Activity 4

Use the following information for 1 to 3:

Bill, Page, Larry, and Scott have decided to terminate their partnership. The partnership's balance sheet at the time
they decide to wind up is as follows:
Cash . . . . . . . . . . . . . . . . . P100,000 Liabilities . . . . . . . . . . . . . . . . . . . P 100,000
Noncash assets . . . . . . . . . 300,000 Bill, capital . . . . . . . . . . . . . . . . . 25,000
Page, capital . . . . . . . . . . . . . . . 110,000
Larry, capital . . . . . . . . . . . . . . . 100,000
________ Scott, capital . . . . . . . . . . . . . . . 65,000
Total . . . . . . . . . . . . . . . . . . P400,000 Total . . . . . . . . . . . . . . . . . . . . . . P 400,000
During the winding up of the partnership, the other assets are sold for P150,000 and the accounts payable are
paid. Page and Larry are personally solvent, but Bill and Scott are personally insolvent. The partners share
profits and losses in the ratio of 3:2:1:4.
1. What amount will be paid out to Bill upon liquidation of the partnership? 
2. What amount will be paid out to Scott upon liquidation of the partnership? 
3. What amount will be distributed to Page and Larry upon liquidation of the partnership?
4. Claire, Doris, and Jeff are partners. The company is currently being liquidated. The partners’ capital accounts
when the liquidation starts are P50,000, P45,000, and P42,000, respectively. The partners have residual profit
and loss ratios of 25 percent, 30 percent, and 45 percent. Inventory with a book value of P15,000 is sold for
P9,500. What is Jeff’s capital account balance after the transaction is completed?
5. Larry, Marsha, and Natalie are partners in a company that is being liquidated. They share profits and losses 55
percent, 20 percent, and 25 percent, respectively. When the liquidation begins they have capital account
balances of P108,000, P62,000, and P56,000, respectively. The partnership just sold equipment with a
historical cost and accumulated depreciation of P25,000 and P18,000, respectively for P10,000. What is the
balance in Natalie’s capital account after the transaction is completed?
6. Liz, Bob, and Alex are partners in a company that is being liquidated. They share profits and losses 30 percent,
45 percent, and 25 percent, respectively. When the liquidation begins they have capital account balances of
P20,000, P30,000, and P15,000, respectively. The partnership just incurred liquidation expenses of P30,000
and sold equipment with a book value of P90,000 for P50,000. What is the balance in Liz’s capital account
after these transactions are completed?
7. Liz, Bob, and Alex are partners in a company that is being liquidated. They share profits and losses 30 percent,
45 percent, and 25 percent, respectively. When the liquidation begins they have capital account balances of
P20,000, P30,000, and P15,000, respectively. The partnership just incurred liquidation expenses of P30,000
and sold equipment with a book value of P90,000 for P50,000. What is the balance in Bob’s capital account
after these transactions are completed?
8. Liz, Bob, and Alex are partners in a company that is being liquidated. They share profits and losses 30 percent,
45 percent, and 25 percent, respectively. When the liquidation begins they have capital account balances of
P20,000, P30,000, and P15,000, respectively. The partnership just incurred liquidation expenses of P30,000
and sold equipment with a book value of P90,000 for P50,000. What is the balance in Alex’s capital account
after these transactions are completed?
9. Donald, Marion, and Jeff are liquidating their partnership. At the date the liquidation begins Donald, Marion,
and Jeff have capital account balances of P147,000, P260,000, and P285,000, respectively and the partners
share profits and losses 35%, 25%, and 40%, respectively. In addition, the partnership has a P28,000 Notes
Payable to Donald and a P15,000 Notes Receivable from Jeff. When the liquidation begins, what is the loss
absorption power with respect to Donald?
10. Donald, Marion, and Jeff are liquidating their partnership. At the date the liquidation begins Donald, Marion,
and Jeff have capital account balances of P147,000, P260,000, and P285,000, respectively and the partners
share profits and losses 35%, 25%, and 40%, respectively. In addition, the partnership has a P28,000 Notes
Payable to Donald and a P15,000 Notes Receivable from Jeff. When the liquidation begins, what is the loss
absorption power with respect to Marion?
11. The Abrams, Bartle and Creighton partnership began the process of liquidation with the following balance
sheet:
Cash . . . . . . . . . . . . . . . . P 16,000 Liabilities. . . . . . . . . . . . . . . . . . . . . P 150,000
Noncash assets . . . . . . 434,000 Abrams, capital . . . . . . . . . . . . . . 80,000
Bartle, capital . . . . . . . . . . . . . . . . 90,000
__________ Creighton, capital. . . . . . . . . . . . . 130,000
Total . . . . . . . . . . . . . . . P 450,000 Total Liabilities and Equities. . . . . P 450,000
Abrams, Bartle and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to
be P12,000. The non-cash assets were sold for P134,000. Which partner(s) would have had to contribute assets
to the partnership to cover a deficit in his or her capital account? 
12. Tom, Dick, and Harry are partners in an equipment leasing business that has not been able to generate the type
of revenue expected by the partners. They share profits and losses in a ratio of 5:3:2. They have decided to
liquidate the business and have sold all the assets except for one piece of heavy machinery. All partnership
liabilities have been settled and all the partners are personally insolvent. The machinery has a book value of
P85,000, and the partners have capital account balances as follows:
Tom, capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P 40,000
Dick, capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Harry, capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
What amount of cash will each partner received as a liquidating distribution if the machinery is sold for
P33,000?
13. The Keaton, Lewis and Meador partnership had the following balance sheet just before entering liquidation:
K Cashe . . . . . a. . . . . . t. . . . . .o n P 10,000
, L
Liabilities .e. . . . . .w. . . . . . i. . . . . .s a
P 130,000 n d M
Noncash assets . . . . . . . . . 300,000 Keaton, capital . . . . . . . . . . . . . 60,000
Lewis, capital . . . . . . . . . . . . . . . 40,000
________ Meador, capital . . . . . . . . . . . . 80,000
Total . . . . . . . . . . . . . . . . . . P310,000 Total . . . . . . . . . . . . . . . . . . . . . . P310,000
Liquidation expenses were P10,000. Assume that Keaton was personally insolvent with assets of P8,000 and
liabilities of P60,000. Lewis and Meador were both solvent and able to cover deficits in their capital accounts, if
any. What amount of cash could Keaton's personal creditors have expected to receive from partnership assets? 
a. P30,000 c. P26,000
b. P52,000 d. P34,000
14. The Henry, Isaac and Jacobs partnership was about to enter liquidation with the following account balances:
Cash . . . . . . . . . . . . . . . . . P 90,000 Liabilities . . . . . . . . . . . . . . . . . . . P 60,000
Noncash assets . . . . . . . . . 300,000 Henry, capital . . . . . . . . . . . . . . 80,000
Isaac, capital . . . . . . . . . . . . . . . 110,000
________ Jacobs, capital . . . . . . . . . . . . . 140,000
Total . . . . . . . . . . . . . . . . . . P390,000 Total . . . . . . . . . . . . . . . . . . . . . . P 390,000
Estimated expenses of liquidation were P5,000. Henry, Isaac and Jacobs shared profits and losses in a ratio of
2:4:4. What amount of cash was available for safe payments, based on the above information?