Case 1 Alternative 1

Profit and Loss Sharing Ratio

Loan
Description
Gain/Loss Cash NCA Liabilities Q Loan
151,500 70,000 5,000
Jan Realization of NCA (15,000) 60,000 (75,000)
Cost of Liquidation (1,000)
Payment to Creditors (55,000) (55,000)
Balance (Undistributed) 4,000 76,500 15,000 5,000
February Realization of NCA (12,000) 18,000 (30,000)
Cost of Liquidation (1,100)
Payment to Creditors (15,000) (15,000)
Balance 5,900 46,500 - 5,000
Payment to Partner (4,400) - - -
Balance (Undistributed) 1,500 46,500 - 5,000
March Realization of NCA (20,000) 10,000 (30,000) - -
Cost of Liquidation (1,200) - -
Balance 10,300 16,500 - 5,000
Payment to Partner (9,300) - -
Balance (Undistributed) 1,000 16,500 - 5,000
April Realization of NCA (12,500) 4,000 (16,500) - -
Cost of Liquidation (1,600) - - -
Balance 3,400 - - 5,000
Payment to partner (3,400) - - -
Balance - - - 5,000
Absorption Deficit by Loan - - - (5,000)
Balance After Realization and Liquidat - - - -

Journal Entries
January Cash 60,000
Q Capital 6,000
R Capital 3,000
S Capital 3,000
T Capital 3,000
Non Current Asset 75,000
To record Realization of NCA at loss $ 15,000

Q Capital 400
R Capital 200
S Capital 200
T Capital 200
Cash 1,000
(to Record cost of Liquidation of NCA)

Liabilities 55,000
 Cash 55,000
(to record payment to creditor)

February Cash 18,000

Q Capital 4,800
R Capital 2,400
S Capital 2,400
T Capital 2,400
Non Current Asset 30,000
To record Realization of NCA at loss $ 15,000

Q Capital 440
R Capital 220
S Capital 220
T Capital 220
Cash 1,100
(to Record cost of Liquidation of NCA)

Liabilities 15,000
Cash 15,000
(to record payment to creditor)

R Capital 4,400
Cash 4,400
(to record payment to partner)

March Cash 10,000

Q Capital 8,000
R Capital 4,000
S Capital 4,000
T Capital 4,000
Non Current Asset 30,000
To record Realization of NCA at loss $ 15,000

Q Capital 480
R Capital 240
S Capital 240
T Capital 240
Cash 1,200
(to Record cost of Liquidation of NCA)

R Capital 3,500
S Capital 3,400
T Capital 2,400
 Non Current Asset 9,300

(to record payment to partner)

April Cash 4,000

Q Capital 5,000
R Capital 2,500
S Capital 2,500
T Capital 2,500
Non Current Asset 16,500
To record Realization of NCA at loss $ 15,000

Q Capital 640
R Capital 320
S Capital 320
T Capital 320
Cash 1,600
(to Record cost of Liquidation of NCA)

Q Capital 1,240
R Capital 720
S Capital 720
T Capital 720
Non Current Asset 3,400
(to record payment to partner)

Q Loan 5,000
T Loan 2,500
Q capital 5,000
T capital 2,500
(to record deficit absorption by loan of Q and T)
 2 1 1 1 Cash Distribution Schedule
Loan Capital February
T Loan Q Capital R capital S capital T Capital NCA Q
2,500 22,000 21,500 17,000 13,500 Balance Possible 15,360
(6,000) (3,000) (3,000) (3,000) Loss if 46,500 NCA not (46,500) (18,600)
(400) (200) (200) (200) Total (3,240)
Deficit Absorption 3,240
2,500 15,600 18,300 13,800 10,300 Total -
(4,800) (2,400) (2,400) (2,400) Deficit Absorption
(440) (220) (220) (220) Total -
Cash Balance Undistributed 1,500
2,500 10,360 15,680 11,180 7,680 Total
- - (4,400) Deficit Absorption
2,500 10,360 11,280 11,180 7,680 Cash Balance Distributed
- (8,000) (4,000) (4,000) (4,000)
- (480) (240) (240) (240) Balance Possible 6,880
2,500 1,880 7,040 6,940 3,440 Loss if 16,500 NCA not (16,500) (6,600)
- - (3,500) (3,400) (2,400) Total 280
2,500 1,880 3,540 3,540 1,040 Cash balance Undistributed 1,000 (400)
- (5,000) (2,500) (2,500) (2,500) Total (120)
- (640) (320) (320) (320) Deficit absorption 120
2,500 (3,760) 720 720 (1,780) Cash Balance Distributed -
- (1,240) (720) (720) (720)
2,500 (5,000) - - (2,500) Balance Possible 1,240
(2,500) 5,000 - 2,500
- - - - -
R S T
15,680 11,180 10,180
(9,300) (9,300) (9,300)
6,380 1,880 880
(1,080) (1,080) (1,080)
5,300 800 (200)
(100) (100) 200
5,200 700 -
(750) (750)
4,450 (50)
(50)
4,400 -

7,040 6,940 5,940

(3,300) (3,300) (3,300)
3,740 3,640 2,640
(200) (200) (200)
3,540 3,440 2,440
(40) (40) (40)
3,500 3,400 2,400

720 720 720

Schedule of Cash Distribution

Balance Possible R