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Exercise 6-1
E2 Partnership
Statement of Liquidation
June 1 - 30, 2014
Non-cash CAPITAL
Cash Assets Liabilities Encabo Elorde
Profit and loss ratio 225/500 275/500
Balances before liquidation P 25,000 P600,000 P125,000 P225,000 P275,000
Sale of non-cash assets and distribution of loss 350,000 ( 600,000) ( 112,500) (137,500)
Balances P375,000 P125,000 P 112,500 P137,500
Payment of liabilities ( 125,000) ( 125,000)
Balances P250,000 P 112,500 P137,500
Payment to partners ( 250,000) ( 112,500) (137,500)
Exercise 6-2
1.
Elias, Enrico and Ener
Statement of Liquidation
January 1 31, 2015
Non-cash C A P I T A L
Cash Assets Liabilities Elias Enrico Ener
Profit and loss ratio 3/8 3/8 2/8
Balances before liquidation P 80,000 P810,000 P270,000 P60,000 P290,000 P270,000
Sale of non-cash assets and distribution of loss 634,000 (810,000) (66,000) ( 66,000) ( 44,000)
Payment of liquidation expenses ( 24,000) ( 9,000) ( 9,000) ( 6,000)
Balances P690,000 P270,000 (P15,000) P215,000 P220,000
Payment of liabilities (270,000) (270,000)
Balances P420,000 (P15,000) P215,000 P220,000
Additional investment of Elias 15,000 15,000
Balances P435,000 P215,000 P220,000
Payment to partners ( 435,000) ( 215,000) ( 220,000)
2.
Elias , Enrico and Ener
Statement of Liquidation
January 1 31, 2015
Non-cash Note Payable C A P I T A L
Cash Assets to Elias Liabilities Elias Enrico Ever
Profit and loss ratio 3/8 3/8 2/8
Balances before liquidation P 80,000 P810,000 P70,000 P200,000 P60,000 P290,000 P270,000
Sale of non-cash assets and distribution of loss 634,000 (810,000) (66,000) ( 66,000) ( 44,000)
Payment of liquidation expenses (24,000) ( 9,000) ( 9,000) ( 6,000)
Balances P690,000 P70,000 P200,000 (P15,000) P215,000 P220,000
Payment of liabilities (200,000) (200,000)
Balances P490,000 P70,000 (P15,000) P215,000 P220,000
Offset of loan against debit balance in the
capital balance of Elias ( 15,000) 15,000
Balances P490,000 P55,000 P215,000 P220,000
Payment to partners (490,000) ( 55,000) ( 215,000) ( 220,000)
3. Elias , Enrico and Ener
Statement of Liquidation
January 1 31, 2015
NR from Non-cash NP C A P I T A L
Cash Enrico Assets to Elias Liabilities Elias Enrico Ever
Profit and loss ratio 3/8 3/8 2/8
Balances before liquidation P 80,000 P110,000 P700,000 P70,000 P200,000 P60,000 P290,000 P270,000
Sale of non-cash assets and distribution of loss 634,000 (700,000) (24,750) ( 24,750) ( 16,500)
Payment of liquidation expenses (24,000) ( 9,000) ( 9,000) ( 6,000)
Balances P690,000 P110,000 P70,000 P200,000 P26,250 P256,250 P247,500
Payment of liabilities (200,000) (200,000)
Balances P490,000 P110,000 P70,000 P26,250 P256,250 P247,500
Offset of receivable against credit balance in
the capital of Enrico (110,000) ( 110,000)
Balances P490,000 P70,000 P26,250 P146,250 P247,500
Payment to partners (490,000) ( 70,000) ( 26,250) ( 146,250) ( 247,500)
Exercise 6-3
Case 1
Enteng and Estrel
Statement of Liquidation
January 1 31, 2015
Other Loans_______ Capital______
Cash Assets Liabilities Enteng Estrel Enteng (90%) Estrel (10%)
Balances before liquidation P 40,000 P 400,000 P 264,000 P 36,000 P 40,000 P 80,000 P 20,000
Sale of other assets & dist. of loss 268,000 (400,000) (118,800) ( 13,200)
Balances P 308,000 P 264,000 P 36,000 P 40,000 (P 38,800) P 6,800
Payment of liabilities (264,000) (264,000)
Balances P 44,000 P 36,000 P 40,000 (P 38,800) P 6,800
Offset of loan against debit balance in
the capital of Enteng ( 36,000) 36,000
Balances P 44,000 P 40,000 (P 2,800) P 6,800
Additional loss to Estrel for the 2,800 ( 2,800)
deficiency of Enteng
Balances P 44,000 P 40,000 P 4,000
Payment to partners ( 44,000) ( 40,000) ( 4,000)
Case 2
Case 3
1. Cash 500,000
Ester, Capital 225,000
Edna, Capital 112,500
Emma, Capital 56,250
Eva, Capital 56,250
Other Assets 950,000
2. Liabilities 450,000
Cash 450,000
7. Cash 9,375
Emma, Capital 9,375
2.
Eugenio , Evaristo and Esteban
Statement of Liquidation
January 1 31, 2015
CAPITAL
Other Evaristo, Eugenio Evaristo Esteban
Cash Assets Liabilities Loan (5/10) (3/10) (2/10)
Balances before liquidation P 70,000 P 568,000 P 200,000 P 40,000 P 132,000 P 134,000 P132,000
Sale of other assets & distribution of loss 463,000 ( 568,000) ( 52,500) ( 31,500) ( 21,000)
Balances P 533,000 P 200,000 P 40,000 P 79,500 P 102,500 P 111,000
Payment of liabilities (200,000) ( 200,000)
Balances P 333,000 P 40,000 P 79,500 P 102,500 P 111,000
Payment to partners ( 333,000) ( 40,000) ( 79,500) (102,500) ( 111,000)
Problem 6-3
Case 1
Estrella, Espino and Espiritu
Statement of Liquidation
January 1- 31, 2015
Other L O A N C A P I T A L
Cash Assets Liabilities Espino Espiritu Estrella (2) Espino (2) Espiritu (1)
Balances before liquidation P 20,000 P 340,000 P 112,000 P 5,000 P 8,000 P 95,000 P 60,000 P 80,000
Sale of assets & distribution of loss 250,000 ( 340,000) (36,000) (36,000) (18,000)
Balances P 270,000 P 112,000 P 5,000 P 8,000 P 59,000 P 24,000 P 62,000
Payment of liabilities ( 112,000) (112,000)
Balances P 158,000 P 5,000 P 8,000 P 59,000 P 24,000 P 62,000
Payment to partners ( 158,000) (5,000) (8,000) (59,000) ( 24,000) (62,000)
Case 2
Estrella, Espino and Espiritu
Statement of Liquidation
January 1 - 31, 2015
Other L O A N C A P I TA L
Cash Assets Liabilities Espino Espiritu Estrella (2) Espino (2) Espiritu (1)
Balances before liquidation P 20,000 P 340,000 P 112,000 P 5,000 P 8,000 P 95,000 P 60,000 P 80,000
Sale of assets & distribution of loss 185,000 (340,000) (62,000) ( 62,000) (31,000)
Balances P 205,000 P 112,000 P 5,000 P 8,000 P 33,000 (P 2,000) P 49,000
Payment of liabilities (112,000) (112,000)
Balances P 93,000 P 5,000 P 8,000 P 33,000 (P 2,000) P 49,000
Offset of loan against debit balance in
the capital of Espino ( 2,000) 2,000
Balances P 93,000 P 3,000 P 8,000 P 33,000 P 49,000
Payment to partners ( 93,000) (3,000) (8,000) (33,000) (49,000)
Case 3
Other L O A N C A P I T A L
Cash Assets Liabilities Espino Espiritu Estrella (2) Espino (2) Espiritu (1)
Balances before liquidation P 20,000 P 340,000 P 112,000 P 5,000 P 8,000 P 95,000 P 60,000 P 80,000
Sale of assets & distribution of loss 170,000 (340,000) (68,000) ( 68,000) (34,000)
Balances P 190,000 P 112,000 P 5,000 P 8,000 P 27,000 (P 8,000) P 46,000
Payment of liabilities ( 112,000) (112,000)
Balances P 78,000 P 5,000 P 8,000 P 27,000 (P 8,000) P 46,000
Offset of loan against debit
balance in the capital of
Espino ( 5,000) 5,000
Balances P 78,000 P 8,000 P 27,000 (P 3,000) P 46,000
Payment to partners ( 78,000) ( 8,000) ( 25,000) ( 45,000)
Balances P 2,000 (P 3,000) P 1,000
Additional investment by
Espino 3,000 3,000
Balances P 3,000 P 2,000 P 1,000
Payment to partners ( 3,000) ( 2,000) ( 1,000)
Case 4
2.
Evasco-Ellor Partnership
Statement of Liquidation
January 1 31, 2015
3.
a. Cash 113,800
Evasco, Capital 15,280
Ellor, Capital 22,920
Allowance for Uncollectible Accounts 20,000
Accumulated Depreciation 60,000
Accounts Receivable 80,000
Merchandise Inventory 50,000
Prepaid Advertising 2,000
Machinery and Equipment 100,000
MULTIPLE CHOICE
5. A E1 E2 E3
Capital bal. before liquidation P 40,000 P 25,000 P 5,000
Loss on realization ( 21,000) (14,000) ( 7,000)
Balances P 19,000 P 11,000 P( 2,000)
Addl loss to E1 & E2 for the deficiency of E3 ( 1,200) ( 800) 2,000
Cash payment to E1 P 17,800
TEST MATERIALS
Test Material No. 21 Test Material No. 22
1. F 11. T 1. Loan payable 11. Marshaling of assets
2. F 12. T 2. Lump-sum liquidation 12. Capital deficiency
3. T 13. F 3. Right of offset 13. Gain on realization
4. T 14. T 4. Liquidation 14. Liquidation expenses
5. T 15. T 5. Realization 15. Loss to the other partner
6. F 16. F 6. Loan recl from partner 16. Capital balance
7. T 17. T 7. Installment liquidation 17. Personal creditors
8. T 18. F 8. Deficient partner 18. Additional investment
9. F 19. T 9. Statement of liquidation 19. Addition to capital
10. T 20. T 10. Insolvent partner 20. Profit and loss ratio
e. Cash 31,667
Empoy, Capital 6,667
Eloy, Capital 25,000
3.
Problem B