Answer the following questions
104 . . KB/S 7. Sid, Olga and Louie are partners of SOL Resort. The firm has been in financial trouble ever since floods battered the town a few years ago. The partners decided to liquidate on January 31, 2019 and gave you the following balances of the as at this date showed the following. Cash P8,000 Liabilities P.98,000 Other Assets 190,000 Loan due to Olga 10,000 Income Summary 15,000 Sid, Capital 55,000 Olga, Capital 24,000 Louie, Capital 26,000 Total P213,000 Total P213,000 Profit or loss is distributed based on a 5:3:2 ratio after a monthly salary allowance of P10,000 each partner. After the operation in January 2019, the other assets were sold for P90,000. Their personal assets and (liabilities) are as follows: Sid P75,000 (P50,000); Olga P80,000 (P120,000); Louie P60,000(P 50,000) Direction: A. Prepare the entry to close the net loss to the capital accounts. Change capital balances. B. Prepare a statement of partnership liquidation with supporting journal entries for sale at a loss, payment of liabilities, right of offset, investment by deficient but solvent partner, distribution of remaining cash to appropriate partners. 8. Immediately prior to liquidation, partners Miss, Mister and Master have capital balances of P300,000, P200,000, and P300,000, respectively. There is a cash balance of P80,000, and a liabilities- Accounts Payable of P800,000 including a loan due to Mister of P50,000, partner's right over profit or loss is based on capital ratio. Personal assets and (liabilities) are: Miss P60,000 (P40,000); Mister P70,000 (P75,000); and Master P80,000 (P180,000) Direction: A. Prepare a statement of liquidation using the title Cash and Non-Cash for the Assets. Separate Accounts Payable from Loan Payable to Mister. The following describes the liquidation process: a.)sale of non-cash assets for P700,000; b.) payment of accounts payable; c.) deficiency of Master absorbed by the other partners; d.) right of offset is applied; e.) additional investment of deficient but solvent partner; and f.) distribution of remaining cash to appropriate partners. B. Prepare the entries to record the liquidation proceedings. 9. Pepe, Pilar and Paz Partnership showed the following financial position before they decided to liquidate on July 31, 2019 because of personal differences: Cash P70,000 Liabilities P280,000 Other Assets 530,000 Loan Payable, Pepe 30,000 Pepe, Capital 65,000 Pilar, Capital 90,000 Paz, Capital 135,000 Total P600,000 Total P600,000 The partnes share profits and losses equally. The other assets were sold at a loss of P315,000. Liquidation expenses of P15,000 were also paid. Partnership became insolvent. The partner's personal records showed the following: Personal Assets Personal Liabilities Pepe (general partner) P75,000 P50,000 Pilar (general partner) 112,000 37,000 Paz (general partner) 130,000 170,000 Directions: A. Prepare a statement of partnership liquidation listing the sale to the creditors from partnership cash, balance of unpaid account paid by Pepe, partners make cash settlement among themselves. B. Marshalling assets: other than the personal assets of P130,000, by how much more can the personal creditors of Paz get additional payment from the other partners? 10. Using exercise 9, start with the balances after payment of partnership liabilities: A. Prepare a statement of liquidation assuming this time that Pepe is a limited partner and all other partners make payments accordingly based on their personal resources. B. Partnership creditors (outside creditors and Pepe) collect from Pilar. C. Marshalling of assets: other than the personal assets of P130,000 by how much more can the personal creditors of Paz collect from the other partner(s)
