SYSTEMS PLUS COLLEGE FOUNDATION

COLLEGE OF BUSINESS
A.Y. 2021-2022

ACCOUNTING FOR PARTNERSHIP CORPORATION

Partnership Liquidation
Seatwork

Name: _______________________ Date: ___________________ Yr. & Section:

_________________ Score: __________________

Partnership Liquidation (Lump sum)

1. The partnership Alpha, Beta, and Charlie was liquidated on May 31, 2021, and the
account balances after all noncash assets are converted to cash on July 1, 2021, along
with residual profit and loss ratios, are:

Cash P262,500 Accounts Payable P630,000 Beta, Capital (30%) P315,000 Alpha,
Capital (30%) P472,500 Charlie, Capital (40%) P525,000
Total P1,102,500 Total P1,102,500

Personal assets and Liabilities of the partners at July 1, 2021 are:

Personal Assets Personal Liabilities

Alpha P420,000 P472,500

Beta P525,000 P320,250
Charlie P997,500 P420,000

If Charlie contributed P367,500 to the partnership to provide cash to pay the creditors, what
amount of Alpha’s P472,500 partnership equity would appear to be recoverable? (10 points)
Show your solution.

a. P414,750
b. P425,250
c. P472,500
d. 0

1 Partnership Liquidation (Lump sum)

2. LenLen and BabyM decided to liquidate their partnership business on June 1, 2021 under
lump sum liquidation. The partners had been sharing profit and losses on a 60:40 ratio. The
statement of financial position prepared on the day of liquidation began as follows:

Assets Liabilities and Capital Cash P18,000 Accounts Payable P42,000 Receivables
P75,000 LenLen, Loan P24,000 Inventory P90,000 LenLen, Capital P102,000 Other
Assets P84,000 BabyM, Capital P90,000 BabyM, Withdrawal P9,000 Total P267,000
Total P267,000

During June, one third of the receivables was collected; P45,000 of inventory was sold at an
average of 70% of book value; other asset were sold for P36,000.

How much should LenLen and BabyM received upon liquidation? (10 points) Show your
solution.

LenLen BabyM
a. P32,100 P36,400
b. P8,100 P27,400
c. P40,200 P41,800
d. P59,100 P54,400

2 Partnership Liquidation (Lump sum)

SOLUTION
1. c. P472,500

Cash 262,500 Account Payable 630,000

Beta, Capital 315,000
Alpha, Capital 472,500
Charlie, Capital 525,000

Total assets 262,500 Total Liabilities and Capital 1,942,500

Beta, Capital (30%) Alpha, Capital(30%) Charlie,Capital(40%)

315,000 472,500 525,000
(367,500)

315,000 472,500 (157,500)

(204,750) (52,500) (577,500)

110,250 420,000 420,000

2. A. lenlen P32,100 babym P36,400

Carrying amount of non-cash (75,000+90,000+84,000) =249,000

Realized from sale (1/3x75,000)+(70%x 45,000)+36,000 =(92,475)
Loss Realization 156,525

Cash 18,000+ 92,475= 110,475-42,000=68,475

Cash Available 68,475

Capital Balance (225,000)

156,525