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Quizzes Chapter 14 Partnership Liquidation

The document is a quiz on partnership liquidation consisting of two cases. Case 1 involves a lump-sum liquidation where the partnership's non-cash assets are sold for cash. Case 2 involves an installment liquidation where the non-cash assets are sold in installments and cash is distributed to partners periodically. The quiz requires calculating the amounts distributed to partners A and B based on provided information about partnership assets, liabilities, capital accounts and cash proceeds from asset sales.

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Amie Jane Miranda
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28K views7 pages

Quizzes Chapter 14 Partnership Liquidation

The document is a quiz on partnership liquidation consisting of two cases. Case 1 involves a lump-sum liquidation where the partnership's non-cash assets are sold for cash. Case 2 involves an installment liquidation where the non-cash assets are sold in installments and cash is distributed to partners periodically. The quiz requires calculating the amounts distributed to partners A and B based on provided information about partnership assets, liabilities, capital accounts and cash proceeds from asset sales.

Uploaded by

Amie Jane Miranda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 14

Partnership Liquidation

NAME: Date:
Professor: Section: Score:

QUIZ 1:

Use the following information for the next two cases:


A and B decided to liquidate their partnership. The partnership’s records show the following
information:

Cash -
Non-cash assets 80,000
80,00
Total assets 0

Liabilities 15,000
Loan payable to Partner A 10,000
Loan payable to Partner B 17,000
A, capital (80%) 20,000
B, capital (20%) 18,000
80,00
Total liabilities and equity
0

Case #1: Lump-sum liquidation


All the non-cash assets are sold for ₱50,000.

Requirement: Determine the amounts distributable to A and B in the liquidation.

Case #2: Installment liquidation


The non-cash assets are sold in installments. Settlement of partners’ claims shall be made in
installments as cash becomes available. In the first sale, three-fourths (3/4) of the non-cash assets are
sold for ₱45,000.

Requirement: Determine the amounts distributable to A and B after the first installment sale.

“Blessed are the peacemakers, for they will be called children of God.” (Matthew 5:9)

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-END-

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SOLUTIONS TO QUIZ 1:

CASE #1
Solution:
Net cash proceeds 50,000
Carrying amount of non-cash assets (80,000)
Total loss on sale (30,000)

  A (80%) B (20%) Totals


Capital balances before liquidation 20,000 18,000 38,000
Loans payable to partners 10,000 17,000 27,000
Total 30,000 35,000 65,000
Allocation of loss
(24,000) (6,000) (30,000)
(-30K x 80%); (-30K x 20%)
Amounts received by the partners 6,000 29,000 35,000

CASE #2
Solution:
Net cash proceeds - first sale 45,000
Carrying amount of all non-cash
(80,000)
assets
Loss (35,000)

  A (80%) B (20%) Totals


Capital balances before liquidation 20,000 18,000 38,000
Loans payable to partners 10,000 17,000 27,000
Total 30,000 35,000 65,000
Allocation of loss
(28,000) (7,000) (35,000)
(-35K x 80%); (-35K x 20%)
Amounts received by the partners - 1st sale 2,000 28,000 30,000

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NAME: Date:
Professor: Section: Score:

QUIZ 2:

Use the following information for the next two questions:


Farewell Partnership is undergoing liquidation. Information on Farewell follows:

Cash 40,000
Accounts
180,000
receivable
Receivable from B 10,000
Inventory 160,000
Equipment 310,000
Total 700,000

Accrued liabilities 250,000


Payable to A 20,000
A, Capital (60%) 240,000
B, Capital (40%) 190,000
Total 700,000

Case #1: Lump-sum liquidation


Information on the conversion of non-cash assets is as follows:
a. Only 60% of the accounts receivable was collected; the balance is uncollectible.
b. ₱50,000 was received for the entire inventory.
c. The equipment was sold at its carrying amount.
d. ₱10,000 Liquidation expenses were paid.

Requirement: Determine the amounts of cash distributed to the partners in the final settlement of
their capital accounts.

Case #2: Installment liquidation


Information on the first conversion of non-cash assets is as follows:
a. Half of the accounts receivable was collected.
b. Inventory costing ₱60,000 was sold for ₱20,000.
c. Equipment with carrying amount of ₱200,000 was sold for ₱120,000.
d. ₱10,000 liquidation expenses were paid.
e. The partners estimate additional liquidation costs of ₱5,000.
f. Both partners are personally insolvent.

Requirement: Determine the amounts of cash distributed to the partners from the partial realization
of partnership assets.

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“Blessed are the pure in heart, for they will see God.” (Matthew 5:8)
-END-

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SOLUTIONS TO QUIZ 2:

CASE #1:
Solution:
Collection from accounts receivable (60% x
108,000
180K)
Sale of inventory 50,000
Sale of equipment 310,000
Liquidation costs (10,000)
Net proceeds 458,000
Carrying amt. of all non-cash assets,
(650,000)
except Receivable from B (180K + 160K +310K)
(192,000
Loss
)

A B
  Totals
(60%) (40%)
Capital balances before liquidation 240,000 190,000 430,000
Payable to (Receivable from) partners 20,000 (10,000) 10,000
Total 260,000 180,000 440,000
Allocation of loss (115,200 (192,000
(76,800)
(-192K x 60%); (-192K x 40%) ) )
Amount received by partners 144,800 103,200 248,000

CASE #2:
Solution:
Collection from accounts receivable (50% x
90,000
180K)
Sale of inventory 20,000
Sale of equipment 120,000
Liquidation expenses (10,000)
Estimated liquidation costs (5,000)
Net proceeds 215,000
Carrying amt. of all non-cash assets,
(650,000)
except Receivable from B (180K + 160K +310K)
Loss (435,000)

A B
  Totals
(60%) (40%)
Capital balances before liquidation 240,000 190,000 430,000
Payable to (Receivable from) partners 20,000 (10,000) 10,000
Total 260,000 180,000 440,000
Allocation of loss (261,000 (174,000 (435,000
(-192K x 60%); (-192K x 40%) ) ) )
Total (1,000) 6,000 5,000
Allocation of deficiency to other partner 1,000 (1,000) -
Amount received by partners - 5,000 5,000

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