PROBLEM 1

MAC partnership provided you with the following account balances as of December
31, 20x6, just before the retirement of A.
Cash 390,000 Liabilities 310,000
Noncash assets 1,100,000 Loan from M 25,000
Loan to C 10,000 M, Capital (20%) 450,000
A, Capital (20%) 325,000
C, Capital (60%) 390,000
On December 31, 20x6, A decided to leave the partnership and he got paid 80% of
his capital balance.

After four months of attempt to carry on with the partnership, M and C decided
to enter into liquidation. A net loss amounting to 124,000 was realized. In
connection with this, 84,000 was the net cash inflow during the first four
months of 20x7 and the partnership’s liabilities increased by 40,000. Half of
the non-cash assets were sold at a loss of 120,000.

Liquidation expenses of 35,000 are expected to be incurred in due course of

liquidating the partnership. 275,000 of the total liabilities to outside
creditors were paid. Available cash was distributed to the partners.
How much is M’s total interest after the first cash distribution?

PROBLEM 2
NKE partnership has the following account balances before liquidation:
Cash 70,000 Liabilities 225,000
Noncash Assets 1,475,000 Loan from E 10,000
Loan to K 30,000 N, Capital (40%) 250,000
Receivable from N 4,000 K, Capital (40%) 380,000
Expenses 446,000 E, Capital (20%) 200,000
Revenues 960,000
During May, some noncash assets were sold that resulted to a loss of 9,225.
Liquidation expenses of 35,000 were paid and additional expenses amounting to
18,000 were expected to be incurred through the following months of liquidating
the partnership. Liabilities to outsiders amounting to 175,000 were paid.
What is the book value of the noncash assets which were sold for K to receive
111,110?

PROBLEM 3
The balance sheet of the partnership of Nah, Lih and Toh are shown below:
NLT Partnership
Balance Sheet
December 31, 20x5
Cash 50,000 Liabilities 80,000
Non-Cash 250,000 Nah, Capital (50) 100,000
Lih, Capital (25 75,000
Toh, Capital (25) 45,000
Total 300,000 Total 300,000
On January 20x6, certain non-cash assets were sold for a certain amount.
Liquidation expenses and liabilities of 4,000 and 25,000 were paid. Future
liquidating expenses of 5,000 are anticipated. Lih received 42,750 from the
first distribution of available cash.
How much is the cash received from the realization of the NCAs?
Assuming that on February 20x6, the remaining non-cash assets were sold for
75,000 and liquidating expenses of 5,000 are paid, how much is the total cash
received by Nah from the two distributions of cash?
PROBLEM 4
On October 31, 20x6, Jo, Ma and Ri who share earnings 5:3:2, respectively,
decided to liquidate their partnership at which time their condensed balance
sheet was as follows:
Cash 50,000 Liabilities 60,000
Other Assets 250,000 Jo, Capital 80,000
Ma, Capital 90,000
Ri, Capital 70,000
Total 300,000 Total 300,000
The first cash sale of assets booked at 150,000 resulted in net realization of
120,000. At this time Ma received 48,000.
What is the amount of the expected liquidation expenses?

PROBLEM 5
The accounts of the partnership of Larry, Moe and Curly at the end of the fiscal
year on September 30, 20x6 are as follows:
Cash 36,000 Loan from Curly 18,000
Other Assets 225,000 Larry, Capital (30%) 81,000
Loan to Moe 9,000 Moe, Capital (50%) 54,000
Liabilities 90,000 Curly, Capital (20%) 27,000
Curly received 16,200 on the first distribution of cash.
What was the cash realized from the initial sale of assets?
What is the loss from the initial sale of the Non-cash Assets?

PROBLEM 6
Partners A, B, C and D to liquidate their partnership. Their capital balances
and profit and loss ratios immediately before the liquidation amount to the
following:
Capital P & L Ratio
Balance
A 125,000 40%
B 150,000 30%
C 125,000 20%
D 50,000 50%
The partnership has beginning cash of P25,000 and total liabilities of P200,000,
including a loan to C for P15,000.

In the first installment sale of NCAs, P150,000 of the liabilities and P10,000
liquidating expenses were paid and P10,000 cash was withheld. Furthermore C
and D received a total of P58,000 from the partnership.

In the second installment sale, P100,000 was received for the sale of NCAs and
the partnership paid the remaining liabilities, P20,000 for liquidating expenses
and withheld P5,000 cash.
After the second installment sale of NCAs, how much will B receive from the
partnership?
How much is the total amount of cash that C has received from the partnership
after the second installment sale of NCAs?

PROBLEM 7
On June 1, 20x5, A and B formed a partnership with cash investments of 1,155,000
and 1,470,000, respectively. Upon formation, the partners agreed to bring their
capital ratio in proportion with their profit and loss ratio which is 30% to A
and 70% to B and partner B is to invest or withdraw sufficient amount of cash
to conform with the agreement.
Profit allocation were as follows: monthly salaries to A amount to 126,000 and
to B amount to 105,000. The partners will be allowed interest of 12% of their
capital balances at the end of the year for the first year and interest of 15%
of the beginning capital in excess of 2,520,000 for the subsequent year. B
receives a bonus of 20% of net income after deducting the bonus and his salary.
Any remainder is based on profit and loss ratio.

On August 1, 20x5, A invested additional 280,000 cash and withdrew 105,000 on

October 1, 2015. On September 1, 2015, B invested additional 168,000 cash and
withdrew 63,000 on December 1, 20x5.

In 20x5, the partnership reported net income of 1,575,000 before any deductions
and each partner has drawings of 525,000 distributed at year-end against share
in net income. Loans due to A as of 12/31/15 amount to 133,000.

On January 1, 20x6, C was admitted as a partner by purchasing 1/3 interest of

B, paying the selling partner the amount of 966,000. C also invested 805,000
for a 20% interest in capital of the partnership. There were no
investments/withdrawals during the year. The profit sharing agreement was
modified to also include an annual salary to C of 945,000 and C receives a bonus
of 15% of net income after deducting the salaries.

The profit and loss ratios were also revised to 24%, 56% and 20% for A, B and
C, respectively. During 20x6, the partnership resulted to income of 3,780,000
before any deductions and distributed an amount 210,000 higher than last year
to each partner during 20x6 against share in net income.

On January 1, 20x7, B sold his interest in the partnership to C for 2,975,000.

After which A and C agreed to share annual profits of 3,220,000 in the ratio of
2:3, to A and C respectively. During 20x7, A and C had additional investments
of 315,000 and 210,000, respectively. Each partner received 840,000
distribution at year end.

On January 1, 20x8, A decided to retire from the partnership and was paid
3,745,000 cash for his total partnership interest. It was agreed that assets
with a book value of 1,015,000 would be adjusted to reflect their fair values
of 826,000. Immediately after A’s retirement, D invested cash of 3,360,000 for
a 30% interest in the partnership. The agreed capital of the partnership is
10,500,000.

1. What is the capital balance of B at the end of 20x5?

2. What is the capital balance of A immediately after the admission of C?
3. What is the capital balance of A immediately after withdrawal of B’s
interest in the partnership?
4. What is the capital balance of C at the end of 20x7?
5. What is the capital balance of C immediately before admission of D?
6. What is the increase in assets of the partnership upon admission of D?