6. The following condensed balance sheet is presented for the partnership of Archer, Bows and Cross, who share profits and losses in the ratio 6:3:1, respectively:

Cash P10,000

Other assets 290,000

Total assets P300,000

Liabilities P130,000

Note Payable to Archer 15,000

Note Payable to Bows 5,000

Archer, Capital 43,000

Bows, Capital 43,000

Cross, Capital 64,000

Total liabilities and equity P300,000

Bows paid P30,000 to creditors out of her own personal funds - this has not been reflected in the above balance sheet. Archer is personally solvent but temporarily not liquid. The partners decided to liquidate the partnership. The first sale of noncash assets having a book value of P140,000 realized P120,000. How should the available cash be distributed?

A. Archer, P10,000; Bows, P10,000; Cross, P10,000

B. Archer, P-0-; Bows, P-0-; Cross, P-0-

C. Archer, P21,000; Bows, P8,000; Cross, P1,000

D. Archer, P18,333; Bows, P8,333; Cross, P3,334

E. Archer, P-0-; Bows, P-0-; Cross, P30,000

7. On January 1, 20x4, the partners of CC, DD and EE, who share profits and losses in the ratio of 5:3:2, decided to liquidate their partnership. On this date the partnership condensed balance sheet was as follows: cash, P50,000; other assets, P250,000; liabilities, P60,000; CC, capital P80,000; DD, capital P90,000; and EE, P70,000.

On January 15, 20x4, the first cash sale of other assets with a carrying amount of P150,000 realized P120,000. Safe instalment payments to the partners were made on the same date. How much cash should be distributed to (1) CC, (2) DD, and (3) EE?

A. (1) P40,000; (2) P45,000; (3) P35,000

B. (1) P60,000; (2) P36,000; (3) P24,000

C. (1) P15,000; (2) P51,000; (3) P44,000

D. (1) P55,000; (2) P33,000; (3) P22,000

8. The capital balances, prior to the liquidation of the XYZ partnership, were as follows:

X, Capital P130,000

Y, Capital P130,000

Z, Capital P100,000

X, Y and Z share profits and losses in the ratio of 5:3:2. As a result of a loan, the partnership owes Y P80,000. Using the information above, which partner has the highest loss absorption power (LAP) prior to liquidation?

A. Z

B. Both X and Y

C. Y

D. X

9. After all noncash asset have been converted into cash in the liquidation of the AA and KK Partnership, the ledger contains the following account balances:

Debit Credit

Cash dr P47,000

Account payable cr P32,000

Loan payable to AA cr P15,000

AA, Capital dr P7,000

KK, Capital cr P7,000

Available cash should be distributed with P32,000 going to accounts payable and then:

A. P15,000 loan payable to AA

B. P7,500 each to AA and KK

C. P7,000 to AA and P8,000 to KK

D. P8,000 to AA and P7,000 to KK

10. Dancey, Reese, Newman and John were partners who shared profits and losses on a 4:2:2:2 basis, respectively. They were beginning to liquidate their business. At the start of the process, capital balances were as follows:

Dancey, capital P72,000

Newman, capital P52,000

Reese, capital P32,000

John, capital P24,000

Which one of the following statements is true?

A. The first available P4,000 would go to John

B. The first available P16,000 would go to Dancey

C. The first available P16,000 would go to Newman

D. The first available P8,000 would go to John

E. The first available P8,000 would go to Reese

28. A schedule prepared each time cash is to be distributed is called a(n)

A. Marshalling of assets schedule.

B. Loss absorption potential schedule.

C. Safe payment schedule.

D. Advance cash distribution schedule.

29. Which partner is considered the most vulnerable as a result of a computation of vulnerability rankings?

A. The partner with the highest vulnerability ranking, who also has the lowest loss absorption potential.

B. The partner with the lowest vulnerability ranking, who also has the highest loss absorption potential.

C. The partner with the highest vulnerability ranking, who also has the highest loss absorption potential.

D. The partner with the lowest vulnerability ranking, who also has the lowest loss absorption potential.

30. The rank order is for claims against a bankrupt partner of

I. Those owing to partners by way of contribution

II. Those owing to separate creditors

III. Those owing to partnership creditors

A. III first; II second and I third.

B. I first; III second and II third.

C. II first; III second and I third.

D. II first; I second and III third.

31. The partnership of Clapton, Seidel and Thomas was insolvent and will be unable to pay P30,000 in liabilities currently due. What recourse was available to the partnership's creditors?

A. They must present equal claims to the three partners as individuals

B. They cannot seek remuneration from the partners as individuals

C. They must present their claims to the three partners in the order of the partners' capital account balances

D. They must try to obtain a payment from the partner with the largest capital account balance

E. They may seek remuneration from any partner they choose