P)!6,)!0 P)"#,!00
Pa*+ent of liabilities $)00,000& $)00,000&
Balances P"90,000 P%%0,000 P#0,000 P)6,)!0 P)!6,)!0 P)"#,!00
Offset of recei-able a/ainst credit balance in
the ca0ital of 2rica $%%0,000&

$ %%0,000&
Balances P"90,000 P#0,000 P)6,)!0 P%"6,)!0 P)"#,!00
Pa*+ent to 0artners $"90,000& $ #0,000& $ )6,)!0& $ %"6,)!0& $ )"#,!00&
Chapter 3 Partnership Liquidation
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Problem 3 2 (Case 1)
Cal+a, 8a9a and 2steban
'tate+ent of Liquidation
.anuar*, )009
Other L O A 4 C A P I T A L
Cash Assets Liabilities 8a9a 2steban Cal+a
$)5!&
8a9a
$)5!&
2steban
$%5!&
Balances before liquidation P )0,000 P "0,000 P %%),000 P !,000 P 8,000 P 9!,000 P 60,000 P 80,000
'ale of assets ( distribution of loss )!0,000 $"0,000& $6,000& $6,000& $%8,000&
Balances P )#0,000 , P %%),000 P !,000 P 8,000 P !9,000 P )",000 P 6),000
Pa*+ent of liabilities $ %%),000& $%%),000&
Pa*+ent of to 0artners P %!8,000 , , P !,000 P 8,000 P !9,000 P )",000 P 6),000
Problem 3 2 (Case 2)
Cal+a, 8a9a and 2steban
'tate+ent of Liquidation
.anuar*, )009
Other L O A 4 C A P I T A L
Cash Assets Liabilities 8a9a 2steban Cal+a
$)5!&
8a9a
$)5!&
2steban
$%5!&
Balances before liquidation P )0,000 P "0,000 P %%),000 P !,000 P 8,000 P 9!,000 P 60,000 P 80,000
'ale of assets ( distribution of loss %8!,000 $"0,000& $6),000& $6),000& $%,000&
Balances P )0!,000 , P %%),000 P !,000 P 8,000 P ,000 P$ ),000& P "9,000
Pa*+ent of liabilities $ %%),000& $%%),000&
Balances P 9,000 , , P !,000 P 8,000 P ,000 P$ ),000& P "9,000
Offset of loan a/ainst debit balance in the
ca0ital account $),000& ),000
Pa*+ent to 0artners P 9,000 , , P ,000 P 8,000 P ,000 , P "9,000
Chapter 3 Partnership Liquidation
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Problem 3 2 (Case 3)
Cal+a, 8a9a and 2steban
'tate+ent of Liquidation
.anuar*, )009
Other L O A 4 C A P I T A L
Cash Assets Liabilities 8a9a 2steban Cal+a
$)5!&
8a9a
$)5!&
2steban
$%5!&
Balances before liquidation P )0,000 P "0,000 P %%),000 P !,000 P 8,000 P 9!,000 P 60,000 P 80,000
'ale of assets ( distribution of loss %#0,000 $"0,000& $68,000& $68,000& $",000&
Balances P %90,000 , P %%),000 P !,000 P 8,000 P )#,000 P$ 8,000& P "6,000
Pa*+ent of liabilities $ %%),000& $%%),000&
Balances P #8,000 , , P !,000 P 8,000 P )#,000 P$ 8,000& P "6,000
Offset of loan a/ainst debit balance in the
ca0ital account

$!,000&

!,000

Balances P #8,000 , , , P 8,000 P )#,000 P$,000& P "6,000
Pa*+ent to 0artners $ #8,000& $ 8,000& $ )!,000& $"!,000&
Balances , , , , , P ),000 P$,000& P %,000
Additional in-est+ent b* 8a9a ,000 ,000
Pa*+ent to 0artners P ,000 , , , , P ),000 , P %,000
Chapter 3 Partnership Liquidation
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Problem 3- 2 (Case 4)
Cal+a, 8a9a and 2steban
'tate+ent of Liquidation
.anuar*, )009
Other L O A 4 C A P I T A L
Cash Assets Liabilities 8a9a 2steban Cal+a
$)5!&
8a9a
$)5!&
2steban
$%5!&
Balances before liquidation P )0,000 P "0,000 P %%),000 P !,000 P 8,000 P 9!,000 P 60,000 P 80,000
'ale of assets ( distribution of loss %)!,000 $"0,000& $86,000& $86,000& $",000&
Balances P %"!,000 , P %%),000 P !,000 P 8,000 P 9,000 P$)6,000& P #,000
Pa*+ent of liabilities $ %%),000& $%%),000&
Balances P ,000 , , P !,000 P 8,000 P 9,000 P$)6,000& P #,000
Offset of loan a/ainst debit balance in the
ca0ital account $!,000& !,000

Balances P ,000 , , , P 8,000 P 9,000 P$)%,000& P #,000
Pa*+ent to 0artners $ ,000& $ 8,000& $)!,000&
Balances , , , , , P 9,000 P$)%,000& P %),000
Additional in-est+ent b* 8a9a )%,000 )%,000
Pa*+ent to 0artners P )%,000 , , , , P 9,000 , P %),000
Chapter 3 Partnership Liquidation
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Problem 3 2 (Case 5)
Cal+a, 8a9a and 2steban
'tate+ent of Liquidation
.anuar*, )009
Other L O A 4 C A P I T A L
Cash Assets Liabilities 8a9a 2steban Cal+a
$)5!&
8a9a
$)5!&
2steban
$%5!&
Balances before liquidation P )0,000 P "0,000 P %%),000 P !,000 P 8,000 P 9!,000 P 60,000 P 80,000
'ale of assets ( distribution of loss 90,000 $"0,000& $%00,000& $%00,000& $!0,000&
Balances P %%0,000 , P %%),000 P !,000 P 8,000 P$ !,000& P$"0,000& P 0,000
Pa*+ent of liabilities $ %%0,000& $%%0,000&
Balances , , P ),000 P !,000 P 8,000 P$ !,000& P$"0,000& P 0,000
Offset of loan a/ainst debit balance in the
ca0ital account $!,000& !,000
Balances , , P ),000 , P 8,000 P$ !,000& P$!,000& P 0,000
Additional in-est+ent b* Cal+a and 8a9a "0,000 !,000 !,000
Pa*+ent of liabilities, loan and ca0ital P "0,000 , P ),000 , P 8,000 , , P 0,000
Chapter 3 Partnership Liquidation
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Problem 3-4
%1 2strella, Ca0ital P %"",000 1 a1 Cash "6,000
2strella, 8ra:in/ $ %),000& 2u/enio, Ca0ital !),!00
Total interest of 2strella P %),000 2steban, Ca0ital %,!00
Cash recei-ed b* 2strella %%%,000 2strella, Ca0ital )%,000
'hare of 2strella in the loss on
liquidation
P )%,000 Other Assets !68,000
;ractional share of 2strella )5%0
Total loss on liquidation P %0!,000 b1 Liabilities )00,000
Cash )00,000
c1 2steban, Loan "0,000
2u/enio, Ca0ital #9,!00
2steban, Ca0ital %0),!00
2strella, Ca0ital %%%,000
Cash ,000
)1
2u/enio , 2steban and 2strella
'tate+ent of Liquidation
.anuar* % 3 %, )008
C A P I T A L
Cash
Other
Assets Liabilities
2steban,
Loan
2u/enio
$!5%0&
2steban
$5%0&
2strella
$)5%0&
Balances before liquidation P #0,000 P !68,000 P )00,000 P "0,000 P %),000 P %",000 P%),000
'ale of other assets ( distribution of loss "6,000 $ !68,000& $ !),!00& $ %,!00& $ )%,000&
Balances P !,000 P )00,000 P "0,000 P #9,!00 P %0),!00 P %%%,000
Pa*+ent of liabilities $)00,000& $ )00,000&
Balances P ,000 P "0,000 P #9,!00 P %0),!00 P %%%,000
Pa*+ent to 0artners $ ,000& $ "0,000& $ #9,!00& $%0),!00& $ %%%,000&
Chapter 3 Partnership Liquidation
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Problem 3 -
<7' Partnershi0
'tate+ent of Liquidation
.ul* to 'e0te+ber, )008
Accounts 7o+an, C A P I T A L
Cash Other Assets Pa*able Loan <ui9on 7o+an 'il-a
Balances before liquidation P %!0,000 P),0%0,000 P%,)%!,000 P%!0,000 P00,000 P)#0,000 P))!,000
.ul*= 'ale of assets %,%#0,000 $ %,!0,000& $ %80,000& $ %08,000& $ #),000&
Pa*+ent of liabilities $ %,)%!,000& $ %,)%!,000&
Pa*+ent of liquidation e60enses $ #,!00& $ ,#!0& $ ),)!0& $ %,!00&
P 9#,!00 P "80,000 , P%!0,000 P%%6,)!0 P%!9,#!0 P%!%,!00
Pa*+ent of loan $ 6#,!00& $ 6#,!00&
Balances P 0,000 P "80,000 , P 8),!00 P%%6,)!0 P%!9,#!0 P%!%,!00
Au/ust= 'ale of assets 66,000 $ %0!,000& $ %9,!00& $ %%,#00& $ #,800&
Pa*+ent of liquidation e60enses $ #,!00& $ ,#!0& $ ),)!0& $ %,!00&
P 88,!00 P #!,000 , P 8),!00 P 9,000 P%"!,800 P%"),)00
Pa*+ent of loan and ca0ital $ !8,!00& $ "%,%00& $ %#,"00&
Balances P 0,000 P #!,000 , P "%,"00 P 9,000 P%"!,800 P%)",800
'e0t1= 'ale of assets %6!,000 $ #!,000& $ %0!,000& $ 6,000& $ "),000&
Pa*+ent of liquidation e60enses $ #,!00& $ ,#!0& $ ),)!0& $ %,!00&
P %8#,!00 , , P "%,"00 $P %!,#!0& P 80,!!0 P 8%,00
Additional loss to 7o+an ( 'il-a %!,#!0 $ 9,"!0& $ 6,00&
Pa*+ent to 0artners P %8#,!00 , , P "%,"00 , P #%,%00 P #!,000
Chapter 3 Partnership Liquidation
Suggested Answers page
Problem 3 - 5
.>L? Tradin/
'tate+ent of Liquidation
;ebruar* % , ?arch %, )008
Other .ocson C A P I T A L
Cash Assets Liabilities Loan .ocson >ai+o Le/arda ?anabat
Balances before liquidation P %00,)0 P %9,!0 P )%,60 P %!,000 P )",%)0 P 96,"80 P %09,0)0 P )#,8#0
;ebruar*=
'ale of assets ( distribution of loss "9,)0 $ 66,060& $ ,"8& $ !,0))& $ !,0))& $ ,"8&
Pa*+ent of liabilities $ %#,#!0& $ %#,#!0&
Pa*+ent of liquidation e60enses $ 8,))0& $ %,6""& $ ),"66& $ ),"66& $ %,6""&
Balances P %),6#0 P %)#,"#0 P ,6%0 P %!,000 P %9,%)8 P 88,99) P %0%,!) P )),8#8
Pa*+ent to 0artners $sch1 %& $ %)0,060& $ #,980& $"9,##0& $ 6),%0&
Balances P ,6%0 P %)#,"#0 P ,6%0 P #,0)0 P %9,%)8 P 9,))) P 9,))) P )),8#8
?arch=
'ale of assets ( distribution of /ain "8,0 $ "",8!0& 696 %,0"" %,0"" 696
Pa*+ent of liabilities $ ,6%0& $ ,6%0&
Pa*+ent of liquidation e60enses $ #,80& $ %,"#6& $ ),)%"& $ ),)%"& $ %,"#6&
Balances P "0,9!0 P 8),6)0 0 ,,,,,,,, P #,0)0 P %8,"8 P 8,0!) P 8,0!) P )),098
Pa*+ent to 0artners $sch1 )& $ "0,9!0& #,0)0 $ %,8)"& $%,)66& $ %,)66& $ !,!#"&
Balances, ?arch % P ,,,,,,,,, P 8),6)0 P ,,,,,,,, P ,,,,,,, P %6,!)" P )",#86 P )",#86 P %6,!)"
Chapter 3 Partnership Liquidation
Suggested Answers page
Problem 3 - !
7eq1 )
4eri, Ordan and Pacia
'tate+ent of Liquidation
.anuar* % , ?arch %, )008
Other Pacia, 'al1 Pa*1 C A P I T A L
Cash Assets Liabilities Loan to 4eri 4eri Ordan Pacia
Balances before liquidation P %9,000 P %9%,000 P ##,000 P 9,000 P 6,000 P !0,000 P )8,000 P "0,000
.anuar*=
Collections fro+ custo+ers %%),000 $%%),000&
Pa*+ent of liquidation e60enses $ ","00& $ ),)00& $ %,%00& $ %,%00&
Pa*+ent of liabilities $ 8,000& $ 8,000&
Balances P 88,600 P #9,000 P 9,000 P 9,000 P 6,000 P "#,800 P )6,900 P 8,900
Pa*+ent to 0artners $see schedule& $ %6,000& $ 9,000& $ #,000&
Balances P #),600 P #9,000 P 9,000 , P 6,000 P "#,800 P )6,900 P %,900
;ebruar*=
Collections fro+ custo+ers 6,000 $ 6,000&
Pa*+ent of liquidation e60enses $ ),800& $ %,"00& $ #00& $ #00&
Pa*+ent of liabilities ( dist1 of /ain $8,000& $ 9,000& !00 )!0 )!0
Balances P 6#,800 P ",000 , , P 6,000 P "6,900 P )6,"!0 P %,"!0
Pa*+ent to 0artners $see schedule& $ %9,800& $ 6,000& $ %,"00& $ ,#00& $ 8,#00&
Balances P "8,000 P ",000 , , , P "!,!00 P )),#!0 P )),#!0
?arch=
Collections fro+ custo+ers ( dist1 of
loss
!,000 $ ",000& $ ",000& $ ),000& $ ),000&
Pa*+ent of liquidation e60enses $ ",000& $ ),000& $ %,000& $ %,000&
Pa*+ent to 0artners P$ #9,000& , , , , P 9,!00 P %9,#!0 P %9,#!0
Chapter 3 Partnership Liquidation
Suggested Answers page
Problem 3 -!
7equire+ent 4o % 4eri, Ordan and Pacia
Cash Priorit* Pro/ra+
.anuar* %, )008


4eri Ordan Pacia 4eri Ordan Pacia
Ca0ital balances before liquidation P !0,000 P )8,000 P "0,000
Add Loan balances 6,000 9,000
Total 0artners@ interest P !6,000 P )8,000 P "9,000
Profit and loss ratio !0A )!A )!A
Loss absor0tion balance P%%),000 P%%),000 P%96,000
allocation I , Cash to Pacia reducin/ LAB to an a+ount re0orted
for 4eri and Ordan1 7eduction of P8",000 requires 0a*+ent
of )!A of P 8",000 $ 8",000& BBBBBBB BBBBBBB P )%,000
Balances P%%),000 P%%),000 P%%),000 ,,,,,,,, ,,,,,,,,, P )%,000
Allocation II , ;urther cash distributions +a* be +ade in the 0rofit and loss raio
'CC28DL2 O; CA'C 8I'T7IBDTIO4=
A+ount 4eri Ordan Pacia
.anuar*= Cash a-ailable P %6,000
Allocation I=
Pa*able to Pacia %6,000 , ,,,,,,,,, P %6,000
;ebruar*= Cash a-ailable P %9,800
Allocation I=
Pa*able to Pacia !,000 P !,000
Allocation II
Pa*able accordin/
to P ( L ratio P %",800 P #,"00 P ,#00 ,#00
, P #,"00 P ,#00 P 8,#00
Chapter 3 Partnership Liquidation
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Problem 3 - 7
7equire+ent
Tabora, Dreta and Veloso
'tate+ent of Liquidation
.anuar* % to A0ril 0, )008
Other L O A 4 C A P I T A L
Cash Assets Tabora Dreta Veloso Tabora Dreta Veloso
Balances before liquidation , P 8,000 P "!,000 P 0,000 P %,000 P %)0,000 P 90,000 P "0,000
.anuar*=
'ale of assets %!,000 $ %!,000&
Pa*+ent to 0artners $%!,000& $%!,000&
Balances , P ),000 P "!,000 P%!,000 P %,000 P %)0,000 P 90,000 P "0,000
;ebruar*=
'ale of assets "0,000 $ "0,000&
Pa*+ent to 0artners $ "0,000& $ )%,)!0& $%!,000& $ ,#!0&
Balances P )8,000 P ),#!0 , P %,000 P %)0,000 P 86,)!0 P "0,000
?arch=
'ale of assets 90,000 $ 90,000&
Pa*+ent to 0artners $ 90,000& $),#!0& $%,000& $ ),!00& $ )8,!0& $ %,"00&
Balances , P %9,000 , , , P 96,!00 P !#,900 P 8,600
A0ril=
'ale of assets ( distribution of loss 0,000 $ %9,000& $ 8%,!00& $ "8,900& $),600&
Balances P 0,000 , , , , P %!,000 P 9,000 P 6,000
Pa*+ent to 0artners $0,000& , , , , P %!,000 P 9,000 P 6,000
Chapter 3 Partnership Liquidation
Suggested Answers page