Use the following information for the next four questions:

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

ASSETS LIABILITIES AND EQUITY

Current assets: Current liabilities:
Cash 160,000 Accrued expenses
Accounts receivable 880,000 Current tax payable
Note receivable 400,000 Accounts payable
Inventory 2,120,000
Prepaid assets 40,000 Noncurrent liabilities:
3,600,000 Note payable (secured by equipment)
Noncurrent assets: Loan payable (secured by land and building)
Land 2,000,000
Building, net 8,000,000 Capital deficiency:
Equipment, net 1,200,000 Share capital
11,200,000 Retained earnings (deficit)
Total assets 14,800,000
Total liabilities and equity

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

Assets pledged to fully secured creditors 10,400,000

Assets pledged to partially secured creditors 800,000
Free assets 2,908,800
Total realizable assets 14,108,800
Fully secured liabilities 8,060,000
Unsecured liabilites with priority 1,620,000
Partially secured liabilities (secured portion) 800,000
Net free assets 3,628,800
Total unsecured liabilities
Partially secured liabilities (unsecured portion) 400,000
Unsecured liabilities without priority 4,784,000 5,184,000
Estimated percentage recovery 70.00%

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.

The following were the actual transactions during the period:

a.       Only ₱660,000 have been collected on the accounts receivable; the remaining balance was written-off.
b.       Only 90% of the note receivable was collected; the remaining balance was written-off. The interest was collected as exp
c.       Half of the inventory was sold for ₱1,200,000. Actual costs to sell were ₱20,000.
d.      The prepaid assets were written-off.
e.       The land and building were sold for ₱10,400,000.
f.        The equipment was sold for ₱880,000.
g.       Accrued expenses of ₱100,000 were paid. The balance remains outstanding.
h.      The current tax payable was paid in full.
i.        The loan payable and interest payable were paid in full.
j.         The lender accepted ₱880,000 as full payment of the note payable.
k.       Administrative expenses relating to the liquidation amounted to ₱108,000.

Statement of realization and liquidation

Assets to be realized Assets realized
Accounts receivable 880,000 Accounts receivable
Note receivable 400,000 Note receivable
Inventory 2,120,000 Inventory
Prepaid assets 40,000 Land and building
Land 2,000,000 Equipment, net
Building, net 8,000,000 Interest receivable
Equipment, net 1,200,000

Assets acquired Assets not realized

Interest receivable 40,000 Inventory

Liabilities liquidated Liabilities to be liquidated

Accrued expenses 100,000 Accrued expenses
Current tax payable 1,400,000 Current tax payable
Loan payable (secured by land and b 8,000,000 Accounts payable
Note payable (secured by equipmen 880,000 Note payable (secured by equipment)
Interest payable 60,000 Loan payable (secured by land and buildi

Liabilities not liquidated Liabilities assumed

Accrued expenses 784,000 Interest payable
Accounts payable 4,000,000

Supplementary expenses Supplementary credits

Liquidation costs 108,000

30,012,000

Opening journal entry:

Cash 160,000
Accounts receivable 880,000
Note receivable 400,000
Inventory 2,120,000
Prepaid assets 40,000
Land 2,000,000
Building, net 8,000,000
Equipment, net 1,200,000
Estate deficit 684,000
Accrued expenses 884,000
Current tax payable 1,400,000
Accounts payable 4,000,000
Note payable 1,200,000
Loan payable 8,000,000
terix Co.’s statement of financial position

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.

terest was collected as expected.

 660,000
360,000
1,180,000
10,400,000
880,000
40,000

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?

Cash NCA Liabilities P to A P to B

BBL - 80,000 15,000 10,000 17,000
Soncadol 15,000 - 40,000
Balances 15,000 40,000 15,000 10,000 17,000

Computation for safe payment

A B
Total Interest 10,000 30,000
Total possible loss 32,000 8,000
Balances - 22,000 22,000
APL 22,000 - 22,000
Cash paid 0 0

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

Accounts payable 120,000

Payable to B 80,000
A, Capital (20%) 400,000
B, Capital (30%) 600,000
C, Capital (50%) 800,000
Total 2,000,000

Information on the conversion of non-cash assets is as follows:

·         ₱40,000 was collected on accounts receivable; the balance is uncollectible.
·         ₱20,000 was received for the entire inventory.
·         The equipment was sold for ₱200,000.
·         ₱8,000 liquidation expenses were paid.
·         ₱108,000 was paid to outside creditors, after offset of a ₱12,000 credit memorandum received on January 2, 20x1.
·         All of the partners are personally solvent.

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

Cash Distribution Program

A B C A B
BBL 400,000 680,000 800,000
Divide by 20% 30% 50%
LAA 2,000,000 2,266,667 1,600,000
Priority 1 - 266,667 80,000
2,000,000 2,000,000 1,600,000
Priority 2 - 400,000 - 400,000 80,000 120,000
1,600,000 1,600,000 1,600,000

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?

Cash NCA AP Payable to B A, Capital

BBL 80,000 1,920,000 120,000 80,000 320,000
Soncadol 240,000 - 520,000 - 56,000
Balances 320,000 1,400,000 120,000 80,000 264,000
Expenses - 80,000 - 16,000
Balances 240,000 1,400,000 120,000 80,000 248,000

Computation for safe payment Period 1

A, Capital B, Capital C, Capital
Total Int. 248,000 572,000 700,000
TPL 280,000 420,000 700,000
Balances - 32,000 152,000 -
APL 32,000 - 32,000
Interest paid - 120,000 -

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?

Cash distribution program

A B C A
BBL 240,000 170,000 100,000
Divide by: 50% 30% 20%
LAA 480,000 566,667 500,000
Priority 1 - 66,667
480,000 500,000 500,000
Priority 2 - 20,000 - 20,000
Priority 1 : B 20,000
Distrubuted cash 12,000
owing information:

as cash becomes available. In the first sale,

cash distribution?

A, Capital B, Capital
20,000 18,000
- 20,000 - 5,000
- 13,000

following information was made available:

received on January 2, 20x1.

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

al balances were ₱400,000 and ₱800,000,

artnership had ₱80,000 cash and ₱120,000
ent but B is insolvent.
 1,240,000
760,000
112,000

ate their partnership. After all the non-cash

, the partners had ₱720,000 to distribute

1,320,000
800,000
608,000

nstallment basis. Distributions to partners

The cost of disposal was ₱80,000. All of the
pital account?

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:

were ₱12,000 and ₱30,000, respectively.

B C

20,000.0

6,000 4,000