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    Accounting For Partnership Liquidation - Jan 12

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    Maria Anne Genette Bañez
    The document discusses dissolution, liquidation, and realization in partnership accounting. It defines dissolution as terminating the partnership contract, liquidation as terminating the business, and realization as selling non-cash assets. It describes lump sum and installment liquidation methods and notes the total cash settlement to partners is the same under both. An example balance sheet for the ABC Partnership is given along with different liquidation scenarios to illustrate the working papers and journal entries required.

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    Accounting For Partnership Liquidation - Jan 12

    Uploaded by

    Maria Anne Genette Bañez
    2K views9 pages
    The document discusses dissolution, liquidation, and realization in partnership accounting. It defines dissolution as terminating the partnership contract, liquidation as terminating the business, and realization as selling non-cash assets. It describes lump sum and installment liquidation methods and notes the total cash settlement to partners is the same under both. An example balance sheet for the ABC Partnership is given along with different liquidation scenarios to illustrate the working papers and journal entries required.

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    Accounting for Partnership Liquidation_Jan 12

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    The document discusses dissolution, liquidation, and realization in partnership accounting. It defines dissolution as terminating the partnership contract, liquidation as terminating the business, and realization as selling non-cash assets. It describes lump sum and installment liquidation methods and notes the total cash settlement to partners is the same under both. An example balance sheet for the ABC Partnership is given along with different liquidation scenarios to illustrate the working papers and journal entries required.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    2K views9 pages

    Accounting For Partnership Liquidation - Jan 12

    Uploaded by

    Maria Anne Genette Bañez
    The document discusses dissolution, liquidation, and realization in partnership accounting. It defines dissolution as terminating the partnership contract, liquidation as terminating the business, and realization as selling non-cash assets. It describes lump sum and installment liquidation methods and notes the total cash settlement to partners is the same under both. An example balance sheet for the ABC Partnership is given along with different liquidation scenarios to illustrate the working papers and journal entries required.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 9

    Chapter 6 Presented by: Ms. Rheichelle C. Antonio, CPA,MBA Reference: Simplified Accounting for Partnership & Corporation Vol.

    2, 2010 Edition By: Nelson S. Abeleda

    Dissolution
    Refers to the termination of the partnership contract

    Liquidation
    Refers to the termination of the business

    Realization
    When non-cash assets are sold

    1.

    Lump Sum Liquidation


    x If the realization process will take only a short period of time If the realization process will take a long time

    2.

    Installment Liquidation
    x

    Note: whichever method is used, the total cash settlement (return of capital) among partners will be the same

    The cash settlement is made once, that is, after all non-cash assets are sold

    The cash settlement is on installment basis as soon as cash becomes available, and the liabilities are fully paid, Partial payments will be made to the partners based on their capital balances if any, after subtracting their share in the losses on realization whether actual or theoratical

    ` ` `

    Offset his loan to the partnership Pay for his capital deficiency if he is solvent Absorbed or charged against the capitals of the other partners if he is insolvent

    1. 2. 3.

    Creditors claim Partners loan to the partnership Return of capital

    page 141 Shown Below is the condensed Balance Sheet of ABC Partnership: ASSETS Cash Other Assets Total LIABILITIES & CAPITAL Accounts Payable Loan Payable to A A, Capital B, Capital C, Capital

    18,000 82,000 100,000

    25,000 3,000 22,000 30,000 20,000 100,000

    The partners share profits and losses in the ratio of 5:3:2 for A, B, and C repaectively. The working paper and journal entries required for the different indefendent cases below will be illustrated Case 1 The other assets are sold for P90,000 2 The other assets are sold for P50,000 Liquidation expenses of P1,000 are paid 3 The other assets are sold for P34,000 4 The other assets are sold for P20,000 a. The deficient partner is solvent b. The deficient partner is insolvent

    Working Paper for the Statement of Liquidation Non-cash Loan from Partner's Partner's Partner's Assets Liabilities a Partner Capital Capital Capital

    Activities Balances before Liquidation Sale of Other Assets

    Cash

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