Problem 8:

The assets and equities of the Dobby Partnership at the end of its fiscal year on Oct. 31, 2013 are as
follows:

Assets Liabilities and Equity

Cash P 75,000 Liabilities P 250,000
Receivables – net 100,000 Loan from G 50,000
Inventory 200,000 E, Capital (30%) 225,000
Plant assets – net 350,000 F, Capital (50%) 150,000
Loan to F 25,000 G, Capital (20%) 75,000
P 750,000 P 750,000

The partners decide to liquidate the partnership. They estimate that the non cash assets other than the
loan to F can be converted into P 500,000 cash over the two-month period ending December 31, 2013.
Cash is to be distributed to the appropriate parties as it becomes available during the liquidation
process.

Questions to answer:
1. Who among the partners is the most vulnerable to partnership losses on liquidation?
2. Assuming that P 325,000 was realized from the initial sale of assets, How much did G
received?
3. Assuming that a total amount of P 37,500 is available for distribution to partners after all non
partner liabilities are paid, How much did E received?
4. Assuming that E received a total of P 180,000, how much must have been received by G?
5. Assuming that F received a total of P 180,000, how much must have been received by E?
6. Using the information in # 25, How much is the total cash distributed?
7. Using the information in # 22, and the final sale of assets realized P 220,000, How much cash
did F received?
8. Using the information in # 22 & 27, Compute for the total cash received by E throughout the
liquidation.