Title | Exercises - Installment Liquidation |
---|---|
Course | Business Administration |
Institution | University of Southern Philippines Foundation |
Pages | 4 |
File Size | 86.6 KB |
File Type | |
Total Downloads | 229 |
Total Views | 1,041 |
EXERCISESA. The assets and equities of the NSW Partnership at the end of its fiscal year, October 31, 2020, are as follows: Profit and loss agreement is 30:50:20.Cash P 150, Accounts receivable -net 200, Inventory 400, Plant Assets - net 700, Loan to South 50, Liabilities P 500, West, Loan 100, Nort...
EXERCISES A.
The assets and equities of the NSW Partnership at the end of its fiscal year, October 31, 2020, are as follows: Profit and loss agreement is 30:50:20. Cash Accounts receivable -net Inventory Plant Assets - net Loan to South Liabilities West, Loan North, Capital South, Capital West, Capital
P 150,000 200,000 400,000 700,000 50,000 P 500,000 100,000 450,000 300,000 150,000
The partners decide to liquidate the partnership. They estimate that the non-cash assets other than the loan to South can be realized into P 1,000,000 over the two-month period ending December 31, 2020. Cash is to be distributed to the appropriate parties as it becomes available during the liquidation process. Required: a) Assuming that P 650,000 is available for the first distribution, show how the available cash would be distributed. b) Assuming that a total amount of P 75,000 is available for distribution to partners after liabilities to outside creditors have been paid, show how the cash will be distributed to the partners. B.
Pisces, Leo and Gemini share profits in the ration of 5:3:2, respectively. Capital and loan balances just prior to partnership liquidation are: CAPITAL Pisces Leo Gemini
LOANS P 120,000 90,000 40,000
Pisces Leo Gemini
P 45,000 30,000 13,000
Non-cash assets are sold, and cash is distributed to partners in monthly installments during the course of liquidation as follows: January – P 15,000; February – P 40,000; March – P 90,000; April – P 30,000 (final distribution) Required: a) Prepare a program to show how cash should be distributed during the entire course of liquidation, b) Using the program developed in (a), prepare schedules summarizing the payments to be made to partners at the end of each month. c) Prepare a statement of liquidation to summarize the course of liquidation.
North, South, and West Statement of Liquidation For the 2 months period ending on December 31, 2020
Profit and Loss Ratio Balances before liquidation First Distribution (650,000) Sale of Assets & distribution of loss Balances Payment of Liabilities Balances Payment to Partners Balances Second Distribution (75,000) Sale of Assets & distribution of loss Balances Additional investment of South and West Balances Payment to Partners
Cash
Other Assets
Liabilities
West, Loan
North
Capital South
West
150,000
1,350,000
500,000
100,000
30 450,000
50 300,000
20 150,000
650,000 800,000 (500,000) 300,000 (300,000)
(1,000,000) 350,000
500,000 (500,000)
100,000
(105,000) 345,000
(175,000) 125,000
(70,000) 80,000
345,000 (60,000) 285,000
125,000 (100,000) 25,000
80,000 (40,000) 40,000
(82,500) 202,500
(137,500) (112,500) 112,500
(55,000) (15,000) 15,000
350,000 350,000
75,000 75,000 127,500 202,500 (202,500)
(350,000)
100,000 (100,000)
202,500 (202,500)
North, South, and West Schedule to Accompany Statement of Liquidation Amount to be Paid to Partners For the 2 months period ending on December 31, 2020
Capital Balances before cash distribution Add Loans Total Partner’s interest Restricted Interest – possible loss of 350,000 is nothing is realized on remaining unsold assets
North 345,000
South 125,000
345,000 (105,000)
125,000 (175,000)
West 80,000 100,000 180,000 (70,000)
240,000
(50,000)
110,000
Restricted Interest – Additional possible loss of P50,000 to North and West if South is unable to pay his possible deficiency, shared in the ratio of 30:20 Free Interest- Payment to Partners
(30,000) 210,000
(20,000) 90,000
Payment to apply on: Loan Capital Total Cash Distribution
210,000 210,000
100,000 (10,000) 90,000
Capital Loan Total Interest Loss Absorption Balance Priority 1- North Balance Priority 2- North and West Balance
N 450,000
S 300,000
450,000 1,500,000 (250,000) 1,250,000 (650,000) 600,000
300,000 600,000
P1- 250,000 P2- 650,000
75,000 195,000
600,000 600,000
W 150,000 100,000 250,000 1,250,000 1,250,000 (650,000) 600,000
130,000...