1. The balance sheet for the partnership of JJ, CC and TT, whose shares of profits and...
Question:
1. The balance sheet for the partnership of JJ, CC and TT, whose shares of profits and losses are 40, 50 and 10 percent, is as follows:
Cash P50,000
Inventory 360,000
Total Assets P410,000
Accounts payable P150,000
JJ, Capital 160,000
CC, Capital 45,000
TT, Capital 55,000
Total Liabilities and Equities P410,000
The partnership will be liquidated in instalments. As cash becomes available, it will be distributed to the partners. If inventory costing P200,000 is sold for P140,000, how much cash should be distributed to (1) JJ, (2) CC and (3) TT at this time?
A. JJ P56,000; CC P70,000; TT P14,000
B. JJ P16,000; CC P20,000; TT P4,000
C. JJ P20,000; CC P-0-: TT P20,000
D. JJ P32,000; CC P-0-; TT P8,000
2. The partnership of Peter, Paul and Mary share profits and losses in the ratio of 4:4:2, respectively. The partners voted to dissolve the partnership when its assets, liabilities and capital were as follows:
Assets:
Cash P250,000
Other assets 1,000,000
Total assets P1,250,000
Liabilities and Capital:
Liabilities P200,000
Peter, capital 300,000
Paul, capital 350,000
Mary, capital 400,000
Total Liabilities and Equity P1,250,000
The partnership will be liquidated over a prolonged period of time. As cash is available, it will be distributed to the partners. The first sale of noncash assets having a book value of P600,000 realized P475,000. How much cash should be distributed to each partner after this sale?
A. Peter, P210,000; Paul, P290,000; Mary, P145,000
B. Peter, P290,000; Paul, P210,000; Mary, P105,000
C. Peter, P150,000; Paul, P175,000; Mary, P200,000
D. Peter, P90,000; Paul, P140,000; Mary, P295,000
3. who share profits and losses in the ratio 4:4:2, respectively:
Cash P20,000
Other assets 180,000
Total Assets P200,000
Liabilities P50,000
Alpha, capital 37,000
Baker, capital 65,000
Charley, capital 48,000
Total Liabilities and Equity P200,000
Assume that the partners decided to liquidate the partnership. The first sale of noncash assets having a book value of P90,000 realized P50,000, and all cash available after settlement with creditors was distributed. How should the available cash have been distributed?
A. Alpha, P-0-; Baker, P18,500; Charley, P1,500
B. Alpha, P-0-; Baker, P13,333; Charley, P6,667
C. Alpha, P8,000; Baker, P8,000; Charley, P4,000
D. Alpha, P6,667; Baker, P6,667; Charley, P6,666
4. A partnership has the following capital balances: A (20% profits and losses) = P100,000; B (30% of profits and losses) = P120,000; C (50% of profits and losses) = P180,000. If the partnership is to be liquidated and P30,000 becomes immediately available, who gets that money?
A. P22,000 to A; P8,000 to B; P-0- to C
B. P24,000 to A; P6,000 to B; P-0- to C
C. P6,000 to A; P9,000 to B; P15,000 to C
D. P22,000 to A; P3,000 to B; P5,000 to C
5. On December 1, 20x5, the partners of Tim, Williams, and Levin, who share profits and losses in the ration of 4:4:2, decided to liquidate their partnership. On this date the partnership condensed balance sheet was as follows:
Cash P100,000
Other assets 300,000
Liabilities P90,000
Tim, capital (40%) 100,000
William, capital (40%) 120,000
Levin, capital (20%) 90,000
On December 11, 20x5, the first cash sale of other assets with a carrying amount of P200,000 realized P140,000. Safe installment payments to the partners were made on the same date. How much should be distributed to (1) Tim, (2) William and (3) Levin?
A. (1) P36,000; (2) P56,000; (3) P58,000
B. (1) P40,000; (2) P40,000; (3) P20,000
C. (1) P40,000; (2) P48,000; (3) P18,000
D. (1) P24,000; (2) P24,000; (3) P12,000
24. Under the rule of offset, what is the proper disposition of a partnership loan that was made from a partner who has a debit balance?
A. The loan is charged off to the capital accounts of all the partners in their profit and loss sharing ratios.
B. The loan is written off as a partnership loss if the partner does not have the ash to cover the debit balance.
C. The loan is first paid to the debtor partner before cash payments are made to partners.
D. The loan is charged off to the capital account of the debtor partner.
25. In partnership liquidation, what are safe payments?
A. The amounts of distributions that can be made to the partners, after all creditors have been paid in full.
B. The amounts of distributions that can be made to the partners, after all non-cash assets have been adjusted to fair market value.
C. All the above are examples of the safe payments concept.
D. The amounts of distributions that can be made to the partners with assurance that such amounts will not have to be returned to the partnership.
26. If all partners are included in the first installment of an instalment liquidation, then in future installments
A. A cash distribution plan must be prepared so that partners will know when they will be included in cash distributions.
B. A safe payments schedule must be prepared before each cash distribution to avoid excessive payments to partners.
C. Cash will be distributed according to the residual profit and loss sharing ratio.
D. Cash should not be distributed until all non-cash assets are converted into cash.
27. Partner's maximum loss absorbable is calculated by
A. Multiplying distributable assets by the partner's profit-sharing percentage.
B. Dividing the partner's capital balance by his or her profit-and-loss-sharing percentage.
C. Multiplying the partner's capital balance by his or her profit-and-loss-sharing percentage.
D. Dividing the partner's capital balance by his or her percentage interest in capital.