SEATWORK # 5

Problems on Liquidation:

A. Below is the Statement of Financial Position of KAM Partnership:

ASSETS LIABILITIES & EQUITY

Cash P15,000 Accounts Payable P115,000
Accounts Receivable 80,000 Loans from M 30,000
Allowance for D/A (5,000) Kaye, Capital (3/6) 105,000
Loans to A 10,000 Anne, Capital (2/6) 50,000
Merchandise Inventory 195,000 Mane, Capital (1/6) 70,000
Equipment 75,000

On October 31, 2020, the partners dissolved and liquidated the partnership. The non-cash assets were
sold for a lump-sum amount of P350,000. Prepare a Statement of Liquidation and journalize the entries.

B. On January 1, 2020, partners Ali, Bob and Bon of ABB Co. decided to liquidate its business due
to migration to another country of the partners. As of Dec. 31, 2019, the Post-Closing Trial
Balance of the business showed the following balances:

ABB Company
Post-Closing Trial Balance
December 31, 2019

Debit Credit
Cash P105,000
Accounts Receivable 450,000
Merchandise Inventory 580,000
Equipment 205,000
Accounts Payable 540,000
Loans Payable to Ali 105,000
Ali, Capital 220,000
Bob, Capital 235,000
Bon, Capital 240,000

Total P1,340,000 P1,340,000

Assume non-cash assets were realized as follows:

 January 15, 2020 Accounts receivable were all
realized and collected
February 15, 2020 The merchandise inventory were
sold for only 60% of its book
value.
March 20, 2020 The remaining non-cash asset
(equipment) was sold for its
salvage value of P25,000
March 30,2020 The realization of non-cash
assets were fully completed as
well as the liquidation process
which have incurred total
expenses including legal fees of
P10,000
The partners profit sharing ratio is 4:4:2 and their personal
Net Worth were as follows:
Assets Liabilities
Ali P1,500,000 P 850,000
Bob 1,380,000 1,450,000
Bon 1,050,000 1,250,000

REQUIRED:
1. Statement of Liquidation with Schedule of Safe payments
2. Statement of Liquidation with Cash Priority Program
3. Journalize entries to support the statement of liquidation