182 Chapter 4 eee apo ts MULTIPLE CHOICES — COMPUTATION AL 4-1: The statement of financial position ofthe Golf Partnership, just before liquidation, isas follows: Cash P20,000 Liabilities 24,000 Non-cash Assets 50,000 Par, capital (50%) 20,000 Boogie, capital (30%) 16,000. Birdie, capital (20%) 10,000 Total _ P70,000 Total - P70,000 The non-cash assets are sold for P10,000 net of liquidation expenses and the liabilities are paid. The remaining cash should be distributed to the partners as follows: Par Boogie Birdie a P o P4,000 P2,000 b. P 2,000 P2,000 2,000 « P 3,000 P1,800 P1,200 @ P15,000 P9,000 P6,000 Use the following information for items 4-2, 4-3, and 4-4, The statement of financial position ofthe PPP partnership, just before liquidation, isas follows: Cash . P 40,000 Liabilities P 70,000 Non-cash Assets 140,000 Ping, capital (60%) 50,000 Pang, capital (20%) 50,000 Pong, capital (20%) 10,000 Total P180,000 Total P180,000 4-2: Ifnoncash assetsare sold for P150,000 and the liabilities are paid, the remaining cash should be distributed to the partners as follows: Ping Pang Pong P44,000 P48,000 P 8,000 P50,000 P50,000 P10,000 P56,000 P52,000 P12,000 P72,000 P24,000 P24,000 RD &RPartnership Liquic 183 43: 4-5: If the non-cash assets are sold for P100,000 and the liabilities are paid, the remaining cash should be distributed to the partners as follows: Ping Pang Pong 20,000 40,000 P 0 P26,000 42,000 P 2,000 42,000 P14,000 P14,000 P50,000 P50,000 P10,000 AOR Ifthe: noncash assets are sold for P70,000 and the liabilities are paid, the: remaining cash should be distributedas follows: paid Ping Pang Pong a. P 5,000 P35,000 P 0 6. P 5;600 P35,200 P 0 c. P 8,000 P 8,000 P.O d. P24,000 P 8,000 P8,000 The following statement of financial position is presented for the partnership of Colt, Mark, and Clock, who share profits and losses in the ratio of 4:3:3, Assets Cash i Other assets Colt, loan Total assets Liability and Equity x Accounts payable 210,000 : Clock, loan yo 30,000 Colt, capital 310,000 Mark, capital - 200,000 Clock, capital 190,000 Total liabilities and capital P940,000 Assume the partners decide to liquidate the partns . If the other assets are ; sold for P700,000, how much of the available cash should be distributed to~ Colt? . 230,000 P238,000 258,000 P310,000 RP SR184 Chapter 4 46: ‘The statement of financial position for the partnership of Jonas, Carlos, and Tomas, whose shares ofprofits and losses are 40,50, and 10 percent, is as follows: Cash P 50,000 Accounts payable P 150,000 Inventory 360,000 Jonas, capital 160,000 Carlos, capital 45,000 Tomas, capital 55,000 Total assets P410,000 Total liabilities and equities 410,000 If the inventory is sold for P300,000, how much should Jonas receive upon liquidation of the partnership? a P 48,000 6. P100,000 c P136,000 d. P160,000 4-7: The following condensed statement of financial position is presented for the partnership of Ariel, Bert, and Cesar, who share, ‘profits and losses in the ratio of 4:3:3, respectively: Cash P100,000 Liabilities P150,000 Other assets 300,000 Aricl, capital 40,000 Bert, capital 180,000 Cesar, capital 30,000 Total 400,000 Total 400,000 The partners agreed to liquidate the partnership after selling the other assets for P200,000. Uponliquidation of the partnership, Ariel should have received? P Oo P40,000 P60,000 --P70,000 _ ROSRPartnership Liquidation. 185 4-8: Noryand Oscar started a partnership some years ago and managed to operate profitably for several years. Recently, however, they lost a substantial legal suit and incurred unexpected losses on accounts receivable and inventories. Asa result, they decided to liquidate. They sold all assets and only P18,000 was available to pay liabilities, which amounted to P33,000. Their capital account balances before the state of liquidation and their profit sharing ratios are shown. below: Capital account.balances Profits-sharing ratio Nory. P23,000 60% Oscar P13,500 40% eer Nory is personally insolvent after paying the unpaid creditors, but Oscar has personal assets in excess of P100,000. In the settlement of partners, how much cash should Nory receive? aP 0 5b. P7,100 c PI,700 4. P7,000 49: On December 31, 2013, the accounting records of the Colors Partnership included the following information: Se Black, drawing (debit balance) P 24,000 White, drawing (debit balance) 9,000 Green, loan 30,000 Black, capital 123,000 » White, capital 100,500 Green, capital 108,000 Total assets amounted to P478,500, including PS2,500 cash, and liabilities totaled P150,000. The partnership was liquidated on December 31, 2013, and White received P83,250 cash pursuant to the liquidation. Black, White, and Green share net income and losses ina 5:3:2 ratio respectively. How much should * Black and Greenreceive upon liquidation of the partnership? @, P59,625 and P106,875, respectively. 5. P59,000 and P106,000, respectively, c& P85,250 and P132,500, respectively. d. P85,250 and P132,500, respectively.186 Chapter 4 — SSS 4-10: Following is the statement of financial position for the Ana, Eva, and Nora Partnership on June 4, 2013: 411: Cash P 6000 Liabilitics P 20,000 Other assets 94000 Eva,loan 4,000 Ana, capital 27,000 Eva, capital 39,000 Nora, capital 10,000 Total P100,000 Total P100,000 The partners share net income and losses as follows: Ana, 40%; Eva, 40%; and Nora, 20%. On June 4, 2008, other assets were sold for P30,700, and P20,500 had to be paid to liquidate the liabilities because of unrecorded claims amounting to P500, Ana and Eva are personally solvent, but Nora’s ersonal liabilities exceed personal assets by P6,000. How much cash should be distributed to partners? Ana Eva Nora va. P1,480 P17,480 Po 4 100 16,100 2,760 c 100 16,100 O° ad 1,480 16,100 0 ‘The accounts of Aries, Leo, and Taurus, who share profits in a 5:3:2 ratio, are as follows on December 31, 2013: Aries, drawing (Dr.) P10,000 Taurus, drawing (Cr.) ; 4,000 - Receivable from Aries (Dr) 6,000 Leo, loan 12,000 Aries, capital 49,500 Leo, capital 37,000 Taurus, capital 32,500 Total assets amount to P176,000, including P53,500 cash. The partnership is liquidated and Taurus ultimately receives P27,500 as his share of cash in final distribution. How much did Aries and Leo receives? Aries Leo a. PI1,000 P35,000 b. = 10,500 34,500, ec 12,000 35,500 d ‘11,000 35,5002artnership Liquidation 187 $12: On June 11,2013, Moly, Nora, and Olga form a partnership investing cash of P15,000, P13,500, and P4,200 respectively. The partners share profits 3:2:2 and on August 30, 2013, they have cash of P1,000, and other assets of P47,500; liabilities‘are P25,600. On this date they decide to go out of business and sell all the assets for P30,000. Olga has personal assets of P1,500 that may, ifnecessary, be used to meet partnership obligations. How much should be distributed to Nora upon liquidation of the partnership? a. P4,000 ' b. P2,040 c. P4,860 a@P oO 4-13: The RST Partnership is in the process of liquidation. The account balances prior toliquidation are given below: Debits Credits Cash P72,000 it ies P40,000 Rita, drawing 10,000 Sara, loan 8,000 Sara, drawing 15,000 Tita, loan 25,000 Tita, drawing 20,000 Rita, capital 49,000 Operating loss. 21,000 Sara, capital 18,000 ‘Loss on realization 12,000 Tita, capital 10,000 ‘The partners share profits in the following ratio: Rita, 1/6; Sara, 2/6; and Tita, 3/ 6.Upon liquidation of the partnership, Rita should have received: aP 0 b. P32,000 ce. P33,500 d@. P35,500 4-14: Following is the statement of financial position of the CPA Partnership before realization ofassets on July 1, 2013: Cash P 10,000 Libilities P 28,000 Accounts receivable 50,000 Carlo, capital 45,000 Inventory 30,000 Pedro, capital 27,000 Equipment 60,000 Andro, capital :,50,000. Total P150,000 Total P150,000188 _ Chapter 4 (No, 4-14: Continued ‘The partners share income 40:40:20, respectively. On July 2, the partnership is liquidated. 60% of the receivables are collected and that inventory is sold for P20,000. Equipment is sold for P30,000. How much is to be distributed to Pedro? a P 3,000 5. P21,000 c. P38,000 a4 P 0 4-15: Mona and Liza are partners with capital balances, Ioan balances and profit and ‘loss ratio as follows: Capital Loan Profit and Loss Balances Balances Ratio Mona ‘'P24,500 P4,000 60% Lisa 15,500 3,500 40% RP SR ‘The partners decide to liquidate the partnership. The firm’s liabilities amounted to P36,000 including partners loan. After realization of assets, cash on hand amounts to P37,500. In the settlementof partners, Mona and Lisa: should receive: Mona Lisa P22,500 P15,000 P 1,500 P 1,000 P 5,400 P 3,600 P28,500 P19,000 4-16: FF, GG, and HH decided to liquidate their partnership on July 31,2013. Their capital balances and profit and loss ratio are as follows: Capital Profit and Loss Balances Ratio FF P100,000 40% GG 120,000 30% HH 40,000 30%189 ~ Pabtnership Eiquidation No. 4-16: Continued 417: 4:18: From January 1, 2013 to July 31, 201 3 the partnership's net loss is P10,000. OnJuly 31,2013 before realization the balance of cash is P50,000 and that of liabilities is P100,000. For FF to receive P80,000 in the settlementof his interest upon liquidation, the non-cash assets must be sold for: a. P260,000 b. P250,000 c. P270;000 d. P200,000 CC, DD, and EE are partners sharing profits and Josses in the ratio of 5:3:2. During the year their investments and withdrawals are as follows: Investment Withdrawals .cC 40,000 P25,000 | DD 35,000, - 12,500. - EE 75,000 12,500. On December 31, 2013, the parmers decided to liquidate the business. After exhausting partnership assets, liabilities of P25,000 remain unpaid. CC is personally insolvent. The gain (loss) on realization and the amount of cash EE will receive upon liquidation are: a. (P25,000), and P3?7,500, respectively. b. (P25,000), and P18,500, respectively. c (P125,000), and P37,500, respectively. | . 4. (P125,000), and P18,500, respectively, | AA, BB, CC, and DD are partners sharing profits in the ratio of 3/21, 4/21, 6/ 21; and 8/21. Their capital balances on December 31, 2013 are as follows: AA P 500 BB 12,500 cc 12,500 DD 4,500 The partners decide to liquidate their firm and they accordingly convert the noncash assets into P11,600 cash. A fter paying liabilities of P1,500, they have P11,100 to divide. What is the gain (loss) on realization?190 Chapter 4 No. 4-18: Continued 4-19: 4-20: a (P11,250) b. P18,900 c. (P18,400) d. (P18,900) LL, MM, and NN are partners with investments and profit and loss ratios of: Investment P&L Ratio LL P50,000 60% MM 7 20,000 20% NN 10,000 20% LL, as the managing partneris tobe allowed a salary of P600 each month. After cight months of opcration, the partners decide to terminate the business. After the sale of partnership assets and payments to creditors, cash of P10,000 is available for distribution to the partners. No salary has yet been paidto LL. All partners are personally solvent. How much would each partner receive? LL MM. ‘NN a. P5,000 P5,000 PO 6. P9,900 P5,040 PO c P6,200 P3,800 PO a P9,920 +P5,040 PO JJ, KK, and LL, each of whom had personal assets well in excess of theirpersonal liabilities, decided to liquidate their partnership on Junc 30, 2013. On this date, the capital, drawing and loan account balances are as follows:” Capital Loans Drawings qu P70,000 P30,000 P10,000(Cr.) KK 60,000 = 10,000 (Dr.) LL 30,000 10,000. - The partners shares profits and losses equally. Liabilities of the parmership on June 30, 2011, exclusive of partners’ loan were equal to 50 percent of the book value of theassets. All the partners agreed thatthe assets of the partnership had to be realized for an amount sufficient to give KK P10,000 cash. How much cash is to be realized from the sale of non-cash assets?Partnership Liquidation “491 No. 4-20: Continued 421; 4-22: @ 250,000 6. P280,000 ¢ 200,000 d. P220,000 NN, 00, and PP form a partnership on July 1, 2012 each investing cash of P25,000. On August 1, 2912, NN was advanced P10,000 by the firm. On September 1, 2012, OO made a P20,000 loan to the firm. Interest is.to be charged on advances to partners and credited on loans by partners at the rate of 6 percent. Business is unsatisfactory and the partners decide to liquidate the firm. PPisallowed special compensation of P2,500 for managing the sale of assets and settlement with creditors. On December 31, 2012, all assets have been sold, outside creditors have beeh paid, and cash of P35,000 is distributed to partners. All partners are personally solvent and final sctement ismade among partners on February 10, 2013. In the final settlement: a. NNshould pay OO and PP, P1,400 each. b. OOand PP should pay NN, P2,800 each. ¢ OO skould pay NN and PP, P2,800 each. d. NNshould pay OO, P1,400. PG, JRand AJ are partners with capital balances and profit and loss ratio as follows: Capital Balances Profit and Loss Ratio PG .P350,000 _ 30% IR 250,000 20% AJ - 350,000 50% Partners agree to dissolve the business and upon liquidation, all of the partnership assets arc sold and sufficient cash is realized to pay all the‘claims except one for P50,000. AJ ispersonally insolvent, but the other two partners are able to meet any indebtedness to the firm. On the partnership claim against the partnership, how much should PG and JR absorb? % PG JR. 40,000 ——P10,000 30,000 —-P20,000 15,000 ——-P35,000 35,000 ~~ PIS,000 RASA192 a Chapter 4 4-23: RM and ST share profits 40: 60, respectively. After realization ofall firmassets, 4-24; ledger accounts show the following balances. * Cash P100,000 - Salary payabletoRM —_-P25,000 Receivable from ST 75,000 RM, capital 475,000 Loss on realization 1,225,000 ST, capital 900,000 Both partners are ‘personally insolvent and unable to contribute to the partnesship. How would the P100,000 cash be distributed ito ) the partners? RM ST P10,000 P90,000 15,000 P85,000 P40,000 P60,000 P90,000 P16,000 RP SR On January 3, 2013 LT, AM, ZP formeda partnership, agrecing to divide profits _ 2:1:1, respectively. On July 31, 2013, with operations going unfavorable, the * Partners decided to dissolved the firm. The following data are available. LT: AM. 2P. Capital contribitions P50,000 P22,500 20,000 Drawings (Dr.) “15,000 . 10,000 _ 10,000 - Netloss, July 31,2013, P30,000 15,000 7,500 7,500 ~ After realization the net asset of the firm is valued at P65,000. In the settlement to partners, how much should be paid to the partners? LT AM Zp P38,750 P14,375 P11,875 P50,000 P20,000 P17,750 P38,750 20,000 PI,875 P 6,250 P 0 P 0 RO SR4-25: 4-26: 193 The partners of AG, BM, CP, and DJ who share profits and losses at 30:30:20:20, respectively, decided to liquidate the partnership. All partnership assets are to be converted into cash. Prior to the liquidation, the condensed statement of financial position is as follows: Cash P 100,000. .- Lisbilities Other assets 1,800,000 BM, loan Dj, loan AG, capital BM, capital CP, capital DJ, capital Total Total The other assets realize P800,000. All partners are solvent and'can contribute any additional cash to cover any deficiency. In the process of liquidation, deficiency(ies) will occur and will require additional investment as follows: a. CP at P7,500. b. DJ and CP for P50,000 and P7,500, respectively. « DJ at P50,000. ad None. On December 31, 2013, the accounting records of Uy, Vi and Wi Partnership included the following ledger account balances: . Receivable from Uy —_P132,000 Uy, Capital P553,500 Loan to Wi 40,500 Vi, Capital 452.500 Salary payable to Vi 135,000 Wi, Capital 486,000 otal assets includes cash amounting to P234,500. The partnership was liquidated ‘on December 31, 2013, and Uy received P351,500 cash pursuant to the liquidation. Uy, Vi and Wi shared net iricome and losses in a 5:3:2 ratio, respectively. Inthe settlement to partners, how much cash is paid to Vi? 2. ~ P545,500 5, PS87,500 a 0 &° 542,000