Q2 Partnership and Corporate Liq

FAR EASTERN UNIVERSITY
Accounting for Special Transactions

2nd Semester S.Y. 2020 - 2021
Quiz 2
1. Easy (Straight Problem)
Problem 1. The books of STU Partnership, which is undergoing liquidation, showed the following just before final
settlement:
Cash P200,000 Liabilities P160,000

Noncash assets P0 S, Capital (40%) P240,000
T, Capital (20%) P120,000
U, Capital (40%) P80,000
1. If all partners are personally solvent, how much cash would S receive? P 80,000
2. If all partners are personally insolvent, how much cash would S receive? P 26,666.67
3. If all partners are personally solvent only up to P100,000, how much cash would S receive? P 80,000
4. If T is personally insolvent while S and U are personally solvent, how much cash would S receive? P 80,000
Problem 2. VW Partnership is undergoing liquidation. Partners V and W share profits and losses equally. All assets
were sold which resulted in a loss of P60,000. The partnership also paid P80,000 liquidation expenses and P90,000
liabilities to outsiders. Partner V received P270,000 in settlement of her capital.
5. How much was V’s capital just before commencement of liquidation? P 340,000
6. If W’s capital before liquidation was P100,000, then how much was total cash distributed to partners?
P 300,000
Problem 3. A partner who receives 50% of the profits of the company was distributed P240,000 cash in partial
settlement of his interest. That partner’s interest in the partnership amounted to P800,000 after his share in the
loss on realization of some non-cash assets and after his share in the liquidation expenses paid by the partnership.
7. How much was maximum possible loss of the partnership? P 1,600,000
8. If the partnership had unsettled liability to outsiders in the amount of P500,000, and it also had unsold
noncash assets with book value of P1,000,000, then how much was anticipated expenses of the
partnership, if any? P 500,000
9. If the partnership had unsettled liability to outsiders in the amount of P500,000, and it also had unsold
noncash assets with book value of P1,000,000, then how much cash should be withheld by the
partnership, if any? P 500,000
Problem 4. Intel Company is being liquidated. The trustee has determined that the unsecured claims will receive
P0.35 on the peso. Advanced Company holds a P1,000,000 mortgage note receivable from Intel Company that is
secured by trading securities with P750,000 carrying value having a market value of P820,000.
10. How much will Advanced Company expects to recover from Intel? P 907,500
Problem 5. The Statement of Affairs of Three-Ten Company contained the following relevant information:
Assets pledged with fully secured creditors 1,500,000
Assets pledged with partially secured creditors 800,000
Free Assets 900,000
Liabilities with priority 200,000
Fully secured liabilities 1,000,000
Partially secured liabilities 1,500,000
Unsecured creditors without priority 1,300,000
11. The estimated deficiency to unsecured claims is? P 800,000
12. What is the percentage of recovery of partially secured liabilities? 0.60
Problem 6. Sett’s Corporation was forced into bankruptcy and is in the process of liquidating assets and paying
claims. Unsecured claims will be paid at the rate of thirty cents on the peso. Ashe holds a note receivable from Sett
for P90,000 collateralized by an asset with a book value of P60,000 and a liquidation value of P30,000.
13. The total amount to be realized by Ashe on this note is: P 48,000
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Problem 7. Bilgewater Co. filed a bankruptcy petition and liquidated noncash assets. Bildgewater was paying
forty cents on the peso for unsecured claims. Miya Co. held a mortgage of P150,000 on land that was sold for
P110,000.
14. The total amount of payment that Miya should have received is calculated to be? P126,000
Problem 8. A Statement of Realization and Liquidation has been prepared for Three-Six Company. The totals are
given below:
Assets to be realized 60,000 Liabilities assumed 50,000

Assets acquired 40,000 Liabilities not liquidated 65,000
Assets not realized 80,000 Supplementary credits 110,000
Liabilities to be liquidated 80,000 Supplementary charges ?
Retained earnings increased to P15,000. The beginning balance of Share Capital and Retained Earnings
are
P100,000 and (P85,000), respectively.
15. How much is the ending cash balance? P 15,000
2. Comprehensive Cases (Multiple Choice)
Problem 9. On December 31, 2020, the Statement of Financial Position of ABC partnership with profit or loss
ratio of 4:1:5 is presented below:
Cash 2,100,000 Liability to third person 5,600,000
Noncash asset 11,200,000 Alucard, capital 4,900,000
Baxia, capital 2,100,000
Claude, capital 700,000
On January 1, 2021, ABC partnership has been subjected to installment liquidation. As of January 31, 2021, the
following data concerning liquidation are provided:
• Noncash asset with book value of P8,700,000 has been sold at a loss of P2,800,000.
• Liquidation expense amounting to P560,000 has been incurred for the month of January.
• P840,000 cash has been withheld for future liquidation expense.
• P4,200,000 liability has been paid.
16. What is C’s share in the maximum possible loss on January 31, 2021?
a. P1,050,000
b. P1,680,000
c. P1,820,000
d. P2,100,000
17. What is the amount received by B on January 31, 2021?

a. P700,000
b. P840,000
c. P1,540,000
d. P2,240,000
18. What is the cash balance on January 31, 2021?

a. P700,000
b. P840,000
c. P1,540,000
d. P2,240,000
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Problem 10. On January 1, 2018, YoLanDa Partnership entered into liquidation. The partners’ capital balances on
this date were as follows: Yo (25%) P2,500,000; Lan (35%) P5,400,000; Da (40%) P3,700,000. The partnership
has liabilities amounting to P4,400,000, including a loan from Lan P600,000. Cash on hand before the start of
liquidation is P800,000.
With the information given, answer the following independent situations:
Case 1
19. Noncash assets amounting to P7,400,000 were sold at a book value and the rest of the noncash assets
were sold at a loss of P4,200,000. How much cash will be distributed to the partners?
a. P4,400,000
b. P7,400,000
c. P8,000,000
d. P11,800,000
Case 2
20. After exhausting the noncash assets of the partnership, assuming all partners has personal assets more
than their liabilities. How much cash must be invested by the partners to satisfy the claims of the outside
creditors and to pay the amount due to the partners?
a. P3,680,000
b.
P3,800,000 c.
P4,360,000 d.
P4,480,000
Case 3
21. If Lan received P2,255,000, how much was the loss from the realization of the noncash assets?
a. P5,255,000
b. P9,945,000
c. P10,525,000
d. P10,700,000
Problem 11. Jax Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs.
The carrying values and estimated fair values of the assets of Jax Company are as follows:
Fair
Carrying value
value
Cash P 20,000 P 20,000

Accounts receivable 45,000 30,000
Inventory 60,000 35,000
Land 75,000 70,000
Building 180,000 100,000
Equipment 170,000 80,000
Total: P 550,000 P 335,000
Debts of Jax are as follows:

Accounts payable P 60,000
Wages payable (all have priority) 10,000
Taxes payable 10,000
Notes payable (secured by receivable and inventory) 120,000
Interest on notes payable 6,000
Bonds payable (secured by land and building) 150,000
Interest on bonds payable 7,000
Total: P 363,000
22. What is the total amount of unsecured claims?
a. P 93,000
b. P 113,000
c. P 121,000
d. P 126,000
23. What estimated amount will be available for general unsecured creditors upon liquidation?
a. P 28,000
b. P 93,000
c. P 113,000
d. P 121,000
24. What is the estimated dividend percentage?

a. 23%
b. 93%
c.
77% d.
68%
Problem 12. Golden Dawn Co. had the following amounts for its assets, liabilities and stockholders’ equity accounts just
before filing a bankruptcy petition and requesting liquidation:
Net Realizable
Book value
Value
Cash 10,000 P 10,000
Accounts receivable 100,000 60,000
Inventory 350,000 350,000
Land 110,000 75,000
Building and equipment 700,000 300,000
Accounts payable 100,000
Salaries payable 75,000

Notes payable (secured by inventory) 300,000
Employee’ claims for distribution to pension plans 10,000
Taxes payable 80,000
Liability for accrued expenses 20,000
Bonds payable 500,000
Common stock 200,000
Additional Paid-in capital 100,000
Retained Earnings Deficit (115,000)
Of the salaries payable, P35,000 was owed to an officer of the company. The remaining amount was owed to salaried
employees who had not been paid within the previous 80 days: Asta was owed P10,600, Noelle was owed P15,000, Nero was
owed P11,900 and Luck was owed P2,500. The maximum owed for any one employee’s claims for contributions to benefit
plans was P800. Estimated expense for administering the liquidation amounted to P40,000.
25. What was the total amount of unsecured liabilities with priority?
a. P 75,000
b. P 155,000
c. P 165,000
d. P 170,000
End of Quiz
“Saving the world, one accounting problem at a time”
Louie Marasigan
PROBLEM 1 (1-4)
PROBLEM 2 (5 & 6), PROBLEM 3(7-9), PROBLEM 4
PROBLEM 5, 6, 7, 8
PROBLEM 9, 10, 11
PROBLEM 12
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FAR EASTERN UNIVERSITY

Accounting for Special Transactions

1. Easy (Straight Problem)

Cash P200,000 Liabilities P160,000

Assets to be realized 60,000 Liabilities assumed 50,000

2. Comprehensive Cases (Multiple Choice)

17. What is the amount received by B on January 31, 2021?

18. What is the cash balance on January 31, 2021?

With the information given, answer the following independent situations:

Cash P 20,000 P 20,000

Debts of Jax are as follows:

24. What is the estimated dividend percentage?

Salaries payable 75,000

PROBLEM 2 (5 & 6), PROBLEM 3(7-9), PROBLEM 4

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