RECONSTRUCTION OF INFORMATION 。 After all the assets (except the receivable from Leni) were realized and the liabilites to outside creditors were settled, Isko received P140,000 in the cash distribution to the partners. REQUIREMENT: Compute for the following. Loss on sales Share of Leni in the cash distribution to the partners Cash available for distribution to the partners > Net proceeds from the sale of the non-cash assets (except the receivable from Leni) 10

During dissolution and liquidation, a partnership's financial situation must be assessed, including…

Answered: RECONSTRUCTION OF INFORMATION 。 After all the assets (except the receivable from Leni) were realized and the liabilites to outside creditors were settled, Isko…

FINANCIAL ACCOUNTING

10th Edition

ISBN: 9781259964947

Author: Libby

Publisher: MCG

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Partnership Accounting

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm …

Partner Admission and Withdrawal

Question

The second image was only a guide in answering the question. (Optional only) disregard if not needed.

RECONSTRUCTION OF INFORMATION
o After all the assets (except the receivable from Leni) were realized
and the liabilites to outside creditors were settled, Isko received
P140,000 in the cash distribution to the partners.
REQUIREMENT:
ANK
Compute for the following.
Only this part
Loss on sales
> Share of Leni in the cash distribution to the partners
> Cash available for distribution to the partners
> Net proceeds from the sale of the non-cash assets (except the
receivable from Leni)

CASE DISCUSSION:
o Leni and Isko are partners of Lenko Partnership which is currently
liquidating. The firm's financial information is as follows:
Cash
20,000
Accounts Payable
30,000
Accounts Receivable
60,000
Payable to Isko
20,000
Receivable from Leni
10,000
Leni, Capital - 60%
250,000
Inventory
120,000
Isko, Capital – 40%
200,000
Equipment, net
290,000
ТОТAL
500,000
ТОTAL
500.000
LUMP-SUM LIQUIDATION
The non-cash assets were realized as follows:
o 70% of the accounts receivable was collected; the balance is
uncollectible
o The entire Inventory was sold for P20,000
o P310,000 was received when the Equipment was sold
o P12,000 liquidation expenses were paid.
REQUIREMENT:
Compute for the cash distributions to the partners.
LUMP-SUM LIQUIDATION
Collection from accounts receivable (60K x 70%)
42,000
20,000
310,000
Sale of inventory
Sale of equipment
Liquidation expenses
Net proceeds
Less: Carrying amt. of all non-cash assets,
(12,000)
360.000
except Receivable from Leni (60K + 120K +290K)
(470,000)
(110,000)
LOSS
Leni
(60%)
250.000
Isko
ТОTAL
(40%)
Capital balance
450,000
200,000
20,000
Pavable to (Receivable from) partner
Total
(10,000)
240,000
10,000
220,000
(44.000) (110,000)
176,000
460,000
Allocation of loss -110K x 60% & 40%
(66,000)
174.000
Amounts received by the partners
350.000
1
INSTALLMENT LIQUIDATION
Lenki will be liquidated on installment basis. Cash distributions to
the partners will be made as cash becomes available. In the first
month of liquidation, the non-cash assets were realized as follows:
o 50% of the accounts receivable were collected, and of the
remaining balance, P10,000 is deemed worthless
o 75% of the inventory was sold at 80% of cost
o Equipment with carrying amount of P200,000 was sold for
P185,000
o P12,000 liquidation expenses were paid. Additional P5,000 are
expected to be incurred in the subsequent periods.
REQUIREMENT:
Compute for the cash distributions to the partners.
INSTALLMENT LIQUIDATION
Collection from accounts receivable (60K x 50%)
30,000
72,000
Sale of inventory (120K x 75% x 80%)
Sale of equipment
185,000
Liquidation expenses
Estimated future liquidation cost
Net proceeds
Less: Carrying amt. of all non-cash assets,
except Receivable from Leni (60K + 120K +290K)
(12,000)
(5,000)
270,000
(470,000)
(200,000)
LOSS
Leni
(60%)
250.000
(10,000)
240.000
Isko
(40%)
200,000
20,000
220,000
ΤΟTAL
450,000
Capital balance
Payable to (Receivable from) partner
Total
10,000
460,000
Allocation of loss
(120,000)
(80,000) (200,000)
Amounts received by the partners
120,000
140,000
260,000
2

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