68

Chapter 4
CHAPTER 4
MULTIPLE CHOICE ANSWERS AND SOLUTIONS
4-1: a
PAR BOOGIE BIRDIE
Capital balances before realization P 20,000 P 16,000 P 10,000
Loss on liquidation, P40,000 ( 20,000) ( 12,000) ( 8,000)
Cash distribution P P 4,000 P 2,000
4-2: c
PING PANG PONG
Capital balances before liquidation P 50,000 P 50,000 P 10,000
ain of P10,000 (150,000!140,000) ""6,000 ""2,000 ""2,000
Cash distribution P 56,000 P 52,000 P 12,000
4-3: b
PING PANG PONG
Capital balances before liquidation P 50,000 P 50,000 P 10,000
Loss of P40,000 (P140,000!P100,000) ( 24,000) ( 8,000) ( 8,000)
Cash distribution P 26,000 P 42,000 P 2,000
4-4: a
PING PANG PONG
Capital balances before liquidation P 50,000 P 50,000 P 10,000
Loss of P#0,000 (P140,000!P#0,000) ( 42,000) ( 14,000) ( 14,000)
$alances P8,000 P %6,000 ( 4,000)
&bsorption of Pon'(s deficienc), 6*2 ( %,000) ( 1,000) ""4,000
Cash distribution P 5,000 P 35,000
4-5: b
COLT MARK CLOCK
Capital balances before liquidation (net of loans)P2+0,000 P200,000 P220,000
Loss of P1%0,000, 4*%*% ( 52,000) ( %+,000) ( %+,000)
Cash distribution P238,000 P161,000 P181,000
4-6: c
JONAS CARLOS TOMAS
Capital balances before liquidation P160,000 P 45,000 P 55,000
Loss of P60,000, 40*50*10 ( 24,000) ( 20,000) ( 6,000)
Cash distribution P136,000 P 25,000 P 49,000
Partnership Liquidation
4-7: a
ARIEL BERT CESAR
Capital balances before liquidation P40,000 P180,000 P %0,000
Loss of P100,000, 4*%*% ( 40,000) ( %0,000) ( %0,000)
Cash distribution P P1!"!!! P
4-8: b
NOR# OSCAR
Capital balances before realization P2%,000 P 1%,500
&dditional in,est-ent b) .or) for
t/e unpaid liabilities (%%,000!18,000) 15,000 0
Loss on realization (sc/edule 1) ( %0,+00) ( 20,600)
Payment by Oscar to Nory P ,100 ! P,100"
S$h%du&% 1
1otal capital before liquidation P %6,500
2npaid liabilities 15,000
1otal loss on realization P 51,500
4-9:
BLACK '(ITE GREEN
Capital balances before liquidation (net) P++,000 P +1,500 P1%8,000
Loss on realization (sc/edule 1) P2#,500 ( 1%,#50) ( 2#,500) "( 5,500)
#a$ances, cash distribution P85,250 P 64,000 P132,500
S$h%du&% 1)
Capital balances of 3/ite (net) P +1,500
Cas/ recei,ed b) 4/ite "8%,250
4/ite(s s/are of total loss (%05) P 8,250
1otal loss on realization (P8,2506%+5) P 2#,500
4-1!: c
ANA E*A NORA
Capital balances before liquidation (net) P2#,000 P 4%,000 P 10,000
Loss on realization, P6%,600 ( 25,%20) ( 25,%20) ( 12,660)
$alances P 1,680 P 1#,680 ( 2,660)
2nrecorded liabilities, P500 ( 200) ( 200) ( 100)
$alances P 1,480 P 1#,480 ( 2,#60)
7li-ination of .ora(s deficienc) ( 1,%80) ( 1,%80) ""2,#60
Payment to %artners P 100 P 16,100 P
4-11:
ARIES LEO TA+R+S
Capital balances before liquidation (net) P%%,500 P 4+,000 P %6,500
Loss on realization (sc/edule 1) P45,000 ( 22,500) ( 1%,500) ( +,000)
Payment to %artners P11,000 P 35,500 P 2,500
70
Chapter 4
S$h%du&% 1)
1aurus capital (net) P%6,500
Pa)-ent to 1aurus ( 2#,500)
8/are of total loss (205) P +,000
1otal loss on realization (+,0006205) P45,000
4-12: c
TOTAL MONA NORA
OLGA
Capital balances, 9une 11 P%2,#00 P15,000 P1%,500
P 4,200
.et loss fro- operation (squeeze) ( +,800) ( 4,200) ( 2,800)
( 2,800)
Capital balances, &u'ust %0 before
liquidation (48,500!25,600) P22,+00 P10,800 P10,#00
P 1,400
Loss on realization (4#,500!%0,000) ( 1#,500) ( #,500) ( 5,000)
( 5,000)
$alances P 5,400 P %,%00 P 5,#00
00)
&dditional in,est-ent b) :l'a "1,500 """""0 """""0
"1,500
$alances P 6,+00 P %,%00 P 5,#00
00)
7li-ination of :l'a(s deficienc) """""" ( 1,260) ( 840 )
"2,100
Payment to %artners P 6,900 P 2,040 P 4,860P

4-13: b
RITA SARA TITA
Capital balances before liquidation P4+,000 P18,000 P10,000
:peratin' loss, P21,000 ( %,500) ( #,000) ( 10,500)
;ra3in's ( 10,000) ( 15,000) ( 20,000)
Loans 0 8,000 25,000
Loss on realization, P12,000 ( 2,000) ( 4,000) ( 6,000)
$alances P%%,500 P 0 ( 1,500)
&bsorption of 1ita(s deficienc) ""1,500 """""0 "1,500
Payment to Nora P32,000 P P
4-14: a
CLARO PEDRO
ANDRO
Capital balances before liquidation P45,000 P2#,000
P50,000
Loss on realization
&ccounts <ecei,able (P50,000 = 405) P20,000
>n,est-ent (P%0,000 ! P20,000) 10,000
7quip-ent (P60,000!P%0,000) "%0,000
1otal P60,000 ( 24,000) ( 24,000)
000)
Payment to %artners P21,000 P 3,000
P38,000
4-15: c
TOTAL MONA
Capital balances before liquidation (inclusi,e loans) P4#,500 P28,500
P1+,000
Loss on realization, (squeeze) ( %8,500) ( 2%,100)
( 15,400)
Ca%ita$ ba$ances & cash distribution P 9,000 P 5,400P
3,600
Partnership Liquidation
Cas/ after realization P %#,500
Less Liabilities (P%6,000!P#,500) ( 28,500)
1otal capital after realization P +,000
4-16: a
?? capital before distribution of net loss P100,000
&dd* s/are of net loss (P10,000 = 405) "( 4,000)
?? capital before liquidation +6,000
Cas/ settle-ent to ?? ( 80,000)
?? s/are of total loss on realization (405) P 16,000
1otal loss on realization (P16,0006405) P 40,000
1otal capital before liquidation (P260,000!P10,000) P250,000
&dd* Liabilities "100,000
1otal assets P%50,000
Cas/ before liquidation ( 50,000)
.on!cas/ assets P%00,000
Loss on realization ( 40,000)
Cash to be rea$i'ed P260,000
4-17:
TOTAL CC DD
Capital balances before realization (net) P100,000 P 15,000 P22,500
P62,500
Loss on realization (squeeze) ( 125,000) ( 62,500) ( %#,500)
( 25,000)
Capital balances after realization
(liabilities!unpaid) (P 25,000) ( 4#,500) ( 15,000)
P%#,500
7li-ination of CC(s deficienc) """""""0 ""4#,500 ( 28,500)
( 1+,000)
$alances (P 25,000) 0 (P4%,500)
P18,500
>n,est-ent b) ;; ""4%,500 """"""0 "4%,500
"""""0
Payment to (( P 18,500 P P
P18,500
4-18:
1otal capital before liquidation P %0,000
Liabilities ""1,500
1otal assets P %1,500
Less* Cas/ balance before realization
Cas/ after pa)-ent of liabilities P 11,100
pa)-ent of liabilities 1,500
Cas/ realized ( 11,600) ""1,000
.on!cas/ asset P %0,500
Less* cas/ realized "11,600
)oss on rea$i'ation P 18,900
72
Chapter 4
4-19:
LL MM NN
TOTAL
Capital balances P 50,000 P 20,000 P 10,000
P 80,000
8alar) of LL (P600 = 8 -ont/s) ""4,800 """"""" """""""
"""4,800
Capital balances before liquidation P 54,800 P 20,000 P 10,000
P 84,800
Loss on realization ( 44,880) ( 14,+60) ( 14,+60)
$alances P +,+20 P 5,040 (P 4,+60)
&dditional in,est-ent b) .. """"""0 """""0 ""4,+60
Payment to %artners P 9,920 P 5,040 P
4-2!: b
@@(s total interest (P60,000!P10,000) P 50,000
Less* Cas/ to be paid to @@ ""10,000
8/are of total loss (16%) P 40,000
1otal loss on realization (P40,000616%) P120,000
1otal assets*
1otal interest of t/e partners before liquidation*
99 (P#0,000AP%0,000AP10,000) P110,000
@@ (P60,000!P10,000) 50,000
LL (P%0,000AP10,000) ""40,000 P200,000
;i,ide b) """"""505
1otal P400,000
Loss on realization "120,000
Cash to be rea$i'ed P280,000
4-21: a
TOTAL NN OO
Capital balances, 9ul) 1 P #5,000 P 25,000 P 25,000
P 25,000
&d,ances to .., &u'ust 1 ( 10,000) ( 10,000) 0
:: Loan, 8epte-ber 1 20,000 0 20,000
>nterest, ;ece-ber %1 (65)
.. (5 -osB) ( 250) ( 250)
:: (4 -osB) 400 400
Co-pensation to PP ""2,500 """"""" """""""
"""2,500
Capital balances before liquidation P 8#,650 P 14,#50 P 45,400
P 2#,500
Loss on realization (squeeze) "56,250 ( 1#,550) ( 1#,550)
( 1#,550)
Cas/ distribution P %5,000 ( 2,800 ) P 2#,850
+,+50
NN shou$d %ay P2,800 and this is to be di*ided to OO + PP e,ua$$y or P1,400 each-
Partnership Liquidation
4-22: a
TOTAL PG JR
Capital balances before realization P +50,000 P%50,000 P250,000
P%50,000
Loss on realization (squeeze) ( 1,000,000) ""20,000 ( 200,000)
"500,000
Capital balances after realization
(unpaid liabilities) (P 50,000) P 50,000 P 50,000
( 150,000)
7li-ination of &8(s deficienc) """""""0 ( +0,000) ( 60,000)
P150,000
Cash to be absorbed P !P 40,000 " !P 10,000 "

4-23: a
RM ST
Capital balances before realization (net) P500,000 P825,000
Loss on realization, P1,225,000 ( 4+0,000) ( #%5,000)
Payment to Partners P 10,000 P 90,000
4-24: a
TOTAL LT AM
Capital balances before realization (net) P 2#,500 P 20,000 P 5,000
P 2,500
ain on realization (squeeze) ""%#,500 "18,#50 ""!+,%#5
""+,%#5
Ca%ita$ ba$ances [Link] rea$i'ation P 65,000 P 38,50 P 14,35
P 11,85
4-25: c
AG BM CP
Capital balances before realization (net) P 420,000 P%#5,000 P205,000
P150,000
Loss on realization, P1,000,000 ( %00,000) ( %00,000) (200,000)
(200,000)
$alances P 120,000 P #5,000 P 5,000
P(50,000)
/dditiona$ in*estment by 01
50,000
4-26: a
8ettle-ent to 2) P%51,500
2) capital before liquidation (net)*
2) capital P55%,500
<ecei,able fro- 2) ( 1%2,000) 421,500
Loss of 2) (505) P #0,000
1otal loss on realization (P#0,000 C 505) P140,000
""+,-- --*i-- --'i-- --Tota&--
C$ before liquidation 55%,500 452,500 486,000 1,4+2,000
<ecei,able fro- 2) (1%2,000) (1%2,000)
Loan to 4i ( 40,500) (40,500)
8alar) pa)able to Di 1%5,000 1%5,000
>nterest before realization 421,500 58#,500 445,500 1,454,500
Loss on realization ( #0,000) ( 42,000) ( 28,000) ( 140,000)
2ett$ement to %artners 351,500 545,500 41,500 1,314,500
74
Chapter 4
SOLUTIONS TO PRO"LEMS
P#$b%&' 4 ( 1
Case 1
R)*a+ a, "#)$,&+
S-a-&'&,- $. L)/0)a-)$,
D&c&'b&# 311 2!!8
Partn%rs.
Ca/ita&s
Ass%ts Ri0as" Brion%s" Ri0as
Brion%s
Cash Oth%rs Liabi&iti%s Loan Loan 12!34
11!34
$alances before liquidationB B B P 20,000 P200,000 P1%2,000 P 18,000 P 20,000 P40,000
P10,000
<ealization of assets and
distribution of lossBBBBBBBBBBB "1%4,000 ( 200,000) """"""" """"""" """"""" ( 5+,400)
( 6,600)
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 154,000 0 1%2,000 18,000 20,000 ( 1+,400)
%,400
Pa)-ent of liabilitiesBBBBBBBBBBBBB ( 1%2,000) """"""0 ( 1%2,000) """""" """"""" """""""
""""""
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000 0 0 18,000 20,000 ( 1+,400)
%,400
:ffset <i,as( loan a'ainst /is
capital deficienc)BBBBBBBBBBBB """"""" """"""" """"""" ( 18,000) """"""" "18,000
""""""
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000 0 0 0 20,000 ( 1,400)
%,400
&dditional loss to $rionesBBBBBB """"""" """"""" """"""" """"""" """"""" ""1,400
( 1,400)
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000 0 0 0 20,000 0
2,000
Pa)-ent to partnerBBBBBBBBBBBBBBBBB P(22,000 ) 0 0 0 P(20,000 ) 0
P(2,000)
Case 2
R)*a+ a, "#)$,&+
S-a-&'&,- $. L)/0)a-)$,
D&c&'b&# 311 2!!8
Partn%rs.
Ca/ita&s
Ass%ts Ri0as" Brion%s" Ri0as
Brion%s
Cash Oth%rs Liabi&iti%s Loan Loan 15!34
16!34
$alances before liquidationB B B P20,000 P200,000 P1%2,000 P 18,000 P 20,000 P40,000
P10,000
<ealization of assets and
distribution of lossBBBBBBBBBBB 1%4,000 ( 200,000) """"""" """""" """"""" ( 46,200)
( 1+,800)
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 154,000 0 1%2,000 18,000 20,000 ( 6,200)
+,800
Pa)-ent of liabilitiesBBBBBBBBBBBBB ( 1%2,000) """"""" ( 1%2,000) """""" """"""" """""""
""""""
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000 0 0 18,000 20,000 ( 6,200)
+,800
:ffset loan a'ainst capital
deficienc)BBBBBBBBBBBBBBBBBBBBBBBB """""""" """"""" """"""" ( 6,200) ( +,800) ""6,200
""+,800
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000 0 0 11,800 10,200 0
Pa)-ent to partnerBBBBBBBBBBBBBBBBB P(22,000 ) 0 0 P(11,800 ) P(10,200 ) 0
0
Partnership Liquidation
Case 3
R)*a+ a, "#)$,&+
S-a-&'&,- $. L)/0)a-)$,
D&c&'b&# 311 2!!8
Partn%rs.
Ca/ita&s
Ass%ts Ri0as" Brion%s" Ri0as
Brion%s
Cash Oth%rs Liabi&iti%s Loan Loan 1!34
1!34
$alances before liquidationBBBBBBBB P 20,000 P200,000 P1%2,000 P 18,000 P20,000 P40,000
P10,000
<ealization of assets and
distribution of lossBBBBBBBBBBBBBBB "1%4,000 ( 200,000) """"""" """"""" """""" ( %%,000)
( %%,000)
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 154,000 0 1%2,000 18,000 20,000 ( #,000)
2%,000)
Pa)-ent of liabilitiesBBBBBBBBBBBBBBBBBB ( 1%2,000) """"""" ( 1%2,000) "" " """""""
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000 0 0 18,000 20,000 ( #,000)
2%,000)
:ffset $riones(( loan a'ainst
/is capital deficienc)BBBBBBBBBBB """"""" """"""" """"""" """"""" ( 20,000) """"""
"20,000
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000 0 0 18,000 0 #,000
%,000)
&dditional loss to <i,asBBBBBBBBBBBBBB """"""" """"""" """"""" """"""" """"""" ( %,000)
""%,000
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000 0 0 18,000 0 4,000
Pa)-ent to partnerBBBBBBBBBBBBBBBBBBBBBB P(22,000 ) 0 0 P(18,000 ) 0 P( 4,000 )
0
1ourna$ (ntries
Case 13
Cas/BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1%4,000
<i,as, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 5+,400
$riones, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6,600
:t/er &ssetsBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 200,000
LiabilitiesB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1%2,000
Cas/BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1%2,000
<i,as, LoanBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 18,000
<i,as, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 18,000
$riones, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1,400
<i,as, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1,400
$riones, LoanBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 20,000
$riones, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 2,000
Cas/ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000
Case 23
Cas/BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1%4,000
<i,as, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 46,200
$riones, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1+,800
:t/er &ssetsBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 200,000
LiabilitiesB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1%2,000
Cas/BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1%2,000
<i,as, LoanBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6,200
$riones, LoanBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB +,800
<i,as, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6,200
$riones, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB +,800
<i,as, LoanBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 11,800
$riones, LoanBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 10,200
Cas/BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000
76
Chapter 4
Case 33
Cas/BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1%4,000
<i,as, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB %%,000
$riones, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB %%,000
:t/er &ssetsBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 200,000
LiabilitiesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1%2,000
Cas/B BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1%2,000
$riones, LoanBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 20,000
$riones, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 20,000
<i,as, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB %,000
$riones, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB %,000
<i,as, LoanBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 18,000
<i,as, CapitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 4,000
Cas/B BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 22,000
P#$b%&' 4 ( 2
"%a,$ a, Ca+-#$
S-a-&'&,- $. L)/0)a-)$,
A2#)% 3!1 2!!8
Partn%rs.
Ca/ita&s
A s s % t s A$$ounts B&ando" B&ando
Castro
Cash R%$%i0ab&%s In0%ntor, Oth%rs Pa,ab&% Loan 17!34
18!34
$alances before
liquidationBBBBBBBBBBBBBBBBBBBB P 18,000 P#5,000 P+0,000 P84,000 P42,000 P 24,000 P102,000
P++,000
Collection of
recei,ables and
distribution of lossBBBBBBBB "%#,500 ( #5,000) """"""" """"""" """"""" """"""" ( 22,500 )
( 15,000)
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBB 55,500 0 +0,000 84,000 42,000 24,000 #+,500
84,000
<ealization of
in,entor) and
distribution of
lossBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB "%0,000 """"""" ( +0,000 ) """"""" """"""" """"""" ( %6,000)
,000)
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBB 85,500 0 0 84,000 42,000 24,000 4%,500
60,000
<ealization of ot/er
assets and distribution
of lossBBBBBBBBBBBBBBBBBBBBBBBBBBB "40,000 """"""" """"""" ( 84,000) """"""" """"""" ( 26,400 )
( 1#,600)
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBB 125,500 0 0 0 42,000 24,000 1#,100
42,400
Pa)-ent of accounts
pa)ableBBBBBBBBBBBBBBBBBBBBBBBBB ( 42,000) """"""" """"""" """"""" ( 42,000 ) """"""" """""""
"""""""
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBB 8%,500 0 0 0 0 24,000 1#,100
42,400
Pa)-ents to partnersEBB E P(8%,500) 0 0 0 0 P(24,000) P( 1#,100)
P(42,400)
Partnership Liquidation
P#$b%&' 4 ( 3
a3 E%&c-#)c C$'2a,4
S-a-&'&,- $. Pa#-,&#+5)2 R&a%)6a-)$, a, L)/0)a-)$,
70,& 3!1 2!!8
Ca/ita& Ba&an$%s
A9/: Non$ash Liabi&; *o&t" A9/ *o&t 'att
Cash Loan Ass%ts iti%s Loan !3 6!3 <!3
$alances 20,000 15,000 1%5,000 %0,000 10,000 80,000 %6,000
14,000
8ale of
assets at a loss "+5,000 """""" (1%5,000) """""" """""" (20,000) (12,000)
( 8,000)
115,000 15,000 !0! %0,000 10,000 60,000 24,000
6,000
Pa)-ent to
creditors "(%0,000) """""" """"""" (%0,000) """""" """"""" """"""
""""""
85,000 15,000 !0! !0! 10,000 60,000 24,000
6,000
:ffset &-p,
recei,able (15,000) (15,000)
Pa)-ents to partners*
Loan (10,000) (10,000)
Capitals "(#5,000) """""" """"""" """"""" """""" (45,000) (24,000)
,000)
$alances !0 ! !0! !0! !0! !0 ! !0 ! !0 !
!0!
b3 (1) Cas/ +5,000
&-p, Capital 20,000
Dolt, Capital 12,000
4att, Capital 8,000
.oncas/ &ssets 1%5,000
S%&& non$ash ass%ts at a &oss o= P8!"!!!:
(2) Liabilities %0,000
Cas/ %0,000
Pa, $r%ditorsB
(%) &-p, Capital 15,000
&-p, Loan 15,000
O==s%t r%$%i0ab&% =ro9 A9/ a>ainst his $a/ita& $r%ditB
(4) Dolt, Loan 10,000
&-p, Capital 45,000
Dolt, Capital 24,000
4att, Capital 6,000
Cas/ 85,000
?ina& &u9/;su9 distribution to /artn%rsB
N$-&: &ll partners per-itted &-p to offset /is recei,able a'ainst /is capital creditB &lternati,el), &-p
could be required to pa) t/e partners/ip t/e P15,000 recei,ableF t/e partners/ip 3ould t/en pa) /i- an
additional P15,000 for /is capital creditB >n t/is case, an offset of t/e recei,able a'ainst t/e capital credit is
reasonable, pro,ided t/e recei,able is not interest!bearin', &-p /as a sufficient capital credit, &-p is
personall) sol,ent, and t/e note is not secured a'ainst specific assts of &-pB 1/e offset is not auto-atic,
but -ust be deter-ined b) t/e ter-s of t/e initial note, and b) t/e partnersB
78
Chapter 4
P#$b%&' 4 ( 4
a3 $ina, capital before liquidationBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P%20,000
Pa)-ent to $inaBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB "128,000
Loss absorbed b) $ina (405)BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P1+2,000
Loss on realization (P1+2,000 405)BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P480,000
b3 AIDA1 "INA 8 CELIA
S-a-&'&,- $. Pa#-,&#+5)2 L)/0)a-)$,
7a,0a#4 11 2!!8
Ca/ita&
Cash Oth%r Ass%ts Aida Bina C%&ia
14 184 114
$alances before liquidationB P80,000 P#20,000 P%20,000 P%20,000 P160,000
<ealization G distB of lossB B B 240,000 ( #20,000) ( 240,000) ( 1+2,000) ( 48,000)
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBB %20,000 0 80,000 128,000 112,000
8ettle-ent to partnersBBBBBBBBBB (%20,000 ) """"""" ( 80,000 ) ( 128,000 ) ( 112,000 )
P#$b%&' 4 ( 5
a3 LL, capital before liquidationBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P #0,000
8ettle-ent to LLBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ""+8,000
ain realized b) LL (205)BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P 28,000
1otal 'ain on realization (P28,000 205)BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P140,000
:t/er assets soldBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB "500,000
8ellin' price BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P640,000
b3 771 99 8 LL
S-a-&'&,- $. L)/0)a-)$,
Oth%r Ca/ita&
Cash Ass%ts Liabi&iti%s JJ 184 KK184 1LL1<4
$alances before liquidationBBBB P50,000 P500,000 P60,000 P180,000 P240,000 P#0,000
<ealization G ;istB of 'ainBBBB 640,000 ( 520,000) """"""" ""56,000 ""56,000 "28,000
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6+0,000 0 60,000 2%6,000 2+6,000 +8,000
Pa)-ent of liabilitiesBBBBBBBBBBBBB ( 60,000) ( 60,000)
Pa)-ent to PartnersBBBBBBBBBBBBBBB (6%0,000 ) """"""" """"""" ( 2%6,000 ) ( 2+6,000 )
( +8,000)
Partnership Liquidation
P#$b%&' 4 ( 6
a3 $$BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P160,000
CCBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P20,000
;;BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P60,000
77BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB P 000
b3 ""1 CC1 DD1 8 EE
S-a-&'&,- $. L)/0)a-)$,
C a / i t a &
Cash Liabi&iti%s BB 16!34 CC 11!34DD 1<!34 EE 18!34
$alances before liquidationBBBB P 0 P60,000 P160,000 P80,000 (P120,000)
P(180,000)
&d,ances b) $$ to pa) liabilities ( 60,000) 60,000
;eposit b) ;;BBBBBBBBBBBBBBBBBBBBBBB 60,000 """""" """"""" """"""" ""60,000
""""""""
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 60,000 0 220,000 80,000 ( 60,000) ( 180,00
0)
7li-ination of 77(s deficienc) ( +0,000) ( %0,000) ( 60,000) 180,000
7li-ination of ;;(s deficienc) """""" ""( +0,000) ( %0,000) 120,000
Pa)-ent to partnersBBBBBBBBBBBBBBBB 60,000 0 40,000 20,000 0
P#$b%&' 4 ( 7
Sa4+$, a, C$'2a,4
S-a-&'&,- $. L)/0)a-)$,
(Da-&(
Liabi&iti%s P a r t n % r s. C a / i t a & s
Ass%ts A$$ounts Not%s P%@a Sa,son Aob%& A,a&a
P%@a
Cash Non$ash Pa,ab&% Pa,ab&% Loan 1834 16!34 1134
11!34
$alances before liquidationBBBB P 15,000 P155,250 P11,250 P+,000 P 1,500 P #5,%45 P 86,4+8 P(14,++%)
P1,650
<ealization of assets and
distribution of 'ainBBBBBBBBBBB 185,000 ( 155,250) """"""" """""" """""" 1#,850 11,+00 """"""
""""""
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 200,000 ! 11,250 +,000 1,500 +%,1+5 +8,%+8 ( 14,++%)
1,650
Pa)-ent of liabilitiesBBBBBBBBBBBBB ( 20,250) """""""" ( 11,250) ( +,000) """""" """""" """""" """""""
""""""
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1#+,#50 ! ! ! 1,500 +%,1+5 +8,%+8 ( 14,++%)
1,650
&dditional loss to 8a)son,
Hobel and PeIaF
45*%0*10BBBBBBBBBBBBBBBBBBBBBBBBBBBB """"""" """""""" """""""" """""" """""" ( #,+%#) ( 5,2+2) 14,++%
1,#64)
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1#+,#50 ! ! ! 1,500 85,258 +%,106 !
(114)
:ffset PeIa(s loan a'ainst
/is capital deficienc)BBBBBBBB """"""" """""""" """""""" """""" ( 114 ) """""" """""" """""""
114
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1#+,#50 ! ! ! 1,%86 85,258 +%,106 !
Pa)-ents to partnersBBBBBBBBBBBBBB P(1#+,#50 ) P(1,%86 ) P(85,258 ) P(+%,106 )

80
Chapter 4
P#$b%&' 4 ( 8
a3 A#-1 "&a a, C) Pa#-,&#+5)2
S-a-&'&,- $. L)/0)a-)$,
70,& 41 2!!8
Ass%ts Partn%rs. Ca/ita&
Cash Oth%r Liabi&iti%s Art 18!34 B%a 18!34 Cid
1<!34
$alances before liquidation
(includin' $ea loan, P4,000)BBBBBB P 6,000 P+4,000 P20,000 P2#,000 P4%,000
P10,000
<ealization of assets
at a loss of P6%,%00BBBBBBBBBBBBBBBBBBB %0,000 ( +4,000) (25,%20) (25,%20) (12,660)
2nrecorded accounts pa)ableBBBBBBBBBB 500 (200) (200)
(100)
Pa)-ent to creditorsBBBBBBBBBBBBBBBBBBBBBBBB (20,500) """""" (20,500) """""" """"""
""""""
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 16,200 ! ! 1,480 1#,480
(2,#60)
7li-inate Cid(s deficitBBBBBBBBBBBBBBBBBBBBB """""" """""" """""" (1,%80) (1,%80)
"2,#60
$alancesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 16,200 ! ! 100 16,100
Pa)-ent to PartnersBBBBBBBBBBBBBBBBBBBBBBBBB (16,200 ) ! ! "( 100 ) ( 16,100 )
!
b3
2008
9ul) 5 Cas/ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB %0,#00
&rt capital (P6%,%00 J 405)BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 25,%20
$ea capital (P6%,%00 J 405)BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 25,%20
Cid capital (P6%,%00 J 205)BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 12,660
:t/er assetsBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB +4,000
To r%$ord r%a&iBation o= oth%r ass%ts at a &oss o= P76"6!!:
&rt capital (P500 J 405)BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 200
$ea capital (P500 J 405)BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 200
Cid capital (P500 J 205)BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 100
LiabilitiesBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 500
To r%$ord trad% a$$ounts /a,ab&%B
LiabilitiesB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 20,500
Cas/B BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 20,500
1o record pa)-ent of liabilitiesB
&rt capitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1,%80
$ea capitalB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 1,%80
Cid capitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 2,#60
To %&i9inat% Cid.s $a/ita& d%=i$itB
&rt capitalBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 100
$ea capitalB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 4,000
Cid capitalB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 12,100
Cas/B BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 16,200
To r%$ord /a,9%nts to /artn%rs to $o9/&%t% &iCuidationB
c3 Cid(s loss -ust be li-ited to P5,000, or P25,000 for t/e partners/ip (P5,000 6 205 K P25,000)B
$ecause t/e liquidation of liabilities results in a loss of P500, onl) P24,500 -a) be lost on t/e
realization of ot/er assetsB 1/is requires t/at ot/er assets realize P6+,500 (P+4,000 0 24,500) to
enable Cid to recei,e P5,000 fro- t/e partners/ip to pa) personal creditors in fullB
P#$b%&' 4 (9
9:" Pa#-,&#+5)2
S-a-&'&,- $. R&a%)6a-)$, a, L)/0)a-)$,
L0'2-+0' L)/0)a-)$, $, 70,& 3!1 2!!8
! Capital $alances !
.oncas/ @ $
Cas/ &ssets Liabilities Loan 20 5 405 405 !
Preliquidation balances 50,000 +50,000 (480,000) (60,000) (240,000) (100,000) (120,000)
8ale of assets
and distribution
of 4%0,000 loss 520,000 +50,000 ! ! 86,000 1#2,000 1#2,000
5#0,000 !0! (480,000) (60,000) (154,000) #2,000 52,000
Cas/ contributed
b) $ 50,000 ! ! ! ! ! 50,000
620,000 !0! (480,000) (60,000) (154,000) #2,000 2,000
;istribution of deficit
of insol,ent partner* (2,000)
20660 (P2,000) 666
40660 (P2,000) ! ! ! ! ! 1,%%4 !
620,000 !0! (480,000) (60,000) (15%,%%4) #%,%%4 !0!
:ffset deficit 3it/ loan ! ! ! 60,000 ! (60,000) !
620,000 !0! (480,000) !0! (15%,%%4) 1%,%%4 !0!
Contribution b) 1%,%%4 ! (1%,%%4) !
6%%,%%4 !0! (480,000) !0! (15%,%%4) !0! !0!
Pa)-ent of creditors (480,000) ! 480,000 ! ! ! !
15%,%%4 !0! !0! !0! (15%,%%4) !0! !0!
;istribution to @ (15%,%%4) ! ! 15%,%%4 ! !

Postliquidation
balances !0! !0! !0! !0! !0! !0! !0! !
82
Chapter 4
9:" Pa#-,&#+5)2
Sc5&0%& $. D)+-#)b0-)$, $. P&#+$,a% A++&-+
70,& 3!1 2!!8
: K G B
Personal assets, eJcludin' partners/ip
capital and loan interests 500,000 600,000 #00,000
Personal liabilities (460,000) (480,000) (650,000)
Personal net 3ort/, eJcludin'
partners/ip capital and loan
interests 40,000 120,000 50,000
Contribution to partners/ip (1%,%%4)
;istribution fro- partners/ip 15%,%%4 !0! ! !0! !
Personal capacit) 1+%,%%4 106,666 !0! !