MODULE 1 - PARTNERSHIP ACCOUNTING

Unit 4.1 - Partnership Liquidation

NAME: Date:

Instructor: Class Code: Score:

1. A and B formed a partnership on July 1, 2004 to operate two stores to be

managed by each of them. They invested P30,000 and P20,000 and agreed

to share earnings 60% and 40%, respectively. All their transactions were of cash,

and all their subsequent transactions were handled through their respective

bank accounts as summarized below:

A B

Cash receipts......................................................P79,100 P65,245

Cash disbursements............................................. 62,275 70,695

On December 31, 20x1, all remaining non-cash assets in the two stores were

sold for cash of P60,000. The partnership was dissolved, and cash settlement

was effected. In the distribution of the P60, 000 cash, A received:

a. P24, 000

b. 26, 000

c. 34,000

d. 36,000

2. A balance sheet for the partnership of KK, LL and MM, who share profits 2:1:1

respectively, shows the following balances just before liquidation:

Cash Other assets Liab. KK, Cap. LL. Cap. MM, Cap.

P48,000 P238,000 P80,000 P88,000 P62,000 P56,000

In the first month of liquidation, P128,000 was received on the sale of certain

assets, Liquidation expenses of P4,000 were paid, and additional liquidation

expenses of P3,200 are anticipated before liquidation is completed. Creditors

were paid P22,400. Available cash was distributed to the partners.

The cash to be received by each partner based on the above data:

KK LL MM KK LL MM

a. P56,600 P28,300 P28,300 c. P29,400 P32,700 P26,700

b. 86,000 61,000 55,000 d. 88,000 62,000 56,000

3. On January 1, 2009, partners AAA, BBB and CCC, who share profits and losses

in the ratio of 5:3:2, respectively, decided to liquidate their partnership. On this

date, the partnership's condensed balance sheet was as follows:Cash P 50,000

Other assets 250,000

P 300,000

Liabilities P 60,000

AAA, capital 80,000

CCC, capital 90,000

BBB, capital 70,000

Total P 300,000

On June 15, 2009, the first cash sale of other assets with a carrying amount of

P150,000 realized P120,000. Safe installment payments to the partners were

made the same date. How much cash should be distributed to each partner?

AAA BBB CCC

a. P 15,000 P 51,000 P 44,000

b. 40,000 45,000 35,000

c. 55,000 33,000 22,000

d. 60,000 36,000 24,000