APC Chapter 6 - APC Solman PDF

Preview

Summary

CHAPTER 6 Partnership Liquidation Exercise E2 Partnership Statement of Liquidation June 1 30, 2009 Cash Assets Profit and loss ratio Balances before liquidation Sale of assets and distribution of loss Balances Payment of liabilities Balances Payment to partners P ( ( ( Liabilities ( CAPITAL Encabo E...

Description

CHAPTER 6 Partnership Liquidation – Lump-sum Exercise 6-1 E2 Partnership Statement of Liquidation June 1 - 30, 2009 Non-cash Cash Assets Profit and loss ratio Balances before liquidation Sale of non-cash assets and distribution of loss Balances Payment of liabilities Balances Payment to partners

P 25,000 350,000 P375,000 ( 125,000) P250,000 ( 250,000)

P600,000 ( 600,000)

Liabilities P125,000 P125,000 ( 125,000)

CAPITAL Encabo Elorde 225/500 275/500 P225,000 P275,000 ( 112,500) (137,500) P 112,500 P137,500 P 112,500 ( 112,500)

P137,500 (137,500)

Exercise 6-2 1. Elias, Enrico and Ever Statement of Liquidation January 1 – 31, 2009 Non-cash Cash Assets Liabilities Profit and loss ratio Balances before liquidation Sale of non-cash assets and distribution of loss Payment of liquidation expenses Balances Payment of liabilities Balances Additional investment of Elias Balances Payment to partners

P 80,000 634,000 ( 24,000) P690,000 (270,000) P420,000 15,000 P435,000 ( 435,000)

P810,000 (810,000)

P270,000 P270,000 (270,000)

2.

Elias , Enrico and Ever Statement of Liquidation January 1 – 31, 2009

Elias 3/8 P60,000 (66,000) ( 9,000) (P15,000) (P15,000) 15,000

C A P I TA L Enrico Ever 3/8 2/8 P290,000 P270,000 ( 66,000) ( 44,000) ( 9,000) ( 6,000) P215,000 P220,000 P215,000

P220,000

P215,000 ( 215,000)

P220,000 ( 220,000)

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

Non-cash Assets

Cash Profit and loss ratio Balances before liquidation Sale of non-cash assets and distribution of loss Payment of liquidation expenses Balances Payment of liabilities Balances Offset of loan against debit balance in the capital balance of Elias Balances Payment to partners

P 80,000 634,000 (24,000) P690,000 (200,000) P490,000

P810,000 (810,000)

P490,000 (490,000)

Note Payable to Elias

C A P I TA L Liabilities

Elias

Enrico

Ever

3/8 P60,000 (66,000) ( 9,000) (P15,000)

3/8 P290,000 ( 66,000) ( 9,000) P215,000

2/8 P270,000 ( 44,000) ( 6,000) P220,000

P70,000

(P15,000)

P215,000

P220,000

( 15,000) P55,000 ( 55,000)

15,000 P215,000 ( 215,000)

P220,000 ( 220,000)

P70,000

P200,000

P70,000

P200,000 (200,000)

Elias , Enrico and Ever

3.

Cash Profit and loss ratio Balances before liquidation Sale of non-cash assets and distribution of loss

Payment of liquidation expenses Balances Payment of liabilities Balances Offset of receivable against credit balance in the capital of Enrico Balances Payment to partners

P 80,000 634,000 (24,000) P690,000 (200,000) P490,000

Statement of Liquidation January 1 – 31, 2009 NR from Non-cash NP Assets Enrico to Elias P110,000

P700,000 (700,000)

C A P I TA L Liabilities

Elias

Ever

3/8 P60,000 (24,750) ( 9,000) P26,250

3/8 P290,000 ( 24,750) ( 9,000) P256,250

2/8 P270,000 ( 16,500) ( 6,000) P247,500

P70,000

P200,000

P110,000

P70,000

P200,000 (200,000)

P110,000

P70,000

P26,250

P256,250

P247,500

P70,000 ( 70,000)

P26,250 ( 26,250)

( 110,000) P146,250 ( 146,250)

P247,500 ( 247,500)

(110,000) P490,000 (490,000)

Enrico

Exercise 6-3 Case 1

Balances before liquidation

Cash P 40,000

Enteng and Estrel Statement of Liquidation January 1 – 31, 2009 Other Loans_______ Assets Liabilities Enteng Estrel P 400,000 P 264,000 P 36,000 P 40,000

Capital______ Enteng (90%) Estrel (10%) P 80,000 P 20,000

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

Sale of other assets & dist. of loss

Balances Payment of liabilities Balances

268,000 P 308,000 (264,000) P 44,000

(400,000) P 36,000

P 40,000

(118,800) (P 38,800)

( 13,200) P 6,800

P 36,000

P 40,000

(P 38,800)

P 6,800

P 44,000

P 40,000

36,000 (P 2,800) 2,800

P 6,800 ( 2,800)

P 44,000 ( 44,000)

P 40,000 ( 40,000)

P 264,000 (264,000)

Offset of loan against debit balance in the capital of Enteng

Balances Additional loss to Estrel for the deficiency of Enteng Balances Payment to partners 1.

2.

3.

( 36,000)

Cash Enteng, Capital Estrel, Capital Other Assets

268,000 118,800 13,200

Liabilities Cash

264,000

Enteng, Loan Enteng, Capital

4.

Estrel, Capital Enteng, Capital

P 4,000 ( 4,000) 2,800 2,800

400,000 5. 264,000

Estrel, Loan Estrel, Capital Cash

40,000 4,000 44,000

36,000 36,000

Case 2 Enteng and Estrel Statement of Liquidation January 1 – 31, 2009

Balances before liquidation Sale of other assets and distribution of loss Balances Payment of liabilities Balances

Cash P 40,000 268,000 P 308,000 (264,000) P 44,000

Other Assets P 400,000 (400,000)

Liabilities P 264,000 P 264,000 ( 264,000)

Loans_______ Enteng Estrel P 36,000 P 40,000 P 36,000

P 40,000

Capital______ Enteng Estrel P 80,000 P 20,000 ( 92,400) ( 39,600) (P 12,400) (P 19,600)

P 36,000

P 40,000

(P 12,400)

(P 19,600)

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

Offset of loan against debit balance in capital account Balances Payment to partners 1.

2.

(12,400) P 23,600 ( 23,600)

P 44,000 ( 44,000)

Cash Enteng, Capital Estrel, Capital Other Assets

268,000 92,400 39,600

Liabilities Cash

264,000

3. 400,000 4. 264,000

( 19,600) P 20,400 ( 20,400)

12,400

Enteng, Loan Estrel, Loan Enteng, Capital Estrel, Capital

12,400 19,600

Enteng, Loan Estrel, Loan Cash

23,600 20,400

19,600

12,400 19,600

44,000

Case 3

Balances before liquidation Sale of other assets & distribution of loss Balances Payment of liabilities Balances Offset of loan against debit balance in the capital of Estrel Balances

Cash P 40,000 268,000 P 308,000 (264,000) P 44,000

Enteng and Estrel Statement of Liquidation January 1- 31, 2009 Other Assets Liabilities P 400,000 P 264,000 (400,000) P 264,000 ( 264,000)

Loans_______ Enteng Estrel P 36,000 P 40,000 P 36,000

P 40,000

Capital______ Enteng Estrel P 80,000 P 20,000 ( 66,000) ( 66,000) P 14,000 (P 46,000)

P 36,000

P 40,000

P 14,000

(40,000) P 44,000

P 36,000

P 44,000

P 36,000

Additional loss to Enteng for the deficiency of Estrel

Balances

P 14,000 ( 6,000) P 8,000

(P 46,000) 40,000 P ( 6,000) 6,000

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

Payment to partners 1.

2. 3.

( 44,000)

Cash Enteng, Capital Estrel, Capital Other Assets

268,000 66,000 66,000

Liabilities Cash

264,000

Estrel, Loan Estrel, Capital

( 36,000) 4,

Enteng, Capital Estrel, Capital

( 8,000) 6,000 6,000

400,000 5. 264,000 40,000 40,000

Enteng, Loan Enteng, Capital Cash

36,000 8,000 44,000

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers page

Exercise 6-4 Capital balances before liquidation Loan from partners Total partners’ interest Loss on realization (P46,000 – P12,000) Balances Additional loss to partners Balances Additional loss to partners Distribution of cash to partners

Esguerra P 11,000 2,000 P 13,000 ( 13,600) (P 600) 600 ----------------

Esteban P 10,300

Estrada P 13,700

Eugenio P 9,000

P 10,300 ( 10,200) P 100 ( 300) (P 200) 200 ---------

P 13,700 ( 6,800) P 6,900 ( 200) P 6,700 ( 133) P 6,567

P 9,000 ( 3,400) P 5,600 ( 100) P 5,500 ( 67) P 5,433

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

page

Problem 6-1 Ester, Edna, Emma, and Eva Statement of Liquidation October 1-31,2009

Balances before liquidation Sale of asset and distribution of loss

Balances Payment of liabilities Balances Offset of receivable against credit balance in the capital account of Ester Balances Additional loss to the partners for the deficiency of Edna shared 4:1:1 Balances Offset of loan against debit balance in the capital account of Eva Balances Payment to partners Balances Additional investment by Emma

Balances Payment to partners

Cash P 50,000 500,000 P 550,000 ( 450,000) P 100,000

Other Assets P950,000 ( 950,000)

Rec'l from Ester P62,500 P62,500 P62,500

Liabilities P 450,000 P 450,000 ( 450,000)

Eva, Loan P37,500 P37,500

Ester (4) P381,250 ( 225,000) P156,250

C A P I T A L Edna (2) Emma (1) P 93,750 P50,000 ( 112,500) ( 56,250) (P 18,750) (P 6,250)

Eva (1) P50,000 ( 56,250) (P 6,250)

P37,500

P156,250

(P 18,750)

(P 6,250)

(P 6,250)

P37,500

( 62,500) P 93,750

(P 18,750)

(P 6,250)

(P 6,250)

( 12,500)

18,750

( 3,125)

( 3,125) (P 9,375)

(62,500) P 100,000

P 100,000

P37,500

P 81,250

(P 9,375)

P 100,000 ( 100,000)

( 9,375) P28,125 (26,250) P 1,875

P 81,250 ( 73,750) P 7,500

(P 9,375)

P 1,875 ( 1,875)

P 7,500 ( 7,500)

9,375 P 9,375 ( 9,375)

9,375 (P 9,375) 9,375

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

page

Journal entries to record the liquidation of the partnership 1.

2. 3. 4.

5. 6.

7. 8.

Cash Ester, Capital Edna, Capital Emma, Capital Eva, Capital Other Assets

500,000 225,000 112,500 56,250 56,250

Liabilities Cash

450,000

950,000 450,000

Esters, Capital Receivable from Ester

62,500

Ester, Capital Emma, Capital Eva, Capital Edna, Capital

12,500 3,125 3,125

Eva, Loan Eva, Capital

9,375

Eva, Loan Ester, Capital Cash

62,500

18,750 9,375 26,250 73,750 100,000

Cash Emma, Capital

9,375

Eva, Loan Ester, Capital Cash

1,875 7,500

9,375

9,375

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

page

Problem 6-2 1.

Esteban, Capital Esteban, Drawing Total interest of Esteban Cash received by Esteban Share of Esteban in the loss on liquidation

Fractional share of Esteban Total loss on liquidation

P 144,000 ( 12,000) P 132,000 111,000 P 21,000  2/10 P 105,000

3.

a.

b. c.

Cash Eugenio, Capital Evaristo, Capital Esteban, Capital Other Assets

463,000 52,500 31,500 21,000

Liabilities Cash

200,000

Evaristo, Loan Eugenio, Capital Evaristo, Capital Esteban, Capital Cash

40,000 79,500 102,500 111,000

568,000 200,000

333,000

2. Eugenio , Evaristo and Esteban Statement of Liquidation January 1 – 31, 2009

Balances before liquidation Sale of other assets & distribution of loss Balances Payment of liabilities Balances Payment to partners

Cash P 70,000 463,000 P 533,000 (200,000) P 333,000 ( 333,000)

Other Assets P 568,000 ( 568,000)

Liabilities P 200,000 P 200,000 ( 200,000)

Problem 6-3 Case 1 Estrella, Espino and Espiritu

P 40,000

Eugenio (5/10) P 132,000 ( 52,500) P 79,500

CAPITAL Evaristo Esteban (3/10) (2/10) P 134,000 P132,000 ( 31,500) ( 21,000) P 102,500 P 111,000

P 40,000 ( 40,000)

P 79,500 ( 79,500)

P 102,500 (102,500)

Evaristo, Loan P 40,000

P 111,000 ( 111,000)

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

Balances before liquidation Sale of assets & distribution of loss

Balances Payment of liabilities Balances Payment to partners

Cash P 20,000 250,000 P 270,000 ( 112,000) P 158,000 ( 158,000)

Statement of Liquidation January 1- 31, 2009 Other L O Assets Liabilities Espino P 340,000 P 112,000 P 5,000 ( 340,000) P 112,000 P 5,000 (112,000) P 5,000 (5,000)

A N Espiritu P 8,000 P 8,000

C A Estrella (2) P 95,000 (36,000) P 59,000

P I T Espino (2) P 60,000 (36,000) P 24,000

A L Espiritu (1) P 80,000 (18,000) P 62,000

P 8,000 (8,000)

P 59,000 (59,000)

P 24,000 ( 24,000)

P 62,000 (62,000)

Case 2 Estrella, Espino and Espiritu Statement of Liquidation January 1 - 31, 2009

Balances before liquidation Sale of assets & distribution of loss Balances Payment of liabilities Balances Offset of loan against debit balance in the capital of Espino Balances Payment to partners

Cash P 20,000 185,000 P 205,000 (112,000) P 93,000

Other Assets P 340,000 (340,000)

Liabilities P 112,000 P 112,000 (112,000)

P 93,000 ( 93,000)

L O A N Espino Espiritu P 5,000 P 8,000

C

P 5,000

P 8,000

Estrella (2) P 95,000 (62,000) P 33,000

P 5,000

P 8,000

P 33,000

( 2,000) P 3,000 (3,000)

P 8,000 (8,000)

P 33,000 (33,000)

A P I TA L Espino (2) Espiritu (1) P 60,000 P 80,000 ( 62,000) (31,000) (P 2,000) P 49,000 (P 2,000)

P 49,000

2,000 P 49,000 (49,000)

Case 3 Estrella, Espino and Espiritu Statement of Liquidation January 1 -31, 2009 Cash

Other Assets

Liabilities

L O A N Espino Espiritu

C Estrella (2)

A P I T Espino (2)

A L Espiritu (1)

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

Balances before liquidation Sale of assets & distribution of loss

Balances Payment of liabilities Balances Offset of loan against debit balance in the capital of Espino Balances Payment to partners Balances Additional investment by Espino Balances Payment to partners

P 20,000 170,000 P 190,000 ( 112,000) P 78,000

P 340,000 (340,000)

P 112,000

P 5,000

P 8,000 P 8,000

P 95,000 (68,000) P 27,000

P 60,000 ( 68,000) (P 8,000)

P 80,000 (34,000) P 46,000

P 112,000 (112,000)

P 5,000 P 5,000

P 8,000

P 27,000

(P 8,000)

P 46,000

P 8,000 ( 8,000)

P 27,000 ( 25,000) P 2,000

( 5,000) P 78,000 ( 78,000) 3,000 P 3,000 ( 3,000)

5,000 (P 3,000) (P 3,000)

P 46,000 ( 45,000) P 1,000

3,000 P 2,000 ( 2,000)

(8,000)

P 1,000 ( 1,000)

Estrella, Espino and Espiritu Schedule to Accompany Statement of Liquidation Amounts to be Paid to Partners Capital balances before cash distribution Add loan balance Total partners’ interest Restricted interest - possible loss to Estrella and Espiritu in the ratio of 2:1 if Espino fails to pay his deficiency Free interests - amounts to be paid to partners Payment to apply on:

Estrella (2) P 27,000

Espino (2) (P 3,000)

P 27,000

(P 3,000)

( 2,000) P 25,000

3,000

Espiritu (1) P 46,000 8,000 P 54,000 ( 1,000) P 53,000

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

Loan Capital Cash distribution

P 8,000 45,000 P 53,000

P 25,000 P 25,000

Case 4 Estrella, Espino and Espiritu Statement of Liquidation January 1 – 31, 2009

Balances before liquidation Sale of assets & distribution of loss

Balances Payment of liabilities Balances Offset of loan against debit balance in the capital of Espino Balances

Cash P 20,000 125,000 P 145,000 ( 112,000) P 33,000

Other Assets P 340,000 ( 340,000)

Liabilities P 112,000 P 112,000 (112,000)

LOAN Espino P 5,000

Espiritu P 8,000 P 8,000

CAPTIAL Estrella (2) P 95,000 (86,000) P 9,000

Espino (2) P 60,000 (86,000) (P26,000)

Espiritu (1) P 80,000 (43,000) P 37,000

P 5,000 P 5,000

P 8,000

P 9,000

(P26,000)

P 37,000

P 8,000

P 9,000

5,000 (P21,000)

P 37,000

( 5,000) P 33,000

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

Payment to partners Balances Additional investment by Espino Balances Payment to partners

( 33,000)

( 8,000) P 9,000

21,000 P 21,000 ( 21,000)

P 9,000 ( 9,000)

(P21,000) 21,000

( 25,000) P 12,000 P 12,000 ( 12,000)

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

page

Estrella, Espino and Espiritu Schedule to Accompany Statement of Liquidation Amount to be Paid to Partners Capital balances before cash distribution Add loan balance Total partners’ interest Restricted interest - possible loss to Estrella and Espiritu in the ratio of 2:1 if Espino fails to pay his deficiency Balances Restricted interest - possible loss to Espiritu if Estrella fails to pay his deficiency Free interests - amounts to be paid to partners Payment to apply on: Loan Capital Cash distribution

Estrella (2) P 9,000

Espino (2) (P 21,000)

P 9,000

(P 21,000)

(14,000)

21,000

Espiritu (1) P 37,000 8,000 P 45,000 ( 7,000)

(P 5,000)

P 38,000

5,000

( 5,000) P 33,000 P 8,000 25,000 P 33,000

Chapter 6 - Partnership Liquidation - Lump-Sum Suggested Answers

Case 5

Balances before liquidation Sale of assets & distribution of loss Balances Payment of liabilities Balances Offset of loan against debit balance in the capital of Espino Balances Additional investment by Estrella and Espino Balances Payment of liabilities and payment to partners

Cash P 20,000 90,000 P 110,000 ( 110,000)

Estrella, Espino and Espiritu Statement of ...