Problem 7:

When Zee and Dee, partners who share earnings equally, were incapacitated in an airplane accident, a
liquidator was appointed to wind up their business. The accounts showed cash, P 70,000; other assets,
P 220,000; liabilities, P 40,000; Zee’s capital, P 142,000; and Dee’s capital, P 108,000. Because of the
highly specialized nature of the non cash assets, the liquidator anticipated that considerable time would
be required to dispose them. The expenses of liquidating the business are estimated at P 20,000.

Questions to answer:
1. If Zee’s guardian, since Zee is incapacitated, received Zee’s share of P 39,625 from the first
distribution of cash, How much cash was realized from the initial sale of assets?
2. Using the information in # 19, What is the balance of Dee’s capital after the first distribution of
cash?