Reference no: EM133155866
Question - On January 1, 2017, AA and BB formed a partnership by contributing cash of P50,000 and P40,000, respectively. They have agreed to give AA 60% interest in capital and BB 50% interest in profit and losses. Since January 1, 2017, the following events have occurred for the partnership: EVENT 1: On April 1, 2017, after charging the old partners' capital their share from a loss of P15,000 for the 1st quarter, CC was taken in as a partner by purchasing 20% partnership interest, proportionately from AA and BB as agreed among the partners. CC paid a total of P12,000 for the purchased interest and was given a 20% interest in profits. The old partners have agreed to maintain their old profit and loss ratios. EVENT 2: On July 1, 2017, to improve sales and profitability, the partnership merged with another firm owned by DD, after crediting the partners for a profit of P10,000 for the second quarter. DD's net assets had a fair value of P30,000 when contributed and DD was given a 30% interest in capital and in profits. The old partners have agreed to maintain their old profit and loss ratios. EVENT 3: On October 1, 2017, BB, whose family was to immigrate to Vancouver, Canada, withdrew from the partnership. The partnership recognized a profit of P15,000 for the 3rd quarter. It was agreed that the partnership net assets were fairly valued at that date and thus no revaluation had taken place upon BB's withdrawal. BB was paid P30,000 from the partnership cash. EVENT 4: In November 15, 2017, DD, a CPA-MBA gave notice of withdrawing from the partnership by the year-end. He was appointed a member of the Board of Accountancy and had to devote his time fully to this exciting new endeavour. The partners have decided to liquidate the partnership instead on December 31, 2017. The partnership recognized a profit of P20,000 for the 4th quarter ended. The loss on realization of assets was P8,000 and liquidation expenses paid were P4,000. What will be the final cash distribution to the partners upon liquidation on December 31, 2017?
A. AA, P46,400, CC, P19,600 and DD, P24,000
B. AA, P46,400, CC, P19,600 and DD, P42,000
C. AA, P44,600, CC, P16,900 and DD, P42,000
D. AA, P40,600, CC, P16,900 and DD, P42,000