Fundamental Accounting Theory and Practice II

Long Quiz 2 March 18, 2024

Name: __________________________________________________________Course & Section:
_______________________
Instructions: Write your answers on the space provided. 2 points each.

1. A balance sheet for the partnership of Uno, Dos and Tres, who share profits in
the ratio of 2:1:1, shows the following balances:

On the first month of liquidation, certain assets are sold for ₱128,000. Liquidation
expenses of ₱4,000 are paid and additional liquidation expenses are anticipated.
Liabilities are paid amounting to ₱21,600 and sufficient cash is retained to insure
payment to creditors before making payments to partners. On the first payment to
partners, Uno receives ₱25,000.
Compute for the amount of cash withheld. _____________________________________

2. Selected accounts of XYZ Partnership just before liquidation are shown below:
X, loan ₱40,000 Dr
Y, loan 60,000 Cr
X, capital 90,000 Dr
Y, capital 180,000 Cr
Z, capital 150,000 Cr
The partners share profits and losses at 20%, 20% and 60%, respectively.
Assuming cash available for the first installment distribution is ₱120,000, compute
for the respective share of X, Y and Z. _____________________________________

3. ABC Partnership is a liquidating concern. Prior to liquidation, the partners had

capital balances of ₱35,000, ₱80,000 and ₱100,000, respectively. Additionally, at
this point, the partnership owes A ₱15,000. The partners share profits and losses
at 40%, 40% and 20%, respectively. The partners proceeded with the liquidation
and after all non-cash assets were sold, liabilities of ₱5,000 remained unpaid.
Assuming A and C are solvent while B is not, how much additional cash
investments will be required from all partners?
_____________________________________

4. After all noncash assets have been converted into cash in the liquidation of the
AA and JJ Partnership, the ledger contains the following account balances:

Cash 34,000 Dr
Accounts Payable 25,000 Cr
Loan Payable to AA 9,000 Cr
AA, Capital 8,000 Dr
Fundamental Accounting Theory and Practice II

JJ, Capital 8,000 Cr

Available cash should be distributed: 25,000 to accounts payable and:

_____________________________________

5. Arthur, Baker and Carter are partners in textile distribution business, sharing
profits and losses equally. On December 31, 2018 the partnership capital and
partners’ drawings were as follows:
Arthur Baker Carter TOTAL
Capital 100,00 80,000 300,00 480,00
0 0 0
Drawi 60,000 40,000 20,000 120,00
ng 0
The partnership was unable to collect on trade receivables and was forced to
liquidate. Operating profit in 2018 amounted to 72,000 which was all exhausted,
including partnership assets. Unsettled creditors’ claims at December 31, 2018
totaled 84,000. Baker and Carter have substantial private resources, but Arthur
has no personal assets. The final cash distribution to Carter was:
_____________________________________

6. Jar, Ram, and Milo, who divide profits and losses 50%, 30%, and 20%,
respectively, have the following October 31, 2018 account balances:
Jar, Drawing 12,000 Dr
Milo, Drawing 4,800 Cr
Accounts Receivable – Jar 7,200
Loans Payable – Ram 14,400
Jar, Capital 59,400
Ram, Capital 44,400
Milo, Capital 39,000

The partnership’s assets are 211,200 (including cash of 64,200). The partnership is
liquidated and Milo receives 33,000 in final settlement. How much is the total loss
on realization? _____________________________________

7. When Mikki and Mylene, partners who share earnings equally, were
incapacitated in an airplane accident, a liquidator was appointed to wind up their
business. The accounts showed cash, 35,000; other assets, 110,000; Liabilities,
20,000; Mikki, capital, 71,000; and Mylene, capital, 54,000. Because of highly
specialized nature of the noncash assets, the liquidator anticipated that
considerable time would be required to dispose them. The expenses of liquidating
the business (advertising, rent, travel, etc.) are estimated at 10,000. How much
cash can be distributed safely to each partner at this point?
_____________________________________
Fundamental Accounting Theory and Practice II

8. After all partnership assets were converted into cash and all available cash was
distributed to creditors, the ledger of the Daniela, Erika, and Fredline partnership
showed the following balances:
DEBIT CREDIT
Accounts Payable 20,000
Daniela, Capital 10,000
(40%)
Erika, Capital 60,000
(30%)
Fredline, Capital 90,000
(30%)
TOTAL 90,000 90,000
Percentages indicated are residual profit and loss sharing ratios. Personal assets
and liabilities of the partners are as follows:
Daniel Erika Fredlin
a e
Personal Assets 50,000 50,000 100,00
0
Personal 45,000 40,000 40,000
Liabilities
The partnership creditors proceed against Fredline for recovery of their claims,
and the partners settle their claims against each other. How much would Erika
receive? _____________________________________

9. The August, Albert and Gerry partnership became insolvent on January 1, 2019,
and the partnership is being liquidated as soon as practicable. In this respect, the
following information for the partners has been marshaled:
Capital Personal Personal
Balances Assets Liabilitie
s
August 70,000 80,000 40,000
Albert (60,000) 30,000 50,000
Gerry (30,000) 70,000 30,000
Total (20,000)
Assume that residual profits and losses are shared equally among the three
partners. Based on this information, the maximum amount that August can expect
to receive from the partnership liquidation is: _____________________________________

10. The partnership of AA, BB, and CC was dissolved on June 30, 2018 and account
balances after non-cash assets were converted into cash on September 1, 2018 are:
Cash 50,000 Dr
Accounts Payable 120,000 Cr
AA, Capital (30%) 90,000 Cr
BB, Capital (30%) 60,000 Dr
CC, Capital (40%) 100,000 Dr
Fundamental Accounting Theory and Practice II

Personal assets and liabilities of the partners at September 1, 2018 are:

Personal Personal
Assets Liabilities
AA 80,000 90,000
BB 100,000 61,000
CC 192,000 80,000
If CC contributes 70,000 to the partnership to provide cash to pay the creditors,
what amount of AA’s 90,000 partnership equity would appear to be recoverable?
_____________________________________

The Gospel is the good news that God became man in Jesus
Christ. He lived the life we should have lived and died the death
we should have died – in our place. Three days later He rose from
the dead, proving He is the Son of God and offering the gift of
salvation and forgiveness of sins to anyone who repents and
believes in Him.
- Rice Broocks