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Q1. Larry. Marsha, and Natalie are partners in a company that is being liquidated. They
share profits and losses 55 percent, 20 percent, and 25 percent, respectively. When the
liquidation begins they have capital account balances of P108,000, P62,000, and
P56,000, respectively. The partnership just sold equipment with a historical cost and
accumulated depreciation of P25,000 and P18,000, respectively for P10,000. What is the
balance in Larry's capital account after the transaction is completed?
a. P106,350 c. P109,650
b. P108,000 d. P110,000
Answer: (c)
P108,000 + (P1,650)
P109,650
Q2. Donald, Marion, and Jeff are liquidating their partnership. At the date the liquidation
begins Donald, Marion, and Jeff have capital account balances of P147,000, P260,000,
and P285,000, respectively and the partners share profits and losses 35%, 25%, and
40%, respectively. In addition, the partnership has a P28,000 Notes Payable to Donald
and a P15,000 Notes Receivable from Jeff. When the liquidation begins, what is the loss
absorption power with respect to Donald?
a. P 80,000 c. P420,000
b. P340,000 d. P500,000
Answer: (d)
(P175,000) / (.35)
P500,000