Problems - Partnership Liquidation

Multiple Choice Questions: Partnership Liquidation

Multiple Choice Questions: Partnership Liquidation

1) As of December 31,2008, the books of XYZ Partnership showed capita baance of! X 1) As of December 31,2008, the books of XYZ Partnership showed capita baance of! X P"0,

P"0,000# 000# P$%,P$%,000 # 000 # Z P1%,000Z P1%,000& 'he( share prof& 'he( share profits and ossits and osses in es in the ratithe ratio o of $!$!2of $!$!2,, res

respecpectitie(e(& & AfAfter ter somsome e timtime, e, thethe( ( decdecideided d to to i*i*+id+idate ate sosod d a a nonnoncacash sh assassets ets of of  P$1,000& -iabiities were paid amo+ntin. to P1",000 and P33,000 each is aaiabe for  P$1,000& -iabiities were paid amo+ntin. to P1",000 and P33,000 each is aaiabe for  distrib+tion& Ass+min. that an( capita debit baance is +ncoectibe, the share of each distrib+tion& Ass+min. that an( capita debit baance is +ncoectibe, the share of each  partner in the cash distrib+tion wo+d be!

 partner in the cash distrib+tion wo+d be! a) a) XXP2P2$,0$,000 00 # Y# YP/,P/,00000 # 0 # ZZ  b)  b) XP2%,200 # YXP2%,200 # YP10,200# ZP2,$00P10,200# ZP2,$00 c) c) XXP3P3$,8$,800 # 00 # YYP3$P3$,8,800# 00# ZZ d) d) XXP1P1,$,$00 # Y00 # YP10P10,2,200# Z00# ZPP1,1,200200 2)

2) 4it and 4it and 4at are 4at are parpartnetners rs shasharinrin. . proprofitfits s and osseand osses s e*+ae*+a((& & 'he'heir ir boobooks ks of of thethe  partnership

 partnership showed showed capita capita baances baances of! of! 4itP$2,000 4itP$2,000 and and 4atP"$,000& 4atP"$,000& 5ash, 5ash, iabiitiesiabiities and

and nonnoncacash sh assassets ets amoamo+nt+nted ed to to P1",P1",000, 000, P20,P20,000 000 and and P1P110,10,000, 000, resrespectpectieie((& & nn December 31,2008, the partnership is dissoed and i*+idated of instaments, and the December 31,2008, the partnership is dissoed and i*+idated of instaments, and the first reai6ation of P30,000 cash is on the

first reai6ation of P30,000 cash is on the sae of noncash asset of book asae of noncash asset of book a+e of P"0,000&+e of P"0,000& After pa(ment of iabiities, the aaiabe and sha be distrib+ted to 4it and 4at as After pa(ment of iabiities, the aaiabe and sha be distrib+ted to 4it and 4at as foows!

foows! a)

a) 4i4ittP"P",0,000 00 # 4# 4atatPP2222,0,00000  b)

 b) 4itP2%,000# 4atP2%,0004itP2%,000# 4atP2%,000 c)

c) 4i4ittP2P22,2,00000# 0# 4a4attP "P ",0,00000 d)

d) 4i4ittP2P2,0,000 # 00 # 4a4attP2P2$,$,000000

3) n ctober 31,200, A,7, and 5 decided to dissoe the partnership& 'heir capita 3) n ctober 31,200, A,7, and 5 decided to dissoe the partnership& 'heir capita  baances and profits and osses ratio on this date are as foows!

 baances and profits and osses ratio on this date are as foows! 5

5aassh h 77aaaannccee PP- - 99aattiioo A A $$00,,000000 2200:: 7 7 00,,000000 %%00:: 5 5 $$00,,000000 3300::

5ash and -iabiities are P20,000 and P$%,000, respectie(& et income form 5ash and -iabiities are P20,000 and P$%,000, respectie(& et income form ;an+ar( to ctober is P28,000&

<ow m+ch m+st be reai6ed from the sae f noncash assets for 7 to receie P32,%00= a) 103,000  b) 100,000 c) 110,000 d) 113,000

$) Din. and Don. are partners who share profits and osses in the ratio of "0!$0, respectie(& 'he( decided to i*+idate and accordin.( sod the noncash assets with a reai6ation of P10,000 cash& -iabiities were paid for P3,000 and aaiabe cash is P/,000& 'heir capita baance is Din. P3,000 and Don. P12,000& after the P/,000was diided, the capita baance of each partner is!

a) $%0  b) /,"00

c) /,000 d) "00

%) 9, >, and ' are partners sharin. profit and osses in the ratio of 2", 3" and 18, respectie(& 'he partners capita baances are! 9P2%,800, >P2$,000, and 'P1",200& 'he iabiities amo+nt to P3",000 inc+din. a aon of 1",000 from >& 'he cash baance is 8,000& A partners are persona( soent& 'he partners pan to se the assets b( instament& ?f ' receied 3,000 from the 1st _{distrib+tion of each, how m+ch did 9 and >}

receie that time=

9 >

a) /,800 3,300

 b) 3,300 

c)  3,300

d)  

") 'he partner most aaiabe to partnership osses on i*+idation is! a) 9 

 b) 9 and > e*+a( c) >

) D, , and @, partners hae capita baances of P/,800, P12,000 and P%,200 and respectie( and share profits in the ratio of $!2!1& Prepare a sched+e showin. how aai cash wi be .ien to the partners as it becomes aaiabe& ho amon. the partners sha  be paid first with an aaiabe cash of P1,200=

a) D  b)  c) @

d) D and @

8) After operatin. for 3 (ears, the books of Bi.o( Partnership showed the foowin.  baances!

 et Assets 130,000

Bi., 5apita 20,000

Bo(, 5apita %0,000

?f i*+idation takes pace at this point and net assets are reai6ed at book a+e, the  partners are entited to!

a) Bi.P20,000 # Bo(P%0,000  b) Bi.P$2,8%0 # Bo(P%8,2%0 c) Bi.P/",$00 # Bo(P1,000 d) Bi.P/1,$%0 # Bo(P"/,00

/) 'he baance sheet of the firm of ;4- partnership shows the foowin.= A>>'> -?A7?-?'?>

5ash 20,000 Acco+nts Pa(abe 2%,000

ther Assets /0,000 ;,5apita 2,000

4, 5apita 23,000 -,5apita 3%,000

Total Assets 110,000 Total Liabilities

 110,000

'he partners decided to i*+idate b( instaments the 1st _{sae of noncash assets}

<ow m+ch sho+d each partner receie in the first instament= a) ;P13,12% # 4P21,8% # - one

 b) ;P10,800 # 4one # -P2$,200 c) ;P12,000 # 4P2,000 # -P2%,000 d) ; one # 4P1,%00# -P10,000

10) ?f P1,800 cash is withhed for possibe i*+idation eCpenses, how m+ch cash sho+d -receie= a) 11,$"0  b) 23,$80 c) /,20 d) 2$,"$0 ANSWERS: 1) A 2) D 3) B 4) D 5) D 6) C 7) B ) A !) B 10) B

SOLUTIONS:

1)

X Y Z TOTL

7aance before -i*+idation "0,000 $%,000 1%,000 120,000 -oss on 9eai6ation

33,000120,000) $!$!2 3$,800) 3$,800)

1,$00) 8,000)

7aance 2%,200 10,200 2,$00) 33,000

-oss on possibe insoenc(

of Z $!$ 1,200) 1,200) 2,$00) 0

Cas" Re#ei$e% 24,000 !,000 0 33,000

2) &'T &AT

7aance before i*+idation $2,000 "$,000 -oss on 9eai6ation

"0,00030,000) %0!%0 1%,000) 1%,000)

7aance 2,000 $/,000

-oss on possibe +nreai6ation of 

 oncash assets 110,000"0,000) 2%,000) 2%,000) Cas" Re#ei$e% 2,000 24,000 3) 'ota 5apita P18,000 'ota -iabiities P $%,000 'ota Assets P 223,000 -ess! 5ash P 20,000 on5ash Assets P203, 000

-ess! -oss on 9eai6ation

32,%008$,000)  %0: P103, 000)

Proceeds from >ae (100, 000

E0,000 F 28,000 C %0:G

$) D?B DB

''A-7aance before i*+idation 3,000 12,000 1%,000

-oss on reai6ation

 /,000 H 1%,000 ) 3,600) 2,400) 6,000)

7aance "00) /,"00 /,000

-oss for possibe insoenc( "00 "00) 

Cas" Re#ei$e% 0 !,000 !,000

5apita 7aance after oss on reai6ation /,"00

-ess! 5ash 9eceied /,000)

Ca*ital Bala+#e ate- #as" settle.e+t 600

%) R S T Cas" (a/.e+t

Bala+#e beo-e Lii%atio+ 2%,800 2$,000 1",200 9 2") > 3") ? 1")

(-oitLoss -atio 2" 3" 1"

Loss Abso-*tio+ Ca*a#it/ ,$00 $8,000 /,200

(-io-it/ ' 1/,800) 3,300) (-io-it/ 1

,$00 $8,000 ,$00

(-io-it/ '' 2/,$00) 2/,$00) /,800 $,/00

4,000 4,000 4,000

6) S is t"e .ost $l+e-able *a-t+e- si+#e "e "as t"e loest abso-*tio+ #a*a#it/ .ea+i+ t"at "is eit/ ol% be -e%#e% to e-o it" a total *a-t+e-s"i* loss o+ lii%atio+ o (4,000

) D E  Cas"(a/.e+t

7aance before i*+idation /,800 12,000 %,200 D  @

P- 9atio %0: 30: 20:

-ess! Absorption 5apacit( 1/,"00 $0,000 2",000

Priorit( ? 1$,000)

Priorit(1

  1/,"00 2",000 2",000

",$00) ",$00)  1,/20 1,280

(-io-it/ '' 1/,"00 1/,"00 1/,000  ",120 1,280

8) 'he partners are entited to receie an amo+nt e*+a to their capita baances since the noncash assets are reai6ed at book a+e, meanin. there is no .ain or oss in sein. the assets&

/) ; 4 -

''A-7aance before i*+idation 2,000 23,000 3%,000 8%,000 -oss on reai6ation

/0,000$0,000) 3!%!2 1%,000) 2%,000) 10,000) %0,000)

7aances 12,000 2,000) 2%,000 3%,000

-oss for possibe insoenc( 1,200) 2,000 800) 

Cas" -e#ei$e% 10,00 8 24,200 35,000

10) 9 & L

7aance before i*+idation 2,000 23,000 3%,000

-oss on reai6ation 3!%!$

E/,000$,000) F1,800G 1%,%$0) 2%,/00) 10,3"0)

7aance 11,$"0 2,/00) 2$,"$0 -oss on possibe insoenc( 3!2 1,$0) 2,/00 1,1"0)