The partnership of Anthony and Davis had an unprofitable year and agreed to liquidate their business on December 31, 2019. The Statement of Financial Position as of December 31, 2019 is presented below: A S S E T S Cash P 1,000 Accounts Receivable P 80,000 Less Allowance for Bad Debts 20,000 60,000 Merchandise Inventory 50,000 Prepaid Advertising 2,000 Office Equipment P 100,000 Less Accumulated Depreciation 60,000 40.000 TOTAL ASSETS P 153,000 LIABILITIES AND EQUITY Accounts Payable P 20,000 Notes Payable (due October 31, 2020) 86,000 Anthony, Capital 30,000 Davis, Capital 17,000 TOTAL LIABILITIES AND EQUITY P 153,000 The information concerning liquidation are as follows: 1. Accounts receivable’s net carrying value plus 20% of the estimated bad debts were collected. 2. Merchandise inventory were realized for P 25,000 3. The contract for Prepaid Advertising has a cancellation value of P 800. 4. Office Equipment were realized equal to 60% of their book value. 5. Unrecorded Accounts Payable of P 2,000 were discovered. 6. Bank charges of P 1,000 was added to the note for early payment than the due date. Anthony is personally insolvent. However, Davis’ personal assets exceeded his personal liabilities by P 4,000. Anthony and Davis share profits and losses 40%; 60%, respectively. Required: 1. Prepare a schedule showing the net amount of liquidation gain or loss. 2. Prepare a Statement of Liquidation. 3. Journal entries to record the liquidation.

The partnership of Anthony and Davis had an unprofitable year and agreed to liquidate their business on December 31, 2019. The Statement of Financial Position as of December 31, 2019 is presented below: A S S E T S Cash P 1,000 Accounts Receivable P 80,000 Less Allowance for Bad Debts 20,000 60,000 Merchandise Inventory 50,000 Prepaid Advertising 2,000 Office Equipment P 100,000 Less Accumulated Depreciation 60,000 40.000 TOTAL ASSETS P 153,000 LIABILITIES AND EQUITY Accounts Payable P 20,000 Notes Payable (due October 31, 2020) 86,000 Anthony, Capital 30,000 Davis, Capital 17,000 TOTAL LIABILITIES AND EQUITY P 153,000 The information concerning liquidation are as follows: 1. Accounts receivable’s net carrying value plus 20% of the estimated bad debts were collected. 2. Merchandise inventory were realized for P 25,000 3. The contract for Prepaid Advertising has a cancellation value of P 800. 4. Office Equipment were realized equal to 60% of their book value. 5. Unrecorded Accounts Payable of P 2,000 were discovered. 6. Bank charges of P 1,000 was added to the note for early payment than the due date. Anthony is personally insolvent. However, Davis’ personal assets exceeded his personal liabilities by P 4,000. Anthony and Davis share profits and losses 40%; 60%, respectively. Required: 1. Prepare a schedule showing the net amount of liquidation gain or loss. 2. Prepare a Statement of Liquidation. 3. Journal entries to record the liquidation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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F.	The partnership of Anthony and Davis had an unprofitable year and agreed to liquidate their business on December 31, 2019. The Statement of Financial Position as of December 31, 2019 is presented below:
	A S S E T S
	Cash		P 1,000
	Accounts Receivable	P 80,000
	Less Allowance for Bad Debts	20,000	60,000
	Merchandise Inventory		50,000
	Prepaid Advertising		2,000
	Office Equipment	P 100,000
	Less Accumulated Depreciation	60,000	40.000
	TOTAL ASSETS		P 153,000
	LIABILITIES AND EQUITY
	Accounts Payable		P 20,000
	Notes Payable (due October 31, 2020)		86,000
	Anthony, Capital		30,000
	Davis, Capital		17,000
	TOTAL LIABILITIES AND EQUITY		P 153,000

	The information concerning liquidation are as follows:
	1. Accounts receivable’s net carrying value plus 20% of the estimated bad debts were collected.
	2. Merchandise inventory were realized for P 25,000
	3. The contract for Prepaid Advertising has a cancellation value of P 800.
	4. Office Equipment were realized equal to 60% of their book value.
	5. Unrecorded Accounts Payable of P 2,000 were discovered.
	6. Bank charges of P 1,000 was added to the note for early payment than the due date.


	Anthony is personally insolvent. However, Davis’ personal assets exceeded his personal liabilities by P 4,000. Anthony and Davis share profits and losses 40%; 60%, respectively.

	Required:
	1. Prepare a schedule showing the net amount of liquidation gain or loss.
	2. Prepare a Statement of Liquidation.
	3. Journal entries to record the liquidation.

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