IMUS INSTITUTE

SY 2015- 2016

ADVANCE ACCOUNTING I
OWNERSHIP INTEREST

PARTNERSHIP

CHANGES

IN

PROBLEM 1
Bankrupt company agree to liquidate their partnership on July 01, 2015 because the company is
having financial difficulties. The partners capital, loan account balances and profit and loss ratio
before liquidation are:
Capital

Loan

P&L ratio

36,000

cr

14,000

cr

20%

28,000

cr

4,000

dr

20%

12,000

cr

4,000

cr

50%

30,000
cr
0
Required: Prepare Cash Distribution Program

10%

On July 01, 2015, The Companys asset and liabilities are:

Cash
Non Cash Assets
Liabilities

6,000
244,000
130,000

Partners expect that the realization of non-cash assets (net cash proceeds) will be as follows:
July
August
September

144,0
00
20,00
0
20,00
0

Also, they are planning to set aside P10, 000 cash at the end of July and P4, 000 at the end of
August as a reserve for future unrecorded liabilities. By the end of September, they are expecting
that all liquidation expenses and unrecorded liabilities will be known so that the final distribution
plan can be made.
Required: Prepare Projected Schedule of Payments
The following events took place during the three month liquidation of the company:

Month

Cash realized
net of
Liquidation
expense

Book Values of
Assets Realized

Unrecorded
Liabilities

July

136,000

180,000

August

22,000

18,000

8,000

September

20,000

46,000

ADVAC 1 ATEST 03

During the month of August, L contributed P5,000 to the partnership to partially cover his capital
deficiency. He was unable to make any further contribution.
Required: Prepare Statement of Partnership Liquidation.

ADVAC 1 ATEST 03