Professional Documents
Culture Documents
1. d
JJ CC TT Total
2. a
Peter Paul Mary Total
Capital balances 300,000 350,00 400,000 1,050,00
0 0
Loss on sale of assets
(475,000 – 600,000) – (50,000 (25,000 (125,000
4:4:2 ( 50,000 ) ) )
)
250,000 300,00 375,000 925,000
0
Possible loss for unrealized
assets
P1,000,000 – P600,000 = 160,000 160,00 80,000 400,000
400,000 0
90,000 140,00 295,000 525,000
0
3. d
4. d AA BB CC
Capital balances 37,00 65,00 48,00
0 0 0
Divided by: Profit and loss 40 40% 2
ratio % 0%
Loss absorption power 92,50 162,50 240,00
0 0 0
Loss to reduce CC to BB:
(77,500 x .20 = 15,500) 77,500
6. a If all partners received cash after the second sale, then the remaining
12,000 is distributed in the loss ratio.
7. b
A B C
Total
Capital before realization 37,00 65,000 48,00 150,00
0 0 0
Loss on sale (2:2:1); [90 – 50] (16,00 ( 16,00 ( 8,000) (40,000
0) 0) )
21,00 49,00 40,000 110,00
0 0 0
Possible loss P90,000, unrealized (36,00 (36,00 (18,000) 90,00
NCA 0) 0) 0
(15,000) 13,000 22,000
20,000
Possible insolvency loss (2:1) 15,000 (10,000) ( 5,000)
0
3,000 17,000
8. b
A B C
Total
Capital before realization 37,00 65,000 48,00 150,00
0 0 0
Loss on sale (2:2:1); [90 – 50] (16,00 ( 16,00 ( 8,000) (40,000
0) 0) )
21,00 49,00 40,000 110,00
0 0 0
Possible loss P90,000, unrealized
NCA (37,200 (37,20 (18,600) 93,00
plus P3,000 = P93,000 ) 0) 0
(16,200) 11,800 21,400
17,000
Possible insolvency loss (2:1) 16,200 (10,800) ( 5,400)
0
1,000 16,000
17,000
9. A AE BT KT
Profit and loss ratio 40% 30% 30%
Capital balances (40,000) (180,000) (30,000)
Loss of P100,000 40,000 30,000 30,000
Remaining equities -0- (150,000) -0-
AE will receive nothing; the entire P150,000 will be paid to BT.
10. c
11. d
Dennis Lily Total
Capital before realization 120,00 80,000 200,00
0 0
Reduction in capital (3:2) ( 84,000 ( 56,000) (140,000
) )
Payment to partners 36,000 24,000 60,000
*
*Payment to partners:
Cash, beginning………………………………………………………………………………P100,000
Proceeds……………………………………………………………………………………….. 60,000
Payment of liabilities – to be conservative – it should be in full……………………..
( 100,000)
Payment to partners…………………………………………………………………………..P 60,000
12. d
Dennis Lily Total__
Capital before realization – refer to no. 11 84,000 56,000 140,00
0
Reduction in capital (3:2) (78,000) ( 52,000) (130,000
)
Payment to partners 6,000 4,000 10,000
*
*since cash was fully distributed last month, only the proceeds of P10,000 for the second
remains to be distributed.
13. c
14. a
CC DD EE Total
Profit and loss ratio 5/10 3/10 2/10 10/10
Beginning capital 80,000 90,000 70,000 240,00
0
Actual loss on assets (5:3:2) (15,000 (9,000) (6,000 ( 30,00
) ) 0)
65,00 81,000 64,000 210,00
0 0
Possible loss – unrealized ( 50,00 (30,000) (20,000 ( 20,00
NCA 0) ) 0)
Safe payments 15,000 51,00 44,000 190,00
0 0
15. c
X Y Z
Capital before 130,000 130,000 100,00
realization 0
Divided by: 50% 30 20
% %
Loss absorption abilities 260,00 260,00 500,000
0 0
16. a
The loan payable to AA has the same legal status as the
partnership’s other liabilities. After payment of the loan, then any
available cash can be distributed to the partners using the safe
payments computations.
17. a
D R N J
Capital balances 72,00 32,00 52,00 24,00
0 0 0 0
Divided by: Profit and loss 40 20% 2 2
ratio % 0% 0%
Loss absorption power 180,00 160,00 260,00 120,00
0 0 0 0
Loss to reduce N to D:
(80,000 x .20 = 16,000) 80,000 ____0
Note:
1. Regardless there is a forthcoming contribution to be made by Sandy, it is assumed that the P10,000 deficit
may
not be recovered for purposes of distribution of cash.
2. The P13,382 cannot be distributed in accordance with profit and loss ratio for reason that the capital
balances of Harding and Jones is not the same with the P&L ratio (H: 20/42 =48%; J: 22/42 = 52%)
22. b –liabilities should be paid first, then the balance of P30,000 should be given to Able
since he is the one entitled to the first priority.
INTERESTS
PAYMENTS______
A B C A B C
Total
Balances before realization
Loans………………….. P 20,000
Capital………………... 70,000 P 30,000 P 50,000
Total interests………... P 90,000 P 30,000 P 50,000
Divided by: P&L ratio………… 1/3 1/3 1/3
Loss absorption ability……….. P270,000 P 90,000 P150,000
Priority I…………………………. 120,000 - _______ P 40,000
P40,000
P150,000 P90,000 P150,000
Priority II………………………… 60,000 0 60,000 20,000 0 P20,000
40,000
P 90,000 P 90,000 P 90,000 P 60,000 P 0 P20,000
P80,000
23. d
A B C
Total
Capital before realization 70,00 30,000 50,00 150,00
0 0 0
Loan 20,00 ______ ______ 20,00
0 0
Total interests 90,00 30,00 50,000 170,00
0 0 0
Loss on sale (240,000 – 195,000) (15,00 ( 15,00 (15,000) (45,000
0) 0) )
75,000 15,000 35,000 125,00
0
Payment of loans to partner (20,000 ______ _____ (20,000
) )
55,000 15,000 35,000
105,000
Asset received ______ ______ (30,000)
(30,000)
Payment to partners after payment of loan 55,000 15,000 5,000
75,000
Note: The requirement is payment to partners after outside creditors and loans to partners had been paid,
therefore, the payment to partners is in so far as capital is concerned.
24. a
D E F
Capital balances 40,000 90,000 30,000
Less: Machine, at fair value ______ (35,000) ______
Capital balances 40,000 55,000 30,000
Divided by: Profit and loss ratio 1/3 1/3 1/3
Loss absorption power 120,000 165,000 90,000
Loss to reduce E to D:
(45,000 x 1/3 = 15,000) (45,000) ____0
Balances 120,000 120,000 90,000
25. c
K M B J
Capital balances 59,00 39,00 34,00 34,00
0 0 0 0
Divided by: Profit and loss 40 30% 1 2
ratio % 0% 0%
Loss absorption power 147,50 130,00 340,00 170,00
0 0 0 0
Loss to reduce CC to BB:
(170,000 x .10 = 17,000) 170,000 ____0
26. c
C P H M
Capital balances 60,00 27,00 43,00 20,00
0 0 0 0
Divided by: Profit and loss 40 30% 2 1
ratio % 0% 0%
Loss absorption power 150,00 90,00 215,00 200,00
0 0 0 0
Loss to reduce CC to BB:
(15,000 x .20 = 3,000) 15,000 ____0
27. c - the P16,000 available cash can be distributed but should be done under the
assumption that all deficit balances will be total losses. After offsetting JJ loan, the two
deficits total P4,000. FF and RR, the two partners with positive capital balances, share
profits in a 30:20 relationship (the equivalent of a 60%:40% ratio). FF would absorb P2,400
of the potential loss with RR being allocated P1,600. The remaining capital balances
(P10,600 and P5,400) are safe capital balances and those amounts can be immediately
distributed.
or, alternatively:
W J F R
Capital balances (2,00 (5,000 13,00 7,00
0) ) 0 0
Loan ______ 3,00 ______ __
0 _
Total interests (2,000) (2,000 13,00 7,00
) 0 0
Potential insolvency loss (3:2) 2,00 2,000 ( 2,40 (1,600
0 0) )
10,60 5,40
0 0
28. b
A B C Total
Capital balances (5,00 18,00 6,00 19,00
0) 0 0 0
Potential loss from A deficit (5:3) 5,00 (3,125) (1,87
0 5) 0
14,875 4,125 19,00
0
Loss to reduce H and J:
(5:3) (8,750 (5,25 (14,000)
) 0)
6,125 (1,125) 5,00
0
Possible insolvency loss ( 1,125) 1,125
0
5,000
33. d
Cash, beginning P 12,000
Add (deduct):
Proceeds from sale of certain assets 32,000
Liquidation expenses paid ( 1,000)
Payment of liabilities ( 5,400)
Payment to partners (refer to No. 30) ( 20,000)
Cash withheld P 17,600
34. d
Priority
Creditors Mattews Norell Reams Total
First P300,000………. P300,000 P 3 00,000
Next P80,000 (7:3)… P56,000 P24,000 80,000
Next P70,000 (3:4)… 30,000 P40,000 70,000
Remainder*……….. 22,000 34,000 44,000 100,000
P300,000 P108,000 P 58,000 P84,000 P550,000
(d)
INTERESTS PAYMENTS______
P Q R P Q R Total
Balances before realization
Loans………………….. P 6,000 P(10,000)
Capital………………... 24,000 P36,000 60,000
Total interests………... P30,000 P36,000 P50,000
Divided by: P&L ratio………… 3/10 3/10 4/10
Loss absorption abilities…….. P100,000 P120,000 P125,000
Priority I…………………………. - - (5,000) P 2,000 P
2,000
P100,000 P120,000 P120,000
Priority II………………………… - (20,000) (20,000) P6,000 8,000
14,000 (d)
P100,000 P100,000 P100,000 P – P6,000 P10,000
P16,000
35. d
Priority
Creditors Mattews Norell Reams Total
First P300,000………. P300,000 P300,000
Next P80,000 (7:3)… P56,000 P24,000 80,000
Next P70,000 (3:4)… 30,000 P40,000 70,000
Remainder*……….. 22,000 34,000 44,000 100,000
P300,000 P108,000 P58,000 P84,000 P550,000
(d)