1.
The partners Pan, Cit, and Can who shared profit and loss in the ratio of [Link] has
decided to dissolve and liquidate their partnership. In the process of liquidation, their
non-cash assets of P490,000 was realized at a loss of P105,000. However, they were
able to pay their obligations to outside creditors of P105,000. The partner’s equity
balance before the start of the liquidation has totaled to P450,000, broken down as
follows:
Pan P 180,000
Cit 150,000
Can 120,000
Required:
1. Prepare a Statement of Partnership Liquidation
2. Prepare journal entries.
3. Title:PROBLEMS
4. Description:
5.
6. The partnership of Edmund, Peter, and Susan has come to an end. All non-cash assets were realized for P65,000. Below is the
post-closing trial balance before liquidation:
Pevensie Trading
Post-closing Trial Balance
July 15,20A
Debit Credit
Cash 5,000
Non-cash Assets 80,000
Liabilities 50,000
Edmund, Loan 4,000
Edmund, Capital (50%) 5,000
Peter, Capital (20%) 17,000
Susan, Capital (30%) 9,000
Total 85,000 85,000
7. 2. Who and how much is the capital deficit of the deficient partner?
[Link], 14,000
[Link], 4,500
[Link], 2,500
Title:PROBLEMS
Description:
The partnership of Edmund, Peter, and Susan has come to an end. All non-cash assets were realized for P65,000. Below is the post-
closing trial balance before liquidation:
Pevensie Trading
Post-closing Trial Balance
July 15,20A
Debit Credit
Cash 5,000
Non-cash Assets 80,000
Liabilities 50,000
Edmund, Loan 4,000
Edmund, Capital (50%) 5,000
Peter, Capital (20%) 17,000
Susan, Capital (30%) 9,000
Total 85,000 85,000
3. What is the journal entry to record the payment of loan to Edmund?
A.4,000
B.2,500
C.1,500
Title:PROBLEMS
Description:
The partnership of Edmund, Peter, and Susan has come to an end. All non-cash assets were realized for P65,000. Below is the post-
closing trial balance before liquidation:
Pevensie Trading
Post-closing Trial Balance
July 15,20A
Debit Credit
Cash 5,000
Non-cash Assets 80,000
Liabilities 50,000
Edmund, Loan 4,000
Edmund, Capital (50%) 5,000
Peter, Capital (20%) 17,000
Susan, Capital (30%) 9,000
Total 85,000 85,000
4. What is the remaining cash after paying the outside creditors?
A.18,500
B.70,000
C.20,000
Title:PROBLEMS
Description:
The partnership of Edmund, Peter, and Susan has come to an end. All non-cash assets were realized for P65,000. Below is the post-
closing trial balance before liquidation:
Pevensie Trading
Post-closing Trial Balance
July 15,20A
Debit Credit
Cash 5,000
Non-cash Assets 80,000
Liabilities 50,000
Edmund, Loan 4,000
Edmund, Capital (50%) 5,000
Peter, Capital (20%) 17,000
Susan, Capital (30%) 9,000
Total 85,000 85,000
5. What is the journal entry to record the sale of non-cash assets?
[Link] 65,000
Non-cash assets 65,000
[Link] 80,000
Non-cash assets 65,000
Edmund, Cap. 7,500
Peter, Cap. 3,000
Susan, Cap. 4,500
[Link] 65,000
Edmund, Cap. 7,500
Peter, Cap. 3,000
Susan, Cap. 4,500
Non-cash assets 80,000
Title:PROBLEMS
Description:
The partnership of Edmund, Peter, and Susan has come to an end. All non-cash assets were realized for P65,000. Below is the post-
closing trial balance before liquidation:
Pevensie Trading
Post-closing Trial Balance
July 15,20A
Debit Credit
Cash 5,000
Non-cash Assets 80,000
Liabilities 50,000
Edmund, Loan 4,000
Edmund, Capital (50%) 5,000
Peter, Capital (20%) 17,000
Susan, Capital (30%) 9,000
Total 85,000 85,000
6. After paying all the liabilities, how much cash was received by Susan?
A.0
B.14,000
C.4,500
The process of winding-up the business activity, converting non-cash assets into cash, paying
its liabilities and distribution of cash and the remaining assets to individual partners *
[Link]
[Link]
c. Liquidation
D. none of these
The following are the causes of partnership’s dissolution with liquidation, except –
[Link] of the firm
[Link] a partner die
[Link] purpose of which it is organized is accomplished already
d. Mutual agreement among partners to close the business
When a partner develops a debit balance in his capital, but such partner has a loan to the
partnership, he may exercise the doctrine of –
a. none of these
b. right of offset
[Link] to seizure
[Link]’s right
The first priority to be paid when there is cash available in the liquidation process, be it in
lump-sum or installment type – *
[Link] creditors
b. partner’s capital
c. none of these
d. partner’s loan
If a partner is insolvent, his personal properties shall first be distributed *
a. To partnership creditors
[Link] separate creditors
[Link] partnership and separate creditors on the ration of their loan exposures
d. to the partners by way of additional contributions when the assets of the partnership were
insufficient to settle all obligaitons
Which of the following statement/s is/are false? Statement I – Gains and losses on the sale of
assets in liquidation are divided equally among partners. Statement II – A partnership may be
dissolved without being liquidated but liquidation is always preceded by dissolution.
a. both statement are false
b. only statement II is false
c. only statement I is false
d. neither statements are false
A liquidation differs from dissolution in that in a liquidation *
a. gains and losses are distributed according to the partnership agreement
b. the business will not continue
[Link] may be revalued
d. there may be an adjustment of partner’s capital accounts
In a partnership liquidation, the final cash distribution to the partners should be made in
accordance with the
[Link] payments computations
b. balances of partner’s capital accounts
c. ratio of the capital contributions by partners
[Link]’s profit and loss ratio
One of the characteristics of lump-sum liquidation is____ *
a. the non cash assets are usually sold at less than book value
[Link] cash assets are sold in one setting only
[Link] will given the first priority for payment
d. none of these
The partners Athena, Aphrodite, and Hera who shared profit and losses in the ratio of [Link] has decided to
dissolve and liquidate their partnership.
In the process of liquidation, their non-cash assets of P490,000 was realized at a loss of P340,000. However,
they were able to pay their obligations to outside creditors of P105,000. The partner’s equity balance before
the start of the liquidation has totaled to P450,000, broken down as follows: (Tip: Prepare a liquidation
statement to answer the proceeding questions. Make sure that A=L+PE)
Athena P180,000
Aphrodite 150,000
Hera 120,000
At what amount were the non-cash assets realized? *
a. 225 00
b.150 000
c. 175 00
d. 200 000
How much was the cash balance at the beginning of the liquidation process?
a. 70 000
b.60 000
c.65 000
d.75 000
How much is the cash balance of the company after paying its obligation?
a.320 000
b.90 000
c.110 000
d. 215 000
How much was received by Athena in the liquidation process?
a. 35 000
[Link] other answer
c. 10 000
d. 65 000
Assuming the non-cash assets were sold for P300,000, how much was the share of Aphrodite
in the gain/loss on realization?
a. 47 500 gain
b.47 500 loss
c.37 500 loss
d. 37 500 gain
After operating for five years, the books of the partnership of Lopez and Mendez showed the following
balances:
Net Assets 130,000
Lopez, Capital 85,000
Mendez, Capital 45,000
If liquidation takes place at this point and the net assets are realized at book value, the
partners are entitled to:
a. lopez to receive P85 000 and mendez to receive P45 000
[Link] to receive P 90 000 and mendez to receive P40 000
[Link] to receive P97 500 and Mendez to receive P32 500
Statement of Liquidation
Cash Non-cash Assets Liabilities Pan, Capital Cit, Capital Can, Capital
Beginning balances 65,000 490,000 105,000 180,000 150,000 120,000
1)Sale of NCA and distribution of loss 385,000 -490,000 -0- -52,500 -26,250 -26,250
Balances 450,000 105,000 127,500 123,750 93,750
2)Payment of liabilities -105,000 -105,000 -0- -0- -0-
Balances 345,000 127,500 123,750 93,750
3)Distribution of remaining cash to partners -345,000 -127,500 -123,750 -93,750
Journal Entry:
1) Cash 385,000
Loss on realization 105,000
No-cash asset 490,000
Sale of NCA at a loss
Pan, Cap. 52,500
Cit, Cap. 26,250
Can, Cap 26,250
Loss on realization 105,000
Distribution of loss on realization
2) Accounts payable 105,000
Cash 105,000
Payment of liabilities
3) Pan, Cap. 127,500
Cit, Cap. 123,750
Can, Cap. 93,750
Cash 345,000
Distribution of remaining cash to partners based on capital balance.
