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How much cash should Pepe receive

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Question - Pepe and Pilar started a partnership some years ago and managed to operate profitably for several years.

Recently, however, they lost a substantial legal suit and incurred unexpected losses on accounts receivable and inventories. As a result, they decided to liquidate. They sold all assets and only P162,000 was available to pay liabilities, which amounted to P297,000. Their capital account balances before the liquidation and their profit and loss sharing ratios are shown below:

Capital balances Profit and loss ratios

Pepe P207,000 60%

pilar 121,500 40%

Pepe is personally insolvent after investing cash to pay the unpaid creditors, but Pilar has personal assets in excess of P900,000.

In the settlement to partners, how much cash should Pepe receive?

Reference no: EM132638266

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