ACCTG122 Homework On Partnership Liquidation
Uploaded by
Joana TrinidadACCTG122 Homework On Partnership Liquidation
Uploaded by
Joana TrinidadACCTG122 Homework on Partnership Liquidation
A. Cruz, Diaz, and Ellema who share profits and losses in the ratio of 2:2:1 decided to liquidate their
partnership on December 31,2018. Below is the condensed statement of financial position just prior
to liquidation:
ASSETS LIABILITIES and CAPITAL
Cash 40,000 Liabilities 224,000
Other Assets 680,000 Loan due to Diaz 10,000
Loan due to Ellema 16,000
Cruz, Capital 190,000
Diaz, Capital 120,000
Ellema, Capital 160,000
Total 720,000 Total 720,000
Required: Statement of liquidation and appropriate journal entries assuming that other assets
were sold for P250,000. Assume further that any deficient partner is insolvent.
B. The statement of financial position of the JKLM Partnership at July 31,2018, when the partnership
is to be liquidated, is as follows:
ASSETS LIABILITIES and CAPITAL
Cash 105,000 Accounts payable 210,000
Non-cash assets 2,205,000 J, Loan 210,000
K, Loan 252,000
M, Loan 168,000
J, Capital (25%) 283,500
K, Capital (25%) 214,200
L, Capital (25%) 662,550
M, Capital (25%0 309,750
Total 2,310,000 Total 2,310,000
During the month of August 2018, assets have a carrying value of P315,000 are sold at a loss of P42,000.
Liquidation expenses of P10,500 are paid as well as P126,000 of the liabilities.
During the month of September, assets with carrying value of P1,200,000 were sold for P800,000;
liquidation expenses of P16,000 were paid; cash of P20,000 was withheld for additional possible
liquidation expenses.
During the month of October, remaining non-cash assets were sold at a loss of P120,000 and additional
liquidation expenses of P20,000 were paid. Remaining cash balane was distributed to the partners
in final settlement of their equity.
Required:
a. A statement of partnership liquidation with supporting schedules to show the amount of safe
payment to partners in August and September.
b. Cash priority program and schedule of payments to partners for the months of August, September,
and October.
