APC ch7sol - Accounting for Partnership Corporation by Baysa and Lupisan 2018 Chapter 7 PDF

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CHAPTER 7Installment LiquidationE 7-Cash Aguilar Bernardo Balances before liquidation P 40,000 P 80,000 P 44, Restricted interest – possible loss of P84,000 if nothing is realized on the remaining non-cash assets ( 50,400) ( 33,600) Balances P 40,000 P 29,600 P 10, Distribution of cash to partners (...

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CHAPTER 7 Installment Liquidation E 7-1 Balances before liquidation Restricted interest – possible loss of P84,000 if nothing is realized on the remaining non-cash assets Balances Distribution of cash to partners

Cash P 40,000

Aguilar P 80,000

Bernardo P 44,000

P 40,000 ( 40,000)

( 50,400) P 29,600 ( 29,600)

( 33,600) P 10,400 ( 10,400)

Conde P142,000 ( 10,000)

Dalmacio P 108,000 ( 10,000)

(110,000) P22,000

(110,000) (P12,000)

( 12,000) P 10,000 ( 10,000)

12,000 -

E. 7-2 Balances before liquidation Estimated liquidating expenses Possible loss of P220,000 if nothing is realized on non-cash assets Balances Additional possible loss to Conde for the deficiency of Dalmacio Balances Payment to Conde E 7-3 Estela, Fajardo and Gomez Cash Priority Program

Capital balances Add Loan balances Total partners’ interest Profit and loss ratio Loss absorption balance Allocation 1 – Cash to Gomez reducing LAB to an amount reported for Fajardo (P125,000 x 20%) Balances Allocation II – Cash to Fajardo & Gomez reducing LAB to an amount reported for Estela P100,000 x 40% P100,000 x 20% Balances Allocation III – further cash distribution may be made in the P & L ratio

Estela P 30,000 20,000 P 50,000 40% P125,000

Fajardo P 70,000 20,000 P 90,000 40% P225,000

Gomez P40,000 30,000 P 70,000 20% P350,000

P125,000

P225,000

(125,000) P225,000

Estela

P25,000

(100,000) P125,000

(100,000) P125,000 P125,000

PAYMENTS Fajardo Gomez

P40,000 -

P40,000

20,000 P45,000

E 7-4 Halili, Ibanez and Jacinto Cash Priority Program

Capital balances Profit and loss ratio Loss absorption balance Allocation I – Cash to Ibanez reducing LAB to an amount reported for Jacinto (P4,900 x 2/7) Balances Allocation II – Cash to Ibanez & Jacinto reducing LAB to an amount reported for Halili P21,000 x 2/7 P21,000 x 1/7 Balances Allocation III – Further cash distributions may be made in the P & L ratio

2.

Halili P11,200 4/7 P19,600

Ibanez P13,000 2/7 P45,500

Jacinto P5,800 1/7 P40,600

P19,600

( 4,900) P40,600

P40,600

Halili

PAYMENTS Ibanez Jacinto

P 1,400

(21,000) P19,600

P19,600

Book value of assets Loss on realization Capital balance of Halili prior to realization Cash to be received by Halili Share of Halili in the loss on realization Fractional share of Halili Cash to be realized of the sale of assets

6,000 (21,000) P19,600

-

P 7,400

P 3,000 P 3,000

P30,000 P 11,200 10,000 P 1,200 4/7

2,100 P27,900

3.

Allocation III – P3,200  4/7 = P5,600 x 1/7 Allocation II Total cash received by Jacinto

P

800 3,000 P 3,800

4.

Book value of assets Total cash available Allocation I Allocation II – P1,800 – P1,400  2/3 Loss on liquidation

P 30,000 P 1,400 600

2,000 P 28,000

E 7-5 1.

Kho, Lagman and Magno Cash Priority Program January 1, 2014

Capital balances before liquidation Add Note payable to Magno Total partners’ interest Profit and loss ratio Loss absorption balances Allocation I – Cash to Lagman reducing LAB to an amount reported for Kho (P60,000 x 3/10) Balances Allocation II – Cash to Kho & Lagman reducing LAB to an amount reported for Magno (P40,000 x 3/10) Balances Allocation III – Further cash distributions may be made in the P & L ratio

2.

Balances before liquidation January: Sale of assets and dist. of loss Payment of liquidation expenses Payment of liabilities Distribution of cash to partners (sch. 1) Balances February: Sale of assets and distribution of gain Payment of liquidation expenses Distribution of cash to partners (sch. 2) Balances March: Sale of assets and distribution of loss Balances Offset of loan against deficiency Final payment to partners

Kho P 36,000

Lagman P 54,000

P 36,000 3/10 P120,000

P 54,000 3/10 P180,000

Magno P18,000 14,000 P 32,000 4/10 P80,000

Kho

P120,000

(60,000) P120,000

P80,000

( 40,000) P80,000

(40,000) P80,000

P80,000

P12,000 P12,000

NP to Magno P14,000

Kho P36,000

PAYMENTS Lagman

Magno

P18,000

12,000 P20,000

-

Kho, Lagman and Magno Statement of Liquidation January to March, 2014 Cash P12,000

Other Assets P146,000

30,000

( 38,000)

( 3,600) ( 36,000)

Liabilities P36,000

( 2,400)

( 2,400)

( 3,200)

( 1,080)

(1,080

(1,440)

P32,520

(2,400) P48,120

P13,360

2,700

2,700

3,600

(2,520)

(2,520)

(3,360)

P14,000

(10,000) P22,700

(25,600) P22,700

P13,600

P14,000

(11,100) P11,600

(11,100) P11,600

(14,800) P(1,200)

( 1,200) (P12,800)

(P11,600)

(P11,600)

(36,000)

( 2,400) P108,000 44,000

P14,000

(35,000)

(8,400) (35,600) P73,000 36,000 P36,000

(P36,000)

PAYMENTS Lagman Magno P54,000 P18,000

(73,000)

1,200

Schedule 1 Installment Liquidation January 31, 2014

Cash available Allocation I – Payable to Lagman

Amount P2,400 P2,400

Kho

Lagman

Mango

P2,400

Schedule 2 Installment Liquidation February 28, 2014

Cash available Allocation I – Balance Payable to Lagman Allocation II – Payable to Kho and Lagman

3. Journal entries January Cash Kho, Capital Lagman, Capital Magno, Capital

Amount P2,400

Kho

P2,400 P20,000

Lagman

Mango

P2,400 P10,000 P10,000

10,000 P25,600

30,000 2,400 2,400 3,200

Other assest Kho, Capital Lagman, Capital Magno, Capital

38,000 1,080 1,080 1,440

Cash Liabilities Cash Lagman, Capital

3,600 36,000 36,000 2,400

Cash February

Cash Other assets

2,400 44,000 35,000 2,700 2,700 3,600

Kho, Capital Lagman, Capital Magno, Capital Kho, Capital Lagman, Capital Magno, Capital

Cash

-

2,520 2,520 3,360 8,400

Kho. Capital Lagman, Capital

10,000 25,600

Cash March

Cash Kho, Capital Lagman, Capital Magno, Capital

35,600 36,000 11,100 11,100 14,800

Other assets Note Payable to Magno

73,000 1,200

Magno, Capital

Note Payable to Magno Kho, Capital Lagman, Capital Cash

1,200 12,800 11,600 11,600 36,000

P 7-1 NOPQ Trading Statement of Liquidation February 1 – March 31, 2014

Balances before liquidation February: Sale of assets & distribution of loss Payment of liabilities Payment of liquidation expenses Balances Payment to partners (sch. 1) Balances March: Sale of assets & distribution of gain Payment of liabilities Payment of liquidation expenses Balances Payment to partners (sch. 2) Balances, March 31

Cash P100,320 49,320 ( 17,750) ( 8,220) P123,670 (120,060) P 3,610 48,330 ( 3,610) ( 7,380) P 40,950 ( 40,950)

Other Assets Liabilities P193,530 P21,360

Noble Loan P15,000

(66,060)

Noble (20%) P24,120

CAP I TA L Orbos Pimentel (30%) (30%) P96,480 P109,020

Quezon (20%) P27,870

( 3,348)

( 5,022)

( 5,022)

( 3,348)

( 1,644) P19,128

( 2,466) ( 2,466) P88,992 P101,532 (49,770) (62,310) P39,222 P39,222

( 1,644) P22,878

( 17,750) P127,470

P 3,610

P127,470

P 3,610

P15,000 ( 7,980) P 7,020

(44,850)

P19,128

P22,878

696

1,044

1,044

696

( 1,476) P18,348 ( 1,824) P16,524

( 2,214) P38,052 (13,266) P24,786

( 2,214) P38,052 (13,266) P24,786

( 1,476) P22,098 ( 5,574) P16,524

( 3,610) P 82,620 P 82,620

P 7,020 ( 7,020)

NOPQ Trading Co. Schedule To Accompany Statement of Liquidation Amounts to be Paid to Partners Februart 28, 2014

Capital balances before cash distribution Add Loan balances Total partners’ interest Restricted interest – possible loss if nothing is realized on remaining assets Balances Restricted interest – additional possible loss if Quezon is unable to pay his deficiency (20:30:30) Free interest – payments to partners Payment to apply on Loan Capital Total cash distribution

Noble P19,128 15,000 P34,128

Orbos P88,992

Pimentel P101,532

Quezon P22,878

P88,992

P101,532

P22,878

(25,494) P 8,634

(38,241) P50,751

(38,241) P 63,291

(25,494) (P2,616)

( 654) P 7,980

( 981) P49,770

( 981) P62,310

(2,616)

P49,770 P49,770

P62,310 P62,310

P 7,980 P 7,980

P P

---------

NOPQ Trading Co. Schedule To Accompany Statement of Liquidation Amounts to be Paid to Partners March 31, 2014

Capital balances before cash distribution Add Loan balance Total partners’ interest Restricted interest – possible loss if nothing is realized on remaining assets Free interest – payments to partners

Noble P18,348 7,020 P25,368

Orbos P38,052

Pimentel P38,052

Quezon P22,098

P38,052

P38,052

P22,098

(16,524) P8,844

(24,786) P13,266

(24,786) P13,266

(16,524) P 5,574

Payment to apply on: Loan Capital Total cash distribution

P 7,020 1,824 P 8,844

P13,266 P13,266

P13,266 P13,266

P 5,574 P 5,574

P 7-2 1. January :

a.

Cash

112,000 Accounts Receivable

b.

c.

d.

February:

a.

Reyes, Capital Samson, Capital Toledo, Capital Cash Accounts Payable Cash Toledo, Capital Toledo, Capital Cash Cash

112,000 2,200 1,100 1,100 4,400 38,000 38,000 9,000 7,000 16,000 36,000

Accounts Receivable b.

Reyes, Capital Samson, Capital Toledo, Capital

c.

Accounts Payable Cash Reyes, Capital Samson, Capital Toledo, Capital

36,000 1,400 700 700 2,800

d.

March:

a.

b.

c.

Salary Payable to Reynes Reyes, Capital Samson, Capital Toledo, Capital Cash Cash Reyes, Capital Samson, Capital Toledo, Capital Accounts Receivable

39,000 38,000 500 250 250 6,000 1,400 3,700 8,700 19,800 35,000 4,000 2,000 2,000 43,000

Reyes, Capital Samson, Capital Toledo, Capital Cash

2,000 1,000 1,000

Reyes, Capital Samson, Capital Toledo, Capital Cash

39,500 19,750 19,750

4,000

79,000

P 7-2 Reyes, Samson and Toledo Partnership Statement of Liquidation January 1 – March 31, 2015

Cash P19,000

Other Assets Liabilities P191,000 P77,000

Balances before liquidation January: Collections from customers 112,000 (112,000) Payment of liquidation expenses ( 4,400) Payment of liabilities (38,000) Balances P88,600 P79,000 Payment to partners (see schedule) ( 16,000) Balances P72,600 P79,000 February: Collections from customers 36,000 (36,000) Payment of liquidation expenses ( 2,800) Payment of liabilities & dist. of gain (38,000) Balances P67,800 P43,000 Payment to partners (see schedule) (19,800) Balances P48,000 P43,000 March: Collections from cust. & dist. of loss 35,000 (43,000) Payment of liquidation expenses ( 4,000) Balances P79,000 Payment to partners ( 79,000)

(38,000) P39,000 P39,000

CAPI TAL Toledo Sal. Pay Reyes Samson Loan to Reyes P 9,000 P 6,000 P50,000 P28,000

P 9,000 ( 9,000)

Toledo P40,000

( 2,200)

( 1,100)

( 1,100)

P 6,000

P47,800

P26,900

P 6,000

P47,800

P26,900

P38,900 ( 7,000) P31,900

( 1,400) 500 P46,900 ( 1,400) P45,500

( 700) 250 P26,450 ( 3,700) P22,750

( 700) 250 P31,450 ( 8,700) P22,750

( 4,000) ( 2,000) P39,500 (39,500)

( 2,000) ( 1,000) P19,750 (19,750)

( 2,000) ( 1,000) P19,750 (19,750)

(39,000) P6,000 (6,000)

Reyes, Samson and Toledo Partnership Cash Priority Program January 1, 2015

Reyes P 50,000 6,000 P 56,000  50% P112,000

Capital balances before liquidation Add Loan balances Total partners’ interest Profit and loss ratio Loss absorption balance Allocation I – Cash to Toledo reducing LAB to an amount reported for Reyes and Samson, reduction of P84,000 requires payment (25% x P84,000) Balances P112,000 Allocation II – Further cash distributions may be made in the profit and loss ratio

Samson P28,000 P28,000  25% P112,000

Toledo P40,000 9,000 P49,000  25% P196,000

P112,000

(84,000) P112,000

SCHEDULE OF CASH DISTRIBUTION: January:

February:

Cash available Allocation I: Payable to Toledo Cash available Allocation I – Balance Payable to Toledo Allocation II Payable according to P & L ratio

Amount P16,000

Reyes

Samson

16,000

Toledo

P16,000

P19,800 5,000

P14,800

5,000

P7,400 P7,400

P3,700 P3,700

P3,700 P8,700

PAY M E N T S Reyes Samson Toledo

-

-

P21,000 P21,000

P 7-3 Urbe, Verde and Waje Cash Priority Program January 1, 2015

Capital balances before liquidation Loan balances Total partners’ interest Profit and loss ratio Loss absorption balances Allocation I – Cash to Verde reducing LAB to an amount reported for Urbe (P70,000 x 30%) Balances Allocation II – Cash to Urbe & Verde to reduce LAB to an amount reported for Waje (P65,000 x 30%) (P65,000 x 20%) Balances Allocation III – Further cash distributions may be made in the P & L ratio

Urbe P120,000 45,000 P165,000 50% P330,000

Verde P90,000 30,000 P120,000 30% P400,000

Waje P40,000 P13,000 P43,000 20% P265,000

P330,000

(70,000) P330,000

P265,000

(65,000) P265,000

(65,000) P265,000

P265,000

Urbe

PAY M E N T S Verde Waje

P21,000

P32,500 P32,500

19,500 P40,500

-

2. Amount

Urbe

Verde

Waje

January: Cash available Allocation I – payable to Verde February: Cash available Allocation I – Bal. payable to Verde Allocation II – Payable to Urbe and Verde in the ratio of 50:30

P15,000 15,000

P15,000

P40,000 6,000

P6,000

P34,000

P21,250 P21,250

P12,750 P18,750

P11,250 360,00 P47,250

P 6,750 21,600 P28,350

P14,400 P14,400

P15,000

P9,000

P6,000

March: Cash available Allocation II – Balance Allocation III – Based on P & L ratio

P90,000 18,000 P72,000

Cash available Allocation III – Based on P & L ratio

P30,000 30,000

April:

P 7-3 Urbe, Verde and Waje Statement of Liquidation January 1 to April 30, 2014

Cash Balances before liquidation January: Sale of assets Payment of partners Balances February: Sale of assets Payment to partners Balances March: Sale of assets Payment to partners Balances April: Sale of assets & distribution of loss Balances Payment to partners

P15,000 (15,000)

Other Assets P338,000

90,000 (90,000)

Waje P13,000

Urbe P120,000

CAP I TA L Verde Waje P90,000 P40,000

P45,000

(15,000) P15,000

P13,000

P120,000

P90,000

P40,000

P13,000

P120,000

(3,750)) P86,250

P40,000

(13,000)

(23,500) P96,500

(28,350) P57,900

(1,400) P38,600

(81,500) P15,000 (15,000)

(48,900) P9,000 (9,000)

(32,600) P 6,000 (6,000)

(40,000) (21,250) P283,000 P23,750

(15,000)

(90,000) (23,750) P193,000

30,000 P30,000 (30,000)

LOAN Verde P30,000

(15,000) P323,000

40,000 (40,000)

Urbe P45,000

(193,000)

P 7-4 Xavier, Yambot and Zapanta Cash Distribution Schedule June 30, 2014

Capital balances before liquidation Receivable from partners Total partners’ interest Profit and loss ratio Loss absorption balance Allocation I – Cash to Yambot to reduce LAB to amount reported for Zapanta (P30,000 x 30%) Balances Allocation II – Cash to Zapanta & Yambot to reduce LAB to an amount reported for Xavier Balances Allocation III – Based on P & L ratio (P6,000 + P100,000 – P17,000 = P89,000 – P14,000)

Xavier P 67,000 (12,000) P 55,000 50% P110,000

Yambot P 45,000 P 45,000 30% P150,000

Zapanta P 31,500 (7,500) P 24,000 20% P120,000

P110,000

30,000 P120,000

P120,000

P110,000

10,000 P110,000

10,000 P110,000

PAY M E N T S Xavier Yambot Zapanta

P9,000

P37,500 P37,500

TOTALS

3,000

2,000

22,500 P34,500

15,000 P17,000

P 7-5 Fernan, Luisa and Susan Statement of Changes in Partners’ Equity For the Period of January 1, 2013 to May 31, 2015

2013 Original investment Distribution of net income (sch.1) Total Drawings Balances, December 31 2014 Investment of Susan (sch. 2) Distribution of net loss Balances Drawings Balances, December 31 2015 Distribution of cash in Feb. (sch. 3) Balances Distribution of cash in April (sch. 4) Balances Sale of assets & distribution of loss in May (sch. 5) Balances Final cash distribution

Fernan

Luisa

Susan

Total

P 50,000 15,200 P 65,200 ( 7,000) P58,200

P 30,000 12,800 P 42,800 ( 6,000) P 36,800

P 80,000 28,000 P108,000 ( 13,000) P95,000

( 9,100) ( 4,200) P 44,900 ( 4,900) P 40,000

( 4,900) ( 3,000) P 28,900 ( 3,900) P 25,000

P 54,000 40,000 ( 4,800) ( 12,000) P 49,200 P123,000 ( 4,200) ( 13,000) P 45,000 P110,000

( 5,000) P 35,000 ( 7,000) P...