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PROBLEM 3: EXERCISES Use the following information for independent Cases 1 to 6: 1. The statement of financial position of ABC Co. before liquidation is as follows: Cash 40,000 Accounts payable 60,000 Accounts receivable 120,000 Payable to B 40,000 Inventory 240,000 A, Capital (20%) 200,000 Equipment 800,000 B, Capital (30%) 300.000 Accum. depreciation (200,000) C, Capital (50%) 400,000 Total Assets 1.000.000 Total Liab. & Equity 1,000,000 a. Case 1: The non-cash assets were realized as follows: Of the total accounts receivable, only P100,000 were collected b. The entire inventory was sold for P140,000 c. The equipment was sold for P500,000 d. P4,000 liquidation expenses were paid. Requirement: Compute for the cash distributions to the partners Case 2: The partnership is liquidated on installment basis. In the first month of the liquidation process: a. 80% of the accounts receivable was collected for only P60,000 b. Two-thirds of the inventory was sold for P80,000. NOT FOR SALE! All rights belongs to respective authors Please consider huving the original stany Partnerskip Liquidation 145 c Equipment with carrying amount of P300,000 was sold for P240,000 d. P4,000 liquidation expenses were paid. An additional P2,000 is expected to be incurred in the succeeding periods. e P18,000 cash is set aside for potential unrecorded liabilities. Requirement: Compute for the cash distributions to the partners. Case 3: A third party offered to buy the non-cash assets and assume the accounts payable of the partnership for 1960,000 However, certain assets are to be revalued as follows: Accounts receivable, P90,000; Inventory, P150,000; and Equipment, P640,000 Requirement: Compute for the cash distributions to the partners. Case 4: The non-cash assets were sold for P100,000. The financial conditions of the partners are as follows: A B Personal assets 600,000 520,000 400,000 Personal liabilities (440,000) (440,000) (640,000) Requirement: Compute for the cash distributions to the partners. Case 5: The partnership will be liquidated on an installment basis. Distributions to the owners will be made as cash becomes available The following transactions occurred in January 20x1: a 75% of the accounts receivable was collected for only P60,000. receivable, P90,000; Inventory, P150,000; and Equipment, P640,000 Requirement: Compute for the cash distributions to the partners. Case 4: The non-cash assets were sold for P100,000. The financial conditions of the partners are as follows: B Personal assets 600,000 520,000 400,000 Personal liabilities (440,000) (440,000) (640,000) Requirement: Compute for the cash distributions to the partners. Case 5: The partnership will be liquidated on an installment basis. Distributions to the owners will be made as cash becomes available. The following transactions occurred in January 20x1: a. 75% of the accounts receivable was collected for only P60,000. b. Half of the inventory was sold for P80,000. c. Equipment with carrying amount of P400,000 was sold for P240,000 d. P4,000 liquidation expenses were paid. Estimated future liquidation expenses totaled P2,000. e. P18,000 cash was retained in the business for potential unrecorded liabilities and anticipated expenses. All rights belongs to respective autho Please consider buving the oricinalo as anaipated expense Chapter 4 146 The following transactions occurred in February 20x1: a. P20,000 was collected on the remaining accounts receivable the balance was deemed uncollectible. b. The other half of the inventory was sold for P40,000. c. The remaining items included in the equipment account were sold for P60,000 d. P20,000 liquidation expenses and previously unrecorded liabilities were paid. The liquidation process ended on February 28, 20x1. e Requirements: Prepare the schedule of safe payments as of a. January 31, 20x1; and b. February 28, 20x1. Case 6: Use the fact pattern and the additional information in Case 5. Requirements: Determine the cash distributions to the partners on the dates below using a cash priority program a. January 31, 20x1 b. February 28, 20x1 2 The accounts of A&B Co before liquidation are as follows