139. The share in the partnership’s 20x5 income to the four original partners (as a group) .

a. P0 c. P25,000
b. P20,000 d. P45,400

(d)
Original partners New partners Total
Gain on real state sold
Price to 1/1/x5 P25,000 25,000
After 1/1/x5 20,000 P5,000 25,000
Interest income 400 100 500
Total income allocation P45,400 5,100 50,500

140. In January 20x6the partners sell all partnerships real estate for P925,000 and dissolve the
partnership. How much will be the new partner (NP); and the original partners as a group(OP),
each receive?
a. NP, 183,350: OP,757,400 c. NP, 183,350: OP,508,400
b. NP, 189,350: OP, 508,400 d. NP,189,350: OP, 757,400(d)

Total gain on sale of real state

Selling price P925,000
Cost (P400,000 + P370,000 – P100,000) 670,000
Total gain P255,000
Gain prior to 1/1/x5
Remaining fair value(P650,000 – P125,000) P525,000
Remaining cost(P400,000 – P100,000) 300,000
Pre – 1/1/x5 gain P825,000
Gain after 1/1/x5
Total gain P255,000
Loss pre-1/1/x5 gain
Post-1/1/x5 gain P 30,000
Cash balance of dissolution
Balance -1/1/x5 P 23,000
New partner investment 168,250
All partners investment 50,000
Proceeds from sales of real estate (50,000)
Interest 500
Investment in real estate (370,000)
Balance, 12/31/x5 P 21, 750
Proceeds from sale of real estate P 25,000
Total cash of dissolution
 Original
Partners New Partner Total
Capital , 1/1/x5 P423,000 P423,000
New Partner Investment P168,250 P168,250
All partner investment 40,000 10,000 50,000
20x5 income allocation 45,400 5,100 50,500

Capital , 1/1/x5 P508,400 P183.350 P691,750

Allocation of pre-1/1/x5 gain 225,000 225,000
Allocation of post-1/1/x5gain 24,000 6,000 30,000
Total Distribution to partners P757,400 P189,350 P946,750

141.After all the partnership assets were converted into cash and all available cash was
distributed to creditors . The ledger of the Daniela, Erika and Frealine partnership showed the
following balances .

Debit Credit
Accounts Payable……………………………………… P20,000
Daniela , Capital(40%)…………………………………. P10,000
Erika , Capital(30%)……………………………………. P60,000
Fraline, Capital(30%)………………………………….. P90,000
P90,000 P90,000
Percentages indicated are residual profit and loss sharing ratios. Personal asset and liabilities of
the partners are as follows:
Daniela Erika Fredine

Personal Assets P50,000 P50,000 P100,000

Personal Liabilities P45,000 P40,000 P40,000

The partnerships creditors proceed against Frealine for recovery of their claims , and the partners
settle their claims against each other. How much would Erika receive ?

a.P0 c.P47,143

b.P45,000 d.Cannot be determine

(b)

Daniela Erika Frealine Total

Total interest……………………………10,000 60,000 (70,000) (20,000)
Payment of Liabilities by Frealine…...... 70,000 70,000
Balance…………………………………10,000 60,000 (70,000) -0-
Additional Investment (100,000-
40,000-20,000= 40,000……….. 40,000 40,000
Balances………………………………..10,000 60,000 (30,000) 40,000
Additional Loss if possible
Insolvency (4:3)……………….(17,143) (12,857)30,000 -0-
Balances………………………………. (7,143) 47,143 40,000
Investment…………………………….. 5,000 5,000

Balances………………………………. (2,143) 47,143 45,000

Additional Loss for possible insolvency... 2,143 (2,143) -0-
45,000 45,000

142. The August , Albert and Gerry partnership became insolvent in January 20x5 all the
partners being liquidated as soon as a practicable. In these respect the following information for
the partners has been marshaled .

Capital Balances Personal Assets PersonalLiabilities

August P70,000 P80,000 P40,000
Albert (P60,000) 30,000 50,000
Gerry (P30,000) 70,000 30,000
Total (P20,000)
Assume that residual profits and losses are shared equally among three partners. Based on this
information , Calculate the maximum amount that August can expect to receive from the
partnership liquidation is:
a.P20,000 c.P70,000

b.P40,000 d.P110,000

(a)

August Albert Gerry

Balances before realization ………………………P70,000 (P40,000) (P30,000)

Additional investment…………………………….. 30,000
Balances…………………………………………...70,000 (60,000)
Additional loss ……………………………………(30,000) 60,000 ( 30,000)
Balances …………………………………………..40,000 (30,000)
Additional investment (P70,000 – P30,000 –
P30,000)…………………………………………… 10,000
Balances……………………………………………40,000 (20,000)
Additional loss……………………………………..(20,000)
20,000Balances…………………………………………….20,000

143. Gardo and Gorda formed a partnership on July, 1 20x5 to operate two stores to be manage
by each of them. They invested P30,000 and P20,000 and agreed to share earnings 60% and
40% respectively. All their transactions were for cash and all their subsequent transactions were
handled through their respective bank account as summarized below:

Gardo Gorda

Cash Receipts P79,100 P65,245

Cash Disbursements P62,275 P70,695

On October 31, 20x5 all remaining non-cash assets in the two stores were sold for cash at
P60,000. The partnership was dissolved and cash settlement was affected . In the distribution of
P60,000, Gardo received :

a. P24,000 c.P34,000
b. P26,000 d.P36,000

(b)

Gardo (60%) Gorda(40%) Total

Initial Investments…………………………. P30,000 P20,000 P50,000
Investments(personal disbursements*)……. 62,275 70,695 132,970
Withdrawals(personal receipt)…………….. (79,100) (65,245) (144,345)
Balance before liquidation…………………. P13,175 P25,450 38,675
Gain on realization(P60,000-P36,625)………..P12,625 8,550 21, 375
Balances before payment to partners………. P26,000 P34,000 60,000
Payment to partner…………………………. (26,000) (34,000) (60,000)

Since personal disbursement were made by partners in behalf on the partnership, such transaction
were treated they are in investment . To analyze further , the following partnership entry would
be as follows:

Purchase/Expenses (or any appropriate account)……………… xxx

Capital (personal cash),,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, xxx
For personal receipt, (as if withdrawals) , the entry would be.
 Capital /Drawings (personal Cash)……………………………. Xxx
Sales(or any appropriate account)…………………….. xxx

144. PP , QQ and RR partners to a firm have capital balances of , P11,200 , P13,000 and P5800
respectively and share profits in the ratio of 4:2:1 , prepare a schedule showing how available
cash will be given to the partners as it becomes available.Who among the partners shall be paid
first with and available cash of P1,400?

a. QQ c.PP
b. No one d.RR

(a) The cash payment priority program is èresented as foloows to determine the distribution of
P1,400
INTERESTS PAYMENTS_____
PP QQ RR PP QQ RR Total
Balances before realization P11,200 P13,000 5,000
Divided by:P & Lratio 4/7__ 2/7 1/7__
Loss absorption ability…. P19,600 P45,500 P40,600
Priority 1…………………… (4,900)________ P1,400 1,400
P19,600 P40,600 P40,600
Priority II………………… -- (21,000) (21,000) -- 6,000 3,000 9,000

P19,600 P19,600P19,600 P- 7,400 3,000 10.400

Cash Distribution Available PP QQ RR
Cash payment to partner………… P1400
Less Priority I…………………… (1,400) P1,400(a)

145. The PQR partnership is being dissolved . All liabilities have been paid and the remaining
assets are being realized gradually. The equity of the partners is as follows:

Partners Account Loans to(from) Partnership Profit and loss ratio

P P24,000 6,000 3
Q 36,000 3
R 60,000 (10,000) 4

The second cash payment to any partner(s) under a program of priorities shall be made thus:

a. To R, P2,000 c. To R, P8,000
b. To Q, P6,000 d. to Q, P6,000 and R, P8,000

(d)
INTERESTS ___ PAYMENT___________
 P Q R P Q R Total
Balances before realization
Loans…………….. P 6,000 P10,000
Capital……………. P24,000 P36,000 60,000

Total Interest…….. P 30,000 P36,000 50,000

Divided by, P&L ratio…… 3/10 3/10 4/10
Loss absorption Ability….. P100,000 P120,000 P125,000
Priority I…………………. -- -- (5,000) P2,000 P2,000
P100,000 P120,00 P120,000
Priority II………………… -- ( 20,000) ( 20,000) P4,000 P8,000 P14,000
P100,000 P100,000 P100,000 P-- P4,000 P10,000 P16,000

146. A cash distribution plan (payment priority program) for the Matthew , Norell and Reams
partnership appears below:

Priority
Creditors Matthew Norell Reams
First P300,000 100%
Next P80,000 70% 30%
Next P70,000 3/7 4/7
Remainder 22% 34% 44%

If P550,000 of cash is to be distributed , how much will be received by the creditors , Matthew ,
Norell and Reams ?

Priority Creditors Matthew Norell Reams

a. P0 P0 P0 P0
b. 0 121,000 187,000 242,000
c. 300,000 55,000 85,000 110,000
d. 300,000 108,000 58,000 84,000

(a)
 Priority
Creditors Matthews Norell Reams Total
First P300,000…………….. P300,000 P300,000
Next P 80,000 (7:3)……… P 56,000 P24,000 80,000
Next P 70,000 (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)

*P550,000 - P300,000 - P80,000 - P70,000 = P100,000

147. Scott, Joe and Ed are liquidating their partnership. At the date the liquidation begins. Scott ,
Joe and Ed have Capital account balances of P162,000 , P192,500 and P215,000 respectively.
And their partners share profits and losses 40% , 35%, and 25% respectively. In addition ,
partnership has P36,000 notes payable to Scott and the P20,000 notes receivable from Ed. When
the liquidation begins ,what is the loss absorption power with respect to Joe.

a. P192,500 c. P550,000

b.P67,375 d. P770,000C

(c) - ( P 192,500 / .35)

148. The assets and Equities of the Queen , Reed , and Stac partnership at the end of its fiscal
year. On October 31, 20x5 are as follows:

Assets Liabilities and Equity

Cash………………P15,000
Receivables-Net……20,000
Inventory…………..40,000
Plant Assets-Net……70,000
Loans to Reed……….5,000
Total Assets……………….P150,000
Liabilities………………P 50,000
Loans from stac……….... ..10,000
Queen , Capital-30%...........45,000
Reed, Capital-50%.............30,000
Stac,Capital-20% ................15,000
Total Liabilities and Equity……...P150,000
The partners decide to liquidate the partnership. They estimate the noncash assets other than the
loan to Reed, can be converted into P100,000 cash over the two months period ending December
31, 20x5. Cash is to be distributed to the appropriate parties as it becomes available during the
liquidation process. The partner most vulnerable to the partnership losses on liquidation is:
a. Queen c. Reed and Queen equally
b. Reed d. Stac

(b)

Balances before Liquidation……………………… Quen Reed Stac

Loan (to) from ……………………………. P(15,000) P10,000

Capital Balances…………………………. P45,000 30,000 15,000

Total Interests……………………………. P45,000 P 25,000 P25,000

Divided by (Capitalized at) ; P & L ratio………... 30% 50% 20%

Loss absorption abilities/potential……………….. P150,000 P50,000 P125,000

Vulnerability rankings ( 1 most vulnerable)……. 3 1 2

The most vulnerable is the partner with the lowest absorption ability , in order to determine their
vulnerability to possible losses ,the equity of each partner is divided by his or her profit sharing
ratio to identify the maximum loss that a partner could absorb without reducing his or her equity
belowzero.The vulnerability ranks indicate that reed is the most vulnerable to losses because his
equity would be reduced to zero with a total partnership loss on liquidation of P50,000.

149. Using the same information in no. 148, and 65,000 is available for first distribution, it
should be paid to :

Priority

Creditors Queen Reed Stac

a. P60,000 P5,000 P0 P0
b. 60,000 1,500 2,500 1,000
 c. 50,000 5,000 0 0
d. 50,000 12,000 0 0

(d)

Balances before Liquidation…….. Queen Reed Stac Total

Loan (to) from………….. P(5,000) P10,000

Capital Balances………... P45,000 30,000 15,000 ________

Total interests…………… P45,000 P25,000 P25,000 P95,000

Reduction in Equity…………….. (24,000) (40,000) (16,000) (80,000)

Payment to partners……………. P21,000 P(15,000) P9,000 P15,000

Additional Loss(3:2)…………… (9,000) 15,000 6,000 ---

Payment to Partners…………… P12,000 P3,000 P15,000

*Cash available for first distribution…………………………………………… P65,000

Less: Priority creditors………………………………………………………….. 50,000

Payment to partners…………………………………………………………… P15,000