ECQ Take-home Assignment 3

Acctg 2: Accounting for Partnership and Corporation

Problem 1: Lump-sum Liqudation

Escareal, Acosta and Lopez are liquidating their business. They share profits and losses in a 2:3:1 ratio,
respectively, and currently have capital balances of ₱300,000, ₱210,000 and ₱390,000 respectively. In
addition, the partnership has ₱150,000 in cash, ₱250,000 in accounts payable, and ₱1,000,000 in non-
cash assets. Escareal and Lopez are personally solvent, but Acosta is not. Assuming that the noncash
assets are sold for ₱460,000. Prepare a statement of partnership liquidation and the liquidation journal
entries.

Problem 2: Installment Liquidation

Partners Lim, Pe and Sy share profits and losses in the ratio of 5:3:2. The partners decided to liquidate
the partnership. Their statement of financial position prior to liquidation is:

Assets Liabilities and Capital

Cash 400,000 Liabilities 600,000
Other Assets 2,100,000 Lim, Loan 80,000
Lim, Capital 400,000
Pe, Capital 720,000
Sy, Capital 700,000
Total 2,500,000 Total 2,500,000

The partnership is to be liquidated by installment. The first sale of non-cash assets costing ₱1,200,000
realized by ₱900,000. Liquidation expenses paid amounted to ₱20,000.

Prepare a statement of partnership liquidation, schedule of safe payments and liquidation journal
entries.