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Assignment04 Liquidation

This document contains an assignment on partnership liquidation from Baliwag Polytechnic College. It includes two problems with multiple cases/requirements each. Problem 1 involves computing cash distributions to partners for different scenarios of non-cash asset sales and payments. Problem 2 provides financial information for a partnership undergoing liquidation over three months, and requires calculating cash available for distribution and amounts partners should receive each month.

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Ailene Mendoza
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182 views2 pages

Assignment04 Liquidation

This document contains an assignment on partnership liquidation from Baliwag Polytechnic College. It includes two problems with multiple cases/requirements each. Problem 1 involves computing cash distributions to partners for different scenarios of non-cash asset sales and payments. Problem 2 provides financial information for a partnership undergoing liquidation over three months, and requires calculating cash available for distribution and amounts partners should receive each month.

Uploaded by

Ailene Mendoza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Baliwag Polytechnic College

Baliwag Polytechnic College


Dalubhasaan Kong Mahal
Institute of Business and Accountancy

ACT27A – Accounting for Special Transactions M. Manayao, CPA

Assignment 04 – Partnership Liquidation

Problem 1
The statement of financial position of MNL Partnership, just before liquidation is as follows:

ASSETS LIABILITIES AND EQUITY


Cash 50,000 Liabilities 70,000
Other Assets 140,000 Loan - L 20,000
Loan - N 10,000 L, Capital (50%) 30,000
M, Capital (30%) 50,000
N, Capital (20%) 30,000
Total 200,000 Total 200,000

Partners L and M are personally insolvent. The percentages in parenthesis and liquidation expense of P5,000
are also paid.

Case 1: If non cash assets are sold for P150,000 and all liabilities are paid and liquidation expense of
P5,000 are also paid.

Requirement: Compute for the cash distributions to the partners.

Case 2: If non cash assets are sold for P50,000, liquidation expense of P5,000 and all liabilities are paid.

Requirement: Compute for the cash distributions to the partners.

Case 3: If non cash assets are sold for P40,000, liquidation expense of P10,000 and all liabilities are paid.

Requirement: Compute for the cash distributions to the partners.

Case 4: If M received a total of P35,000 and liquidation expenses of P5,000 were paid:
1. How much cash should N receive?
2. How much is the amount of gain (loss) on realization of other assets?
3. How much is the total proceeds on sale of other assets?

ASSIGNMENT 04 – ACT27A | M. MANAYAO, CPA 1


Problem 2
ECQ, GCQ and BBQ are partners who share profits and losses in the ratio of 40:30:30, respectively. On
January 1, 2020, they decided to liquidate the partnership and the statement of financial position was
prepared as follows:

ASSETS LIABILITIES AND EQUITY


Cash 20,000 Liabilities 40,000
Non-cash Assets 65,000 Loan from GCQ 5,000
Loan from BBQ 7,500
ECQ, Capital 10,000
GCQ, Capital 10,000
BBQ, Capital 12,500
Total 85,000 Total 85,000

In January, non-cash asset with book value of P35,000 was sold for P30,000 to NBS; liquidation expenses
of P5,000 was paid and only 40% of the outstanding liabilities were paid in January. The partnership
withholds cash of P2,500 for next month’s liquidation expenses.

In February, non-cash asset with a book of P15,000 was sold to Mr. James but a loss on realization of
P3,000 was recognized; liquidation expense of P2,750 was paid and only P10,000 recorded liabilities were
paid during the month. The partnership withholds cash of P2,700 for next month’s liquidation expenses and
P2,750 in anticipation for future unrecorded liability.

In March, the remaining non-cash assets were sold to Ms. Smith for P12,500. A liquidation expense of
P5,500 was paid. The remaining recorded liabilities including P2,000 unrecorded liabilities were paid during
the month to end the liquidation process.

Requirements:
1. How much is the amount of cash available for distribution in the month of January?

2. How much is the amount of cash available for distribution in the month of March?

3. How much should GCQ and BBQ receive in the month of January?

4. How much should ECQ and GCQ receive in the month of February?

5. How much should ECQ, GCQ and BBQ receive in the month of March?

- End -

ASSIGNMENT 04 – ACT27A | M. MANAYAO, CPA 2

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