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Afar1 Exercises 2
Afar1 Exercises 2
Andrix Asterix Co. has filed for voluntary insolvency and is about to liquidate its business. Andrix Asterix Co.’s statement of fina
immediately prior to the liquidation process is shown below:
Andrix Asterix Co.
Statement of financial position
As of December 31, 20x0
Additional information:
The following were determined before the commencement of the liquidation process:
a. Only 76% of the accounts receivable is collectible.
b. The note receivable is fully collectible and, in addition, interest of ₱40,000 is expected to be collected.
c. The inventory has an estimated selling price of ₱1,680,000 and estimated costs to sell of ₱40,000.
d. The prepaid assets are non-refundable.
e. The land and building have fair values of ₱8,000,000 and ₱3,200,000, respectively. However, Andrix Asterix Co. expects t
f. The equipment is expected to be sold at a net selling price of ₱800,000.
g. Liquidation costs of ₱120,000 are expected to be incurred.
h. The accrued expenses include accrued salaries of ₱100,000.
i. Interest of ₱60,000 is expected to be paid on the loan.
j. All the other liabilities are stated at their expected net settlement amounts.
APTFSC APTPSC FA
Cash 160,000
Accounts receivable 668,800
Note receivable 440,000
Inventory 1,640,000
Land
10,400,000
Building, net
Equipment, net 800,000
TOTAL 10,400,000 800,000 2,908,800
FSL PSL UL with P UL without
Liquidation costs 120,000
Accrued salaries 100,000
Accrued expenses 784,000
Current tax payable 1,400,000
Accounts payable 4,000,000
Note payable 1,200,000
Loan payable 8,060,000
TOTAL 8,060,000 1,200,000 1,620,000 4,784,000
Andrix Co.’s liquidation was entrusted to a receiver. The receiver identified the following before the start of the liquidation pro
a. Liquidation costs of ₱120,000 are expected to be incurred during the winding up of Andrix Co.’s business affairs.
b. Interest of ₱40,000 is expected to be collected on the note receivable.
c. Interest of ₱60,000 is expected to be paid on the loan payable.
30,012,000
884,000
1,400,000
4,000,000
6,284,000
1,200,000
8,000,000
9,200,000
2,000,000
-2,684,000
-684,000
14,800,000
Andrix Asterix Co. expects to sell both assets at a single price of ₱10,400,000. Costs to sell are negligible because the prospective buyer ag
e start of the liquidation process:
.’s business affairs.
1,060,000
884,000
1,400,000
4,000,000
ecured by equipment) 1,200,000
ecured by land and buildi 8,000,000
60,000
30,124,000
112,000
ause the prospective buyer agrees to shoulder all costs relating to the transfer of the property.
1. A and B decided to liquidate their partnership. The partnership’s records show the following information:
Cash 0
Non-cash assets 80,000
Total assets 80,000
Liabilities 15,000
Loan payable to Partner A 10,000
Loan payable to Partner B 17,000
A, capital (80%) 20,000
B, capital (20%) 18,000
Total liabilities and equity 80,000
The non-cash assets are to be sold in installments and the partners’ claims are to be settled as cash becomes available. In the
half of the non-cash assets were sold for ₱15,000. How much did A and B receive in the first cash distribution?
1. On January 1, 20x1, the partners of ABC Co. decided to liquidate their partnership. The following information was made
CA Realized
Cash 80,000 -
Accounts receivable 240,000 40,000
Inventory 480,000 20,000
Equipment 1,200,000 200,000
Total 2,000,000 260,000
How much did B receive from the settlement of his interest in the partnership?
20%
Cash NCA AP Payable to B A, Capital
BBL 80,000 1,920,000 120,000 80,000 400,000
Soncadol 260,000 -1,920,000 - 332,000
Balances 340,000 0 120,000 80,000 68,000
Liquidation Exp - 8,000 - 1,600
Balances 332,000 - 120,000 80,000 66,400
Pmt to OC - 108,000 - 120,000 2,400
Balances 224,000 - - 80,000 68,800
Absorption - 11,200
Balances 224,000 - - 80,000 57,600
Cash paid - 224,000 - - - 80,000 - 57,600
A B C Total
Cash available 224,000
P#1 80,000 144,000
P#2 57,600 86,400 -
Cash paid 57,600 166,400 - 144,000
On January 1, 20x1, A and B decided to liquidate their partnership. As of this date, their capital balances were ₱400,000 and ₱
respectively. The partners share profits and losses on a 60:40 ratio. Before liquidation, the partnership had ₱80,000 cash and ₱
liabilities. The partnership incurred loss of ₱480,000 on the sale of non-cash assets. A is solvent but B is insolvent.
Cash NCA Liabilities A (60%) B (40%)
Balances 80,000 1,240,000 120,000 400,000 800,000
Soncadol 760,000 - 1,240,000 - 288,000 - 192,000
Balances 840,000 - 120,000 112,000 608,000
Pmt to creditors - 120,000 - 120,000
Balances 720,000 - - 112,000 608,000
Cash paid - 720,000 - - - 112,000 - 608,000
1. How much was the carrying amount of the non-cash assets?
2. How much was the net proceeds from the sale of non-cash assets?
3. How much did A receive from the settlement of his capital balance?
On January 1, 20x1, A and B, who share profits and losses on a 60:40 ratio, decided to liquidate their partnership. After all the
assets of the partnership were sold for ₱760,000 and all the ₱120,000 liabilities were settled, the partners had ₱720,000 to dis
among themselves. A received ₱112,000 in the settlement of his ₱400,000 capital balance.
60% 40%
Cash NCA Liabilities A, Capital B, Capital
BBL 80,000 1,240,000 120,000 400,000 800,000
Soncadol 760,000 - 1,240,000 - 288,000 - 192,000
Balances 840,000 - 120,000 112,000 608,000
PMT to Creditors - 120,000 - 120,000
Balances 720,000 - - 112,000 608,000
Cash paid - 720,000 - 112,000 - 608,000
1. How much was the total assets immediately before liquidation?
2. How much was the beginning capital balance of B?
3. How much did B receive in the settlement of his capital account?
1. On January 1, 20x1, the partners of ABC Co. decided to liquidate their partnership on installment basis. Distributions to p
shall be made as cash becomes available. The following information was made available:
Dr. Cr.
Cash 80,000
Accounts receivable 240,000
Receivable from C 40,000
Inventory 480,000
Equipment 1,200,000
Accounts payable 120,000
Payable to B 80,000
A, Capital (20%) 400,000
A, Drawings 80,000
B, Capital (30%) 600,000
C, Capital (50%) 800,000
C, Drawings 120,000
Totals 2,120,000 2,120,000
During January, non-cash assets with carrying amount of ₱520,000 were sold for ₱240,000. The cost of disposal was ₱80,000.
partners are personally insolvent. How much did B receive in the partial settlement of his capital account?
1. ABC Co. is undergoing liquidation. Information before the start of the liquidation process is as follows:
Cash 10,000 Accounts payable 80,000
Accounts receivable 80,000 Payable to B 20,000
Receivable from A 10,000 A, Capital (50%) 250,000
Inventory 180,000 B, Capital (30%) 150,000
Equipment, net 320,000 C, Capital (20%) 100,000
Total 600,000 Total Liab. & Equity 600,000
The total cash distributed to the partners after the first and second sales of noncash assets were ₱12,000 and ₱30,000, respec
How much cash did B receive in the first cash distribution?
A, Capital B, Capital
20,000 18,000
- 20,000 - 5,000
- 13,000
30% 50%
B, Capital C, Capital
600,000 800,000
- 498,000 - 830,000
102,000 -30,000
- 2,400 - 4,000
99,600 - 34,000
3,600 6,000
103,200 - 28,000
- 16,800 28,000
86,400 -
- 86,400 -
C Total
80,000
200,000
1,320,000
800,000
608,000
B, Capital C, Capital
600,000 880,000
- 84,000 - 140,000
516,000 740,000
- 24,000 - 40,000
492,000 700,000
ss is as follows:
B C
20,000.0
6,000 4,000