Scribd
Upload
426 views

Module 4 Problem 2 PDF

The partnership is being liquidated and the assets sold. Partner LL received $98,000 in cash for her 20% share of the partnership. The other assets were sold for $640,000, resulting in a gain of $140,000. After paying off liabilities of $60,000, the remaining funds were distributed to partners JJ, KK, and LL based on their ownership ratios of 40%, 40%, and 20% respectively.

Uploaded by

ANDREA PLN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
426 views

Module 4 Problem 2 PDF

The partnership is being liquidated and the assets sold. Partner LL received $98,000 in cash for her 20% share of the partnership. The other assets were sold for $640,000, resulting in a gain of $140,000. After paying off liabilities of $60,000, the remaining funds were distributed to partners JJ, KK, and LL based on their ownership ratios of 40%, 40%, and 20% respectively.

Uploaded by

ANDREA PLN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Module 4: Partnership Liquidation – Lump Sum

Problem 2: (Lump-sum Liquidation)


Partners JJ, KK and LL have decided to liquidate their partnership. The partnership statement of financial
position reveals the following:

Assets Liabilities and Capital


Cash 50,000 Liabilities 60,000
Other Assets 500,000 JJ, Capital 180,000
KK, Capital 240,000
LL, Capital 70,000
Total Assets 550,000 Total Liabilities and Capital 550,000

The partners share profits and losses in a 4:4:2 ratio and all partners are personally solvent. LL received
P98,000 in cash in full settlement for her share of the partnership.

Required:
1. What was the selling price for the other assets?
2. Prepare a statement of partnership liquidation.

This study source was downloaded by 100000855831521 from CourseHero.com on 11-21-2022 04:39:06 GMT -06:00

https://www.coursehero.com/file/91302203/Module-4-Problem-2pdf/
Answers:
1. What was the selling price for the other assets?

JJ KK LL Total
Balances before liquidation 180,000 240,000 70,000 490,000
Gain on realization 56,000 56,000 28,000 140,000
Payment to partners 236,000 296,000 98,000 630,000

Book Value of Other Assets 500,000


Gain on realization 140,000
Selling Price of other assets 640,000

2. Prepare a statement of partnership liquidation.

Statement of Liquidation
Assets Partners' Capital
LL
Cash Others Liabilities JJ (40%) KK (40%) (20%)
Balances before liquidation 50,000 500,000 60,000 180,000 240,000 70,000
Realization of assets and 640,000 (500,000) 56,000 56,000 28,000
distribution of loss
Balances 690,000 - 60,000 236,000 296,000 98,000
Payment of Liabilities (60,000) (60,000)
Balances 630,000 - 236,000 296,000 98,000
Payment to partners (630,000) (236,000) (296,000) (98,000)

This study source was downloaded by 100000855831521 from CourseHero.com on 11-21-2022 04:39:06 GMT -06:00

https://www.coursehero.com/file/91302203/Module-4-Problem-2pdf/
Powered by TCPDF (www.tcpdf.org)

You might also like