Reference no: EM132994020
Questions -
Q1) After several years of operations, the partnership of Ana, Bada and Cada is to be liquidated. After making the closing entries on June 20, 2016, the following accounts remain open:
Cash 50,000
Non-Cash Assets 2,350,000
Liabilities 400,000
Ana, Capital 900,000
Bada, Capital 500,000
Cada, Capital 600,000
The non-cash assets are sold for P2,650,000. Profits and losses are shared equally.
Required - Statement of partnership liquidation and the entries to record the following:
1. Sale of all non-cash assets.
2. Distribution of gain on realization to the partners.
3. Payment of liabilities.
4. Distribution of cash to the partners.
Q2) Soria and Paras are partners sharing profits and losses equally. They decided to terminate the business. Prior to realization, their capital balances are P150,000 and P70,000, respectively. After all non-cash assets are sold and all liabilities are paid, there is a cash balance of P160,000.
Required -
1. What is the amount of loss or gain on realization?
2. How should the loss or gain be divided between the partners?
3. How much cash should be distributed to each partner?
Q3) The capital and loan balances for partners Bee, Lee and Ong are shown below. They share profits and losses in the ratio of 4:4:2, respectively.
Loans payable-Bee 100,000
Loans Payable-Lee 100,000
Loans Payable-Ong 150,000
Bee, Capital 150,000
Lee, Capital 350,000
Ong, Capital 200,000
Required -
1. Cash Priority Program.
2. Assume that P250,000 cash is available for initial distribution, prepare the entries to record the distribution to the partners.
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