XII – Statement of Liquidation: Lump-sum

Assume the following data for QRS Partnership had the following condensed balance sheet just before liquidation on November 1, 20x4, reports the following
balances:
Assets Liabilities and Capital
Cash . . . . . . . . . . . . . . . . . . . . . . . P 24,000 Liabilities . . . . . . . . . . . . . . . . . P 12,000
Noncash assets ......................... 84,000 Q, loans . . . . . . . . . . . . . . . . . . 2,400
Q, capital(30%) . . . . . . . . . . . . 9,600
R, capital (50%) .................... 48,000
S, capital (20%) .................. 36,000
P108,000 P108,000
Required: Prepare statement of liquidation, assuming, the noncash assets includes goodwill of P54,000 and prepaid expenses of P18,000. The partners agreed to write-
off these accounts since they are valueless. The remaining noncash assets were realized at P1,200 with liquidation expenses paid amounting to P14,400.
The personal assets and liabilities of the partners on this date are as follows:
Personal Assets Partnership Liabilities
Q....................................................... P 240,000 P204,000
R…………………………………. 216,000 192,000
S…………………………………. 108,000 112,800

Solution to Problem XII – Statement of Liquidation: Lump-sum

Note: Loss on Realization Creates a Deficit Balance in Partner’s Capital Account Requiring Transfer Partner’s
Loan Account (Right of Offset Is Exercised) since Partners Q and R are Personally Solvent.
QRS Partnership
Statement of Realization and Liquidation November 1 – 30, 20x4
Non- Q, R, S,
Cash Capital Capital Capital
Cash Assets Liabilities Q, Loan (30%) (50%) (20%)
Balances before liquidation 24,000 84,000 12,000 2,400 9,600 48,000 36,000
Payment of liquidation
Expenses (14,400) (4,320) (7,200) (2,880)
Balances after payment of
liquidation expenses 9,600 84,000 12,000 2,400 5,280 40,800 33,120
Write-off goodwill and
prepaid expenses (72,000) (21,600) (36,000) (14,400)
Balances after write-offs 9,600 12,000 12,000 2,400 (16,320) 4,800 18,720
 Balances after write-offs 9,600 12,000 12,000 2,400 (16,320) 4,800 18,720
Realization and distribution
of loss 1,200 (12,000) ( 3,240) ( 5,400) ( 2,160)
Balances after realization 10,800 12,000 2,400 ( 19,560) ( 600) 16,560
Payment of liabilities (10,800) (10,800)
Balances after payment of
Liabilities -0- 1,200 2,400 (19,560) ( 600) 16,560
Offset loan versus deficit (2,400) 2,400
Balances after offsetting -0- 1,200 (17,160) ( 600) 16,560
Additional investment by Q
and R 17,760 17,160 600
Balances after additional
Investment 17,760 1,200 16,560
Payment of liabilities (1,200) (1,200)
Balances after payment of
Liabilities 16,560 16,560
Payment to partners -
Capital (16,560) (16,560)

XIII –Lump-sum: Incomplete Data

On December 31, 20x9, the accounting records of MM, NN and OO Partnership (a general partnership) included the following ledger account balances:

MM, drawing…………………………………………. P (15,000.00)

OO, drawing…………………..……………………… ( 5,625.00)
NN, loan………………………………….……………. 18,750.00
MM, capital…………………………………………… 76,875.00
NN, capital……………………………………………. 62,812.50
OO, capital…………………………………………… 67,500.00

Total assets of the partnership amounted to P299,062.50, including P32,812.50 cash, and partnership liabilities totaled, P93,750. The partnership was liquidated
on December 31, 20x9, and OO received P52,031.25 cash pursuant to the liquidation. MM, NN and OO shared net income and losses in a 5:3:2 ratio, respectively.
Determine:
1. The loss on realization:
a. P 9,843.75 c. P49,218.75
b. 15,468.75 d. P77,343.50
2. The amount realized from sale of non-cash assets?
a. P160,781.25 c. P217,031.25
b. 188,906.25 d. 266,250.00
3. The cash balance after payment of liabilities?
a. P156,093.75 c. P221,718.75
b. 193,593.75 d. 249,843.75
 XIV – Lump-sum: Incomplete Data
The AA, BB and CC partnership began the process of liquidation with the following balance sheet:
Cash…………………………………….. P 8,000 Liabilities……………………………………. P 75,000
Noncash assets……………………….. 217,000 AA, capital…...................................................... 40,000
BB, capital…....................................................... 45,000
CC, capital… ................................................. 65,000
Total Assets……………………………….P225,000 Total liabilities & capital…............................ P225,000
AA, BB and CC share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be P6,000. After the liquidation expenses of P6,000 had been paid
and the non-cash assets sold, CC had a deficit of P4,000. For what amount were the non-cash assets sold?
a. P 85,000 c. P 79,000
b. 132,000 d. 73,000
 XV – Lump-sum: Incomplete Data
Silverio, Domingo, Reyes, and Pasko are partners sharing earnngs in the ratio of 3/32; 4/21; 6/21 and 8/21. The balances of their capital accounts on December
31,20x9 are as follows:
Silverio…………………………………………………………………… P 500
Domingo………………………………………………………………… 12,500
Reyes……………………………………………………………………… 12,500
Pasko……………………………………………………………………… 4,500
P30,000
The partners decided to liquidate, and they accordingly convert the non-cash assets into P11,600 of cash. After paying the liabilities amounting to P1,500, they have
P11,100 to divide. Assume that a debit balance of any partner’s capital is uncollectible.

Determine:
1. The book value of the non-cash assets amounted to:
a. P12,600 c. P30,500
b. P22,700 d. P31,500
2. The share of Silverio in the loss upon conversion of the non-cash assets into cash was:
a. P2,486.00 c. P2,700
b. P2,628.50 d. None
3. After the P11,100 was divided, the capital balance of Domingo was:
a. P1,600 c. P2,200
b. P1,960 d. P8,900
 XVI – Lump-sum: Incomplete Data
Fleming, Durano, and Mart are partners in a wholesale business. On January 1, 20x9 the total capital was P30,000 and drawings presented as follows:
Capitals Drawings
Fleming……………………………………. P 6,250 P 3,750
Durano…..………………………………… 5,000 2,500
Mart………………………………………… 18,750 1,250

Partners agree that profit and loss ratio are shared equally. Because of the failure of some debtors to pay their outstanding accounts, the partnership loses heavily and
is compelled to liquidate. After exhausting the partnership assets, including those arising from an operating profit of P4,500 in 20x9, they still owe P5,250 to creditors on
December 31, 20x9. Fleming has no personal assets but the others are well off.
1. The partnership liquidation loss:
a. None c. P27,750
b. P10,000 d. P32,250

2. The amount to be received by Mart as a result of the liquidation:

a. P 818.75 c. P7,125.00
b. P4,875.00 d. P9,750.00
 XVII – Statement of Liquidation: Installment;
Schedule of Safe Payments and Cash Payment Priority Program
Assume A, B, C, and D are partners sharing profits 40%: 20%: 20%: 20%, respectively. On January 1, 20x4, they agree to liquidate. A balance sheet prepared on this
date is shown as follows:
Assets Liabilities and Capital
Noncash assets ....................P 181,800 Liabilities . . . . . . . . . . . . . . . . . P 84,000
A, loan . . . . . . . . . . . . . . . . . . . 6,000
D, loan . . . . . . . . . . . . . . . . . . . 3,000
A, capital . . . . . . . . . . . . . . . . 26,400
B, capital . . . . . . . . . . . . . . . . . 25,800
C, capital . . . . . . . . . . . . . . . . 20,400
D, capital............................. 16,200
Total ...................................P 181,800 Total .................................. P 181,800
The results of liquidation are summarized below:
Costs of
Cash proceeds Book value liquidation Payment
on Sale of of Noncash expenses to Cash
20x4 Noncash Assets Assets Sold paid Creditors withheld
January . . . . . . . . . . . P 72,000 P 90,000 P 1,200 P 66,000 P4,800
February . . . . . . . . . . 21,600 30,000 1,320 18,000 1,800
March . . . . . . . . . . . . 19,200 24,000 1,440 1,200
April . . . . . . . . . . . . . . 6,000 19,800 4,800 600
May . . . . . . . . . . . . . 2,400 18,000 960
Distributions of cash to partners are normally done at month-end.
Determine:
1. The amount to be received by Partner A for the month of January?
2. The amount to be received by Partner B for the month of February?
3. The amount to be received by Partner C for the month of March?
4. The amount to be received by Partner D for the month of April?
5. The total payment to partners for the month of May?
6. The partner most vulnerable to partnership losses on liquidation is:
7. The second payment to any partner (s) under a program of priorities shall be made thus:
 XVIII
Following is the balance sheet of DD, EE, and FF Partnership (a general partnership) on June 4, 20x9, immediately prior to its liquidation:
Assets Liabilities and Capital
Cash……………………………..P 6,000 Liabilities…………………………….. P 20,000
Other Assets…………………… 94,000 EE, loan ..................................................... 4,000
DD, capital… .......................................... 27,000
EE, capital… ........................................... 39,000
FF, capital… ........................................ 10,000
Total..………………….…………P100,000 Total… ................................................. P100,000
The partners shared net income and losses as follows: DD, 40%; EE, 40%; and FF, 20%. On June 4, 20x9, the other assets were realized at P30,700, and P20,500 had to
be paid to liquidate the liabilities because of an unrecorded trade accounts payable of P500. DD and EE were solvent, but FF’s personal liabilities exceeded personal
assets by P5,000. How much would each partner receive?
a. DD, P1,680; EE, P17,680; FF, P -0 c. DD, P100; EE, P12,100; FF, P -0-
b. DD, P1,480; EE, P17,480; FF, P -0- d. DD, P100; EE, P16,100; FF, P -0-
 XIX – Statement of Liquidation: Installment;
Aaron, Ben and Chris are partners who share income in a 1:3:1 ratio, respectively. On January 1, 20x5, they
decide to terminate operations. The partnership’s trial balance on that date is as follows:
Debit Credit
Cash P 20,000
Accounts receivable 200,000
Loan receivable – Ben 15,000
Inventory 400,000
Equipment 600,000
Accounts payable P 80,000
Bank loan payable 240,000
Loan payable – Aaron 25,000
Capital – Aaron 310,000
Capital – Ben 250,000
Capital – Chris 330,000
P1,235,000 P1,235,000
Liquidation of assets will take place over the next few months. At the end of each month, available cash, less an amount retained to cover estimated future liquidation
costs, is distributed to each partner. During January 20x5, the following events occur:
• P90,000 of the accounts receivable are collected.
• The inventory was sold for P180,000.
• The equipment was sold for P300,000.
• Liquidation costs of P10,000 were paid.
• The bank loan and the accounts payable were paid.
• P18,000 of cash is to be retained to cover future costs.
1. The capital balance (deficiency) of the partners on January 31 before the distribution of possible losses and anticipated expenses (if any) for Aaron, Ben and
Chris, respectively:
a. P203,400; (P159,800); P198,400 c. P229,000; (P159,800); P198,400
b. P225,400; (P 93,800); P220,400 d. P123,500; P 0; P242,000
2. How much should each partner receive for the month of February?
a. P203,400; (P159,800); P198,400 c. P229,000; (P159,800); P198,400
b. P225,400; (P 93,800); P220,400 d. P123,500; P 0; P118,500
 XX
When Ray and Conniff, general partners of the Ray Conniff partnership who shared net income and losses in a 4:6 ratio, were incapacitated in an accident, a liquidator
was appointed to raise up the partnership. The partnership’s balance sheet showed the following:
Assets Liabilities and Capital
C ash…… …… …… ……… … P 17,500 Liabilities..................................................... P 10,000
Other Assets………………. 50,000 Ray, capital….................................................. 35,500
Goodwill…………………… 5,000 Conniff, capital… ........................................ 27,000
Total.…………………… …. P72,500 Total..………………….…………………… P 72,500
Because of the specialized nature of the non-cash assets, the liquidator anticipated that considerable time would be required to dispose them. Liquidation expenses
paid P2,500 for advertising, rent, travel, etc. and in the process of liquidating the partnership an overlooked bill for landscaping services of P1,000 is discovered
and in addition, partners agree to keep a P1,500 contingent fund. Determine the amount of cash that should be paid to each partner:
Ray Conniff Ray Conniff
a. P 11,500 P 0 c. P 7,500 P 0
b. P 2,500 P 0 d. P 5,000 P 0
 XXI
The ABC Partnership is being dissolved. All liabilities have being liquidated. The balance of assets of hand is
being realized gradually. The following are details of partners’ accounts.
Capital Account Current Account Loans to (Original Investment) (undistributed earnings)
Partnership P&L
A P 5,000 P 250 Cr. P 3,750 40%
B 6,250 500 Dr. - 40%
C 2,500 250 Cr. 1,250 20%
If A receives P4,000 at this point, how much will BB and CC receive?
BB CC BB CC
a. P5,750 P4,000 c. P5,000 P1,500
b. P 750 P1,500 d. P1,000 P1,125
 XXII
The balance sheet of the Partnership Duro, Kemp, and Ruth on December 31, 20x8 before liquidation shows the following:
Cash……………………………...P 60,000 Accounts payable.................................. P 75,000
Other Assets…………………… 280,000 Notes payable ........................................... 50,000
Loan to Ruth…………………… 10,000 Loan from Kemp…...................................... 5,000
Duro, capital (50%) ................................ 85,000
Kemp, capital (30%)............................... 85,000
Ruth, capital (20%) .............................. 50,000
T ot al … … … … … … … … … … … … P 350,000 Total. ....................................................... P350,000
The partnership decided to liquidate as soon as possible after December 31, 20x8, and all cash on hand except for P5,000 contingency balance is to be distributed
at the end of each month until the liquidation is completed. If in the first month realization and distribution, the partnership pays liquidation expenses of P2,500 and
Kemp receives P30,000. Compute the cash proceeds from the initial sale of other assets?
a. P80,000 c. P100,000
b. P90,000 d. P102,500
 XXIII
The following account balances were available for the PP, QQ, and RR partnership just before it entered liquidation:
Cash………………………………P 45,000 Liabilities………………………………….....P 85,000
Noncash assets……………….. 50,000 PP, capital… ..................................................... 35,000
QQ, capital… ................................................... 25,000
RR, capital… ................................................. 50,000
Total Assets………………….. P195,000 Total liabilities & capital… ........................ P 195,000
PP, QQ and RR had shared profits and losses in a ratio of 4:4:2. Liquidation expenses were expected to be P4,000. All partners were solvent. What would be the minimum
amount for which the non-cash assets musts have been sold for, in order for QQ to receive some cash from the liquidation?
a. Any amount in excess of P87,500.00 c. Any amount in excess of P91,500.00
b. Any amount in excess of P58,500.00 d. Any amount in excess of P99,333.50
 XXV
The partnership of Aiko, Barney and Clinton is winding its affairs. The following information has been gathered. The trial balance of the partnership at June 30, 2019, is as follows:
Cash……………………………………… P 3,000 Accounts payable…………………P 8,500 Accounts receivable……………….. 11,000 Aiko, capital (50%) 33,500
Inventory………………………………. 7,000 Barney, capital (30%) ...................... 22,500
Property, plant and Clinton, capital (20%)...................... 15,750
equipment (net) ...................................... 49,500
Aiko, loan ..................................................... 6,000
Clinton, loan…………………………. 3,750 _
Totals………………………………….. P 80,250 Totals ................................................. P 80,250
Cash is distributed to the partners at the end of each month. A summary of transactions follows:
July:
P8,250 – collected on accounts receivable; balance is uncollectible P5,000 – received from the entire inventory
P 500 – liquidation expenses paid
P4,000 – cash retained in the business at the end of the month

August:
P 750 – liquidation expenses paid
- Clinton’s capital was reduced when Clinton accepted a piece of special equipment that had a book value of P2,000. The partners agreed that a value of P5,000 should
be placed on the machine for liquidation purposes
P 1,250 - cash retained in the business at the end of the month

September:
P37,500 - received on sale of remaining plant assets P 500 - liquidation expenses paid
- No cash was retained in the business
Determine the cash to be paid to Barney in:
July August September July August September
a. P -0-; P 2,000; P12,300 c. P 3,250; P 2,469; P11,700
b. P 3,250; P 2,000; P11,700 d. P 3,250; P 2,000; P13,200