PRACTICAL ACCOUNTING II

Partnership Accounting

PARTNERSHIP FORMATION

Problem A. Jaime decided to admit Ted as co-owner in his business by forming a partnership. The selected
accounts of Jaime on May 31, 2018 prior to the admission of Ted are as follows:

Debit Credit
Cash P?
Accounts receivable 96,000
Merchandise inventory 183,300
Accounts payable P49,600
Jaime, capital ?

It is agreed that the following adjustments should be made:

 An allowance for doubtful accounts of 2% of accounts receivable is to be established.
 Merchandise inventory is to be valued at P160,000.
 Prepaid expenses of P5,200 and accrued expenses of P3,200 are to be recognized.

Ted invested cash of P113,640 to give him one-third interest in the partnership capital. What is the adjusted capital
balance of Jaime before the admission of Ted?
A. P250,500 B. P211,200 C. P230,120 D. P227,280

How much is the cash balance of the sole proprietorship?

A. P2,420 B. P38,080 C. P20,800 D. P19,200

Problem B. On December 31, 2018, Chico and Gino decided to pool their resources and put up a partnership. After
the formation, the partners agreed to share in the profits and losses at the ratio of 75:25 for Chico and Gino,
respectively. Their unadjusted trial balances on December 31 are as follows:

Chico Gino
Debit Credit Debit Credit
Cash P125,000 P310,000
Accounts receivable 1,500,000 800,000
Allowance for doubtful accounts P200,000 P70,000
Notes receivables 750,000 -
Inventories 1,800,000 1,750,000
Prepaid insurance - 45,000
Machineries 2,000,000 -
Accumulated depreciation – machineries 500,000 -
Furniture and fixtures - 700,000
Accumulated depreciation – furniture and fixtures - 200,000
Accounts payable 1,050,000 1,625,000
Notes payable - 450,000
Sales 3,200,000 1,200,000
Cost of sales 1,900,000 900,000
Operating expenses 750,000 350,000
Capital 3,875,000 1,310,000
Total P8,825,000 P8,825,000 P4,855,000 P4,855,000

The partnership is to take over business assets and assume business liabilities. Capitals are to be based on net assets
transferred after the following adjustments:
 10% of the accounts receivables of Chico and Gino are estimated to be doubtful of collections.
 A 60-day 12% notes was received by Chico last November 15, 2018. No interest is has been accrued yet.
Interest is computed on a monthly basis.
 The inventory of Chico should be valued at P1,200,000 while 10% of Gino’s inventory is to be considered
worthless.
 Only 20% of the prepaid insurance is still unexpired.
 The machineries should be depreciated by P20,000 more.

Page 1 of 10
  The furniture and fixtures should be 40% depreciated.
 Interest at 10% on notes payable dated September 30, 2018 should be accrued.
 Accrued rent expense of P25,000 is to be recognized in the books of Chico.

After formation, the new capital of the partnership must be based on the adjusted capital balance of Chico, so that
Gino may either withdraw or invest additional cash to make the partners’ capital balance in proportionate to their
profits and losses ratio.

How much is the additional cash to be invested/received by Gino to make his capital balance proportionate to their
profit ad loss ratio?
A. P332,667 B. P149,333 C. P2,893,500 D. P12,563

Problem C. On January 1, 2018, Del, Belle and Tel decided to form a partnership. Del a sole proprietor will transfer
to the partnership his net assets, excluding cash. Belle will contribute cash amounting to one-half of Del’s
investment. Tel will contribute a piece of land with an original cost of P280,000 but with an agreed value of
P500,000. The statement of financial position of Del as of this date is presented below:

Assets Liabilities and Capital

Cash P850,000 Accounts payable P2,180,000
Accounts receivable 1,200,000 Del, capital 3,170,000
Allowance for doubtful accounts (300,000)
Inventories 2,500,000
Furniture and fixtures 1,700,000
Accumulated depreciation (600,000)
Total assets P5,350,000 Total liabilities and capital P5,350,000

The articles of co-partnership executed for the purpose contains the following adjustments:
 Only 90% of the outstanding accounts receivable is estimated to be collectible.
 80% of the inventories can only be sold for P1,500,000 and the balance can be sold at book value.
 Furniture and fixtures must be 40% depreciated.
 The liabilities are to be assumed by the partnership.

How much is the balance of the partner’s capital accounts upon formation?
Del Belle Tel
A. P2,770,000 P1,385,000 P500,000
B. 2,770,000 860,000 280,000
C. 1,920,000 960,000 500,000
D. 1,720,000 1,385,000 280,000

How much is the total assets of the newly formed partnership?

A. P5,560,000 B. P3,380,000 C. P6,410,000 D. P6,945,000

Quizzer:
On December 1, 2018 Gelli, the sole proprietor of the Vaseline Company, expands the company and establish a
partnership with Althea and Bettina. The partners plan to share profits and losses as follows: Gelli, 40%; Althea,
35% and Bettina, 25%.

Gelli asked Althea to join the partnership because his image and reputation are expected to be valuable during the
formation. Althea is also contributing P105,000 cash and a building that was acquired for P1,010,000, with carrying
amount of P870,000, and a fair market value of P490,000. The building is subject to a P198,000 mortgage that the
partnership did not assume.

Bettina is contributing P212,000 cash and marketable securities costing P336,000 to Bettina but are currently worth
P475,000. Gelli’s investment in the partnership is the Vaseline Company. The Statement of Financial Position for the
Vaseline Company follows:
 Vaseline Company
Statement of Financial Position
December 31, 2018

Assets Liabilities and Capital

Cash P390,000 Accounts payable P437,000
Accounts receivable 456,000 Notes payable 592,000
Inventories 394,000 Gelli, capital 829,000
Equipment, net 618,000
Total assets P1,858,000 Total liabilities and capital P1,858,000

The partners agree that 35% of the inventory is considered worthless, the equipment is worth 75% of its carrying
amount, and 15% of the accounts receivable is uncollectible. Gelli plans to pay off the accounts payable with his
personal assets. The other partners have agreed that partnership will assume the notes payable. The partners
agreed that their capital balances upon formation will be in conformity with their profit and loss ratio.

All the statements are true, except:

A. Assuming the partners will either invest or withdraw cash, using Bettina as the base, Gelli and Althea will
both invest cash with a total amount of P560,800.
B. If the transfer of capital method is used, the capital accounts of Gelli and Bettina will be debited in the
amount of P30,320 and P140,200, respectively.
C. Assuming the partners will either invest or withdraw cash, using Gelli as the base, Althea and Bettina will
both invest cash with a total amount of P75,800.
D. Assuming the partners will either invest or withdraw cash, using Althea as the base, Gelli and Bettina will
both withdraw cash with a total amount of P487,200.

PARTNERSHIP OPERATIONS
Problem A. Kara and Tara are partners with the following capital transactions for the year 2018:

Kara Tara
January 1 P120,000 P180,000
April 1 (30,000)
July 31 36,000
November 30 12,000
December 1 (6,000)

Assume that the income summary account has a credit balance of P420,000. Also, the partners will receive 10%
interest on average capital balances; annual salary allowances of P120,000 and P180,000 to Kara and Tara; 20%
bonus to Kara based on net income after bonus; and the remainder, if any, in the ratio of their beginning capital
balances. How much is the share of each partner in the net income?
Kara Tara
A. P211,730 P208,270
B. 169,730 250,270
C. 252,000 168,000
D. 208,730 211,270

Assuming that the income summary has a credit balance of P210,000. Also the partners will receive 10% interest on
ending capital balances; monthly salary of P10,000 each for the partners; 15% bonus to Kara based on the net
income after salaries and interests; and the remainder if any, in the ratio of 2:2.
Kara Tara
A. P105,000 P105,000
B. 104,400 105,600
C. 74,400 135,600
D. 114,400 95,600
Assuming that the income summary has a debit balance of P50,000. Also the partners will receive 20% interest on
beginning capital balances; monthly salary of P12,000 and P18,000 the partners respectively; 30% bonus on net
income to Kara; and the remainder if any, in the ratio of 7:3.
Kara Tara
A. P(168,000) P218,000
B. (148,000) (200,000)
C. (105,000) 155,000
D. (161,000) 111,000

Problem B. JKL’s partnership provided for the following distribution of profits and losses:
i. J to receive 10% of the net income up to P1,000,000 and 20% of the amount in excess thereof.
ii. K and L each, are to receive 5% of the remaining income in excess of P1,500,000 after J’s share as per
above.
iii. Balance to be divided equally among the partners.

For the year ended, the partnership realized a net income of P2,500,000 before distribution to partners. How much is
the share of J?
A. P1,300,000 B. P1,000,000 C. P1,080,000 D. P1,100,000

Problem C. Allie and Belinda formed a partnership with a capital contribution of P80,000 and P40,000 respectively.
According to the partnership agreement, all profits will be distributed as follows:
 Allie will be allowed a monthly salary of P8,000 with P4,000 assigned to Belinda.
 The partners will be allowed with interest equal to 10% of the capital balance as of the first day of the year.
 Allie will be allowed a bonus of 10% of the net income after bonus.
 The remainder will be divided on the basis of the beginning capital for the first year and equally for the
second year.
 Each partner is allowed to withdraw up to P4,000 a year.

Assume that the net loss for the first year of operations is P6,000, the net income for the second year is P22,000 and
that each partner withdraws the maximum amount from the business each period, what is the capital balance of Allie
at the end of the second year?
A. P73,900 B. P72,000 C. P105,900 D. P83,900

Quizzer:
Ella and Veronica are partners engaged in a manufacturing business. Transactions affecting the partners’ capital
accounts in 2018 are as follows:

Ella Veronica
Debit Credit Debit Credit
Beg. Balance P 50,000 P 70,000
April 1 30,000 P 20,000
June 30 P 25,000 50,000
Sept. 1 45,000 60,000
Oct. 1 70,000 40,000

At the end of the year, the income summary account has a debit balance of P45,000. The results of operations will
be divided as follows:
 Interest on average capital at 8%.
 Salaries of P25,000 and P35,000 are given to Ella and Veronica, respectively.
 Bonus to Veronica at 25% of net income after deducting interest and salaries but before deducting bonus.
 Balance is to be divided equally.

How much is the net increase/decrease in Veronica’ capital account during 2018?
A. P(6,400) B. P(16,400) C. P33,600 D. 1,400
PARTNERSHIP DISSOLUTION - ADMISSION
Problem A. Rhian and Mary are partners with profit and loss ratio of 75:25 and capital balances of P175,000 and
P87,500 respectively. Gale is to be admitted into the partnership by purchasing a 20% interest in the capital, profits
and losses for P105,000.

Assuming that no asset revaluation is to be made, the capital balances of Rhian and Mary, respectively, after
admission of Gale are:
Rhian Mary
A. P140,000 P70,000
B. 210,000 105,000
C. 196,000 66,500
D. 175,000 87,500

Assuming that equipment of the partnership is undervalued, the capital balances of Rhian, Mary and Gale,
respectively, after the admission are:
Rhian Mary Gale
A. P175,000 P87,500 P105,000
B. 336,875 135,625 52,500
C. 140,000 70,000 52,500
D. 297,500 122,500 105,000

Problem B. Pia, Sandy and Morrie are partners sharing profits and losses of 5:3:2, respectively. As of December 31,
2018, their capital balances were P498,750; P420,000; and P315,000 respectively. On January 1, 2019, the partners
admitted Adriano as a new partner and according to their agreement Adriano will contribute P420,000 in cash to the
partnership and also pay P52,500 for 15% of Sandy’s share. Adriano will be given a 20% share in profits, while the
original partners’ share will be proportionately the same as before. After admission of Adriano, the total capital will be
P1,732,500 and Adriano’s capital will be P367,500.

How much is the amount of asset revaluation?

A. P78,750 B. P36,750 C. P115,500 D. P194,250

How much is the bonus in the admission of Adriano?

A. P115,500 B. P57,750 C. P63,000 D. P34,650

Problem C. Patrice, Bella and Timmy were partners with capital balances on January 2, 2018 of P175,000;
P262,500 and P350,000, respectively. Their profit ratio is 5:3:2 while their capital interest ratio is 4:4:2. On July 1,
2018, Jade was admitted by the partnership for 20% interest in capital and 25% in profits by contributing P43,750
cash, and the old partners agree to bring their interest to their old capital and profit interest sharing ratio. The
partnership had net income of P105,000 before admission of Jade and the partners agree to revalue its overvalued
equipment by P17,500. How much is the he capital balance of Patrice after admission of Jade?
A. P148,750 B. P294,000 C. P177,100 D. P235,200

Quizzer:
Lalaine, Erin and Gia are partners with capital balances of P336,000, P540,000 and P190,000 respectively, sharing
profits and losses in the ratio of 2:5:1. Selena is admitted as a new partner bringing with him expertise and is to
invest cash for a 15% interest in the partnership considering the transfer of capital from him of P90,000 upon his
admission.

Upon admission of Selena, which of the following statements is wrong?

A. The capital balance of Erin amount to P596,250.
B. Cash will be debited in the amount of P204,000.
C. The capital account of Gia will be credited in the amount of P11,250.
D. The total agreed capital of the old partners is P90,000 greater than there contributed capital.
PARTNERSHIP DISSOLUTION – RETIREMENT

Problem A. Hazel, Nina and Rhea share profits in the ratio of 2:3:5. On January 20, Rhea opted to retire from the
partnership. The capital balances on this date follow:

Hazel P43,750
Nina P70,000
Rhea P61,250

How much will be the capital of Nina, assuming Rhea sold his interest to Nina for P17,500?
A. P87,500 B. P43,750 C. P131,250 D. P70,000

How much is to be debited from Hazel, assuming Rhea is paid P68,250 in full settlement of his interest?
A. P4,200 B. P5,250 C. P7,000 D. P2,800

Problem B. On December 30, 2018, the statement of financial position of Magnolia Co. has the following balances:
Total assets P1,125,000; Bianca loan P62,500; Bianca capital P259,375; Mela capital P240,625 and Lia capital
P562,500. The partners share profits and losses in the ratio of 25% to Bianca, 25% to Mela, and 50% to Lia. It was
agreed among the partners that Bianca retires from the partnership and the partnership assets be adjusted to their
fair value of P1,275,000 as of December 31, 2018. The partnership also suffered net loss of P375,000. The
partnership would pay Bianca P271,250 cash for her total interest in the partnership.

What is the total capital of Mela after retirement of Bianca assuming the use of bonus method?
A. P182,500 B. 191,875 C. P184,375 D. P190,000

Problem C. The statement of financial position as of September 30, 2018, for the partnership of Danielle, Elise and
Francesca shows the following information:

Assets P126,000 Danielle, loan P7,000

Danielle, capital 29,050
Elise, capital 26,950
_______ Francesca, capital 63,000
Total P126,000 Total P 126,000
====== ======
It was agreed among the partners that Danielle retires from the partnership, and it was also further agreed that the
assets should be adjusted to their fair value of P120,750 as of September 30, 2018. Net loss prior to the retirement
of Danielle amount to P24,500. The partnership is to pay Danielle P21,700 cash for his partnership interest.
Danielle, Elise and Francesca share profit 40%, 15% and 45% respectively. After the retirement of Danielle, how
much is the capital balance of Francesca?
A. P23,100 B. P47,775 C. P51,450 D. P64,838

Quizzer:
Farrah, Denise and Gwen are partners dividing profits and losses in the ratio of 2:3:1 respectively. Their capital
balances on December 31, 2018 were P374,500, P574,000, and P339,500, respectively. Gwen is retiring from the
partnership as of April 30, 2019. Assume net income is considered as having been realized evenly throughout the
year during the year of a partner’s retirement. After retirement of a partner, remaining partners would divide profits
and losses in the remaining original ratio. The partnership reported net income of P472,500 for the year 2019.
Gwen is to be paid an amount, which is 130 percent of his adjusted equity as of the date of his retirement.

Which of the following statements is false?

A. Upon retirement of Gwen, the balance of the capital account of Farrah amount to P383,110.
B. At the end of 2019, the balance of the capital account of Denise is P266,805 higher than the capital account
balance of Farrah.
C. The capital account of Farrah has a net increase of P134,610 from beginning to end of 2019.
D. Upon retirement of Gwen, the capital account of Denise will have a net increase of P12,915 as a result of
the transfer of capital.
PARTNERSHIP LIQUIDATION – LUMP SUM
Problem A. The statement of financial position of HIJ Partnership is as follows:
HIJ Partnership
Statement of Financial Position
December 31, 2018

Assets Liabilities and Capital

Cash P180,000 Accounts payable P1,530,000
Receivable from Hail 180,000 Hail, capital 1,080,000
Other assets 3,780,000 Ivan, capital 810,000
Jake, capital 720,000
Total assets P4,140,000 Total liabilities and capital P4,140,000
The partner’s profit and loss ratio of Hail, Ivan and Jake is 5:3:2 respectively. On January 1 of next year, the partners
decide to liquidate the partnership. They agree that all cash should be distributed as it becomes available.

If cash of P1,980,000 including the P180,000 cash on hand becomes available, how much should each partner
receive?
Hail Ivan Jake
A. P225,000 P135,000 P90,000
B. 0 162,000 288,000
C. 90,000 288,000 72,000
D. 0 234,000 216,000

If Hail received P250,000 in the final settlement, how much is the loss on realization?
A. P1,300,000 B. P1,120,000 C. 2,650,000 D. 1,550,000

Problem B. Dave, Elmo and Fred are partners who share profits and losses in the ratio of 10:6:4, respectively.
Their statement of financial position of their partnership is presented below:

Assets Liabilities and Capital

Cash P180,000 Accounts payable P250,000
Noncurrent assets 1,000,000 Advances from Elmo 20,000
Advances to Dave 50,000 Dave, capital 400,000
Elmo, capital 260,000
Fred, capital 300,000
Total assets P1,230,000 Total liabilities and capital P1,230,000

If Dave received P175,000, how much would have Elmo received by then?
A. P210,000 B. P175,000 C. P490,000 D. P230,000

If Dave received P25,000, how much is the loss on realization of noncash assets?
A. P3,250,000 B. P650,000 C. P350,000 D. 700,000

If Elmo received P100,000, how much is the loss on realization of noncash assets?
A. P900,000 B. P620,000 C. P870,000 D. P800,000

Problem C. The partnership of Charisse, Anne, and Glenn decided to liquidate their partnership on May 31, 2018.
Before liquidating and sharing of net income, their capital balances are as follows: Charisse (30%) P437,500, Anne
(30%) P315,000, and Glenn (40%) P385,000. Net income from January 1 to May 31 is P210,000. Liabilities of the
partnership amounted to P367,500 and its total assets include cash amounting to P122,500.

Unsettled liabilities are P192,500. Charisse invested additional cash enough to settle their partnership’s indebtedness.
Anne is personally solvent, Glenn is personally insolvent, and Charisse becomes insolvent after investing the cash
needed by the partnership.

How much were the partnership’s non-cash sold for?

A. P78,750 B. P1,540,000 C. P52,500 D. P262,500
How much cash will Anne invest in the partnership?
A. P157,500 B. P84,000 C. 147,000 D. 35,000

How much will Charisse receive as a result of their liquidation?

A. P192,500 B. 0 C. P157,500 D. P231,000

Quizzer:
Brilliant Partnership engaged in a steel manufacturing business had the following condensed financial position prior to
liquidation:

Assets Liabilities and Capital

Cash P147,000 Liabilities P82,000
Noncurrent assets 720,000 Advances from Nelly 45,000
Nelly, capital (25%) 194,000
Reese, capital (40%) 330,000
Irish, capital (35%) 216,000
Total assets P867,000 Total liabilities and capital P867,000

Assuming non-cash assets with a book value of P340,000 were sold for P415,000 and that all available cash was
distributed. Which of the following statements is false for Nelly to receive a total of P176,000 cash after liquidation?
A. The proceeds from the sale of the remaining non-cash assets amount to P53,000.
B. The loss on realization on the sale of the remaining non-cash assets amount to P177,000.
C. Partner Reese will receive the amount of P208,000 on the first distribution of cash.
D. Partner Irish will receive a total of P127,800 cash after liquidation.

PARTNERSHIP LIQUIDATION – INSTALLMENT

Problem A. Allen, Ben and Carlo are partners in ABC Partnership who share profit and losses 5:3:2 respectively.
The partners have agreed to liquidate the partnership. Prior to the liquidation, the following is found in the
partnership’s books:
Cash P13,200
Noncash assets 297,600
Advances from Carlo 38,400
Advances to Allen 12,000
Other liabilities 184,800
Allen, capital 72,000
Ben, capital (12,000)
Carlo, capital 39,600

Assuming the actual liquidation expense is P16,800 and that noncash assets with a book value of P240,000 were sold
for P195,000, how much cash should Carlo receive?
A. P46,657 B. P6,600 C. P34,757 D. P0

Problem B. The following statement of financial position was prepared for the partnership of Elaine, Flor and Gina
as of March 31, 2018:

Assets Equities
Cash P25,000 Liabilities P52,000
Other assets 180,000 Elaine, capital 40,000
Flor, capital 65,000
Gina, capital 48,000

Total assets P205,000 Total equities P205,000

They share profits in the ratio of 4:4:2. The partnership is being liquidated and the first sale of noncash assets having
a book value of P90,000 realized P50,000.

The amount of cash each partner should receive in the first installment is:
 Elaine Flor Gina
A. 0 5,000 18,000
B. 12,000 13,000 22,000
C. 27,000 5,000 18,000
D. 24,000 49,000 40,000

Assuming P3,000 cash is withheld for possible liquidation expenses, how much cash should Gina receive?
A. 3,000 B. 17,000 C. 21,000 D. 40,000

Assuming that each partner properly received the same amount of cash in the distribution after the second sale of
assets, the cash to be distributed in the third sale of asset amounts to P14,000, and unsold assets with a book value
of P6,000 remain. How should the 14,000 be distributed to each partner?
Elaine Flor Gina
A. 5,600 6,500 2,800
B. 5,000 5,000 4,000
C. 0 11,200 2,800
D. 5,600 5,600 2,800

Problem C. Partners Alipio, Borromeo and Castro share profits and losses in the ratio of 5:3:2. At the end of a
very unprofitable year, they decided to liquidate the firm. The partner’s capital account balances at this time are as
follows: Alipio, P55,000 ; Boromeo, P62,250 ; Castro, P37,500.

The liabilities accumulate to P 75,000, including a loan of P 25,000 from Alipio. The cash balance is P15,000. All the
partners are personally solvent. The partners plan to sell the assets in installment. If Alipio received a total of
P50,000 as a result of liquidation, what was the total amount realized from the sale of the non-cash assets?
A. P154,750 B. P184,750 C. P214,750 D. P60,000

If Castro received P15,500 on the first installment of cash, how much did Borromeo received at that time?
A. P25,000 B. P12,500 C. P29,250 D. P15,500

Problem D. The following information is found in the books of the partnership of Rommel, Stephanie and Tina on
December 31, 2018:
Cash P50,000
Accounts receivable, net 100,000
Noncash assets 800,000
Loan to Rommel 50,000
Expenses 400,000
Accounts payable 80,000
Loan from Tina 20,000
Revenues 200,000
Rommel, capital 300,000
Stephanie, capital 450,000
Tina, capital 350,000
Additional information:
 Partnership profits are divided 20%, 40% and 40% respectively to Rommel, Stephanie and Tina. Salary
allowances of P25,000 each are also given to Rommel and Stephanie.
 Due to the disastrous results of 2018, the partners agreed to liquidate the business as soon as possible after
January 1, 2019 and to distribute available cash on a weekly basis.
 During the first week in January, P85,500 was collected on the accounts receivable and cash was distributed
on January 9, 2019.

How much is the loss absorption balance of Rommel?

A. P1,500,000 B. P1,250,000 C. 1,125,000 D. 1,050,000

How much is the share of Rommel on the January 9, 2019 cash distribution?
A. P43,500 B. P12,000 C. P35,167 D. 20,333
Quizzer:
Partners Xian, Yna and Zara, who share income and loss in the ratio of 3:5:2 have decided to liquidate their
partnership. At he time of liquidation, the statement of financial position of the partnership consisted of the following:
Assets Equities
Cash P40,000 Liabilities P31,000
Other assets 120,000 Loan from Yna 10,000
Xian, capital 36,000
Yna, capital 40,000
Zara, capital 43,000
Total assets P160,000 Total equities P160,000

The partners desire to prepare an installment distribution schedule showing how cash would distributed to partners
as assets are realized.

In the first sale of other assets having book value of P50,000 realized P15,000 and all available cash is distributed,
how much cash should each partner receive?
Xian Yna Zara
A. P0 P6,000 P18,000
B. 8,000 0 8,000
C. 3,000 0 21,000
D. 21,000 0 3,000

Challenge: Vince, James, Albert and Kath are partners of a very successful auditing firm. However, due to
disagreements in managing the firm, they decided to liquidate. The statement of financial position just before
liquidation, reports the following balances:

Cash P50,000 Liabilities P375,000

Other assets 900,000 James, Loan 30,000
Kath, Loan 25,000
Vince, Capital(30%) 210,000
James, Capital(30%) 157,500
Albert, Capital(20%) 102,500
__ Kath, Capital(20%) 50,000
Total assets P950,000 Total Liabilities and Partners’ Equity P950,000

The following is the summary of the realization and liquidation proceedings:

Cash Book value Expenses Liabilities Cash paid to

realized of asset paid paid partners
realized
January 115,000 200,000 5,000 160,000 -
February 276,500 400,000 3,500 215,000 50,000
March 92,000 150,000 7,000 - 88,000
April 80,000 150,000 - - 85,000

1. What is the balance of the cash account as of January 31, 2018?

2. How much is the loss on realization absorbed by Kath for January?
3. How much is the cash withheld for future liquidation expenses and unrecorded liabilities in the
month of February?
4. How much cash did James receive as settlement of his interest for February?
5. How much is the maximum possible loss in the schedule of safe payment for the month of
March?
6. How much is the total loss absorbed by all the partners in the entire course of liquidation?

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