Hernandez, Jessica O.
Partnership and Corporation
BSA 1-1 Chapter 6
Chapter 6- Partnership Dissolution- Lump Sum Liquidation
Exercises- Odd Numbers only
Exercise 6-1- Statement of Liquidation, Insolvent Partner
Cash Other Assets Liabilities Encabo, Capital Elorde, Capital
Balances before
liquidation 25,000 600,000 125,000 225,000 275,000
Sale of Non-Cash
Assets 350,000 (600,000) (112,500) (137,500)
Balances 375,000 -
Payment of Liabilities (125,000) (125,000)
Balances 250,000 - - 112,500 137,500
Payment to Partners (250,000) (112,500) (137,500)
a. Sale of non-cash assets
Cash 350,000
Encabo, Capital 112,500
Elorde, Capital 137,500 c. Payment to Partners
Other Assets 600,000 Encabo, Capital 112,500
Elorde, Capital 137,500
b. Payment of Liabilities Cash 250,000
Liabilities 125,000
Cash 125,000
Exercise 6-3 Case 1
Cash Other Assets Liabilities Enteng, Loan Estrel, Loan Enteng, Capital Estrel, Capital
90% 10%
Balances before
Liquidation 40,000 400,000 264,000 36,000 40,000 80,000 20,000
Sale of Non-Cash Assets 268,000 (400,000) (118,800) (13,200)
Balances 308,000 - 264,000 36,000 40,000 (38,800) 6,800
Payment of Liabilities 264,000 (264,000)
Balances 44,000 - - 36,000 40,000 (38,800) 6,800
Offset of Loan Against
Deficient Partner (36,000) 36,000
Balances 44,000 - - - 40,000 (2,800) 6,800
Additional Loss to
Remaining Partner 2,800 (2,800)
Balance 44,000 - - - 40,000 - 4,000
Payment to Partners (44,000) - - - (40,000) - (4,000)
a. Sale of Non-Cash Assets c. Offset of Loan against Deficient Partner
Cash 268,000 Enteng, Loan 36,000
Enteng, Capital 118,800 Enteng, Capital 36,000
Estrel, Capital 13,200
Other Assets 400,000
d. Capital Deficiency absorbed by the other partner
b. Payment of Liabilities Estrel, Capital 2,800
Liabilities 264,000 Enteng, Capital 2,800
Cash 264,000
e. Payment to Partner
Estrel, Loan 40,000
Estrel, Capital 4,000
Cash 44,000
Exercise 6-3 Case 2
Cash Other Assets Liabilities Enteng, Loan Estrel, Loan Enteng, Capital Estrel, Capital
70% 30%
Balances before
Liquidation 40,000 400,000 264,000 36,000 40,000 80,000 20,000
Sale of Non-Cash Assets 268,000 (400,000) (92,400) (39,600)
Balances 308,000 - 264,000 36,000 40,000 (12,400) (19,600)
Payment of Liabilities 264,000 (264,000)
Balances 44,000 - - 36,000 40,000 (12,400) (19,600)
Offset of Loan Against
Deficient Partner (12,400) (19,600) 12,400 19,600
Balances 44,000 - - 23,600 20,400 - -
Payment to Partners (44,000) - - (23,600) (20,400) - -
a. Sale of Non-Cash Assets c. Offset of Loan against Deficient Partner
Cash 268,000 Enteng, Loan 12,400
Enteng, Capital 92,400 Enteng, Capital 12,400
Estrel, Capital 39,600 Estrel, Loan 19,600
Other Assets 400,000 Estrel, Capital 19,600
b. Payment of Liabilities
Liabilities 264,000 e. Payment to Partner
Cash 264,000 Enteng, Loan 23,600
Estrel, Loan 20,400
Cash 44,000
Exercise 6-3 Case 3
Cash Other Assets Liabilities Enteng, Loan Estrel, Loan Enteng, Capital Estrel, Capital
50% 50%
Balances before
Liquidation 40,000 400,000 264,000 36,000 40,000 80,000 20,000
Sale of Non-Cash Assets 268,000 (400,000) (66,000) (66,000)
Balances 308,000 - 264,000 36,000 40,000 14,000 (46,000)
Payment of Liabilities 264,000 (264,000)
Balances 44,000 - - 36,000 40,000 14,000 (46,000)
Offset of Loan Against
Deficient Partner (40,000) 40,000
Balances 44,000 - - 36,000 - 14,000 (6,000)
Additional Loss to
Remaining Partner (6,000)
Balances 44,000 - - 36,000 - 8,000 -
Payment to Partners (44,000) - - (36,000) - (8,000) -
a. Sale of Non-Cash Assets c. Offset of Loan against Deficient Partner
Cash 268,000 Estrel, Loan 40,000
Enteng, Capital 66,000 Estrel, Capital 40,000
Estrel, Capital 66,000
Other Assets 400,000
d. Capital Deficiency absorbed by the other partner
b. Payment of Liabilities Enteng, Capital 6,000
Liabilities 264,000 Estrel, Capital 6,000
Cash 264,000
e. Payment to Partner
Entengl, Loan 36,000
Enteng, Capital 8,000
Cash 44,000
Problems- Even Numbers Only
Problem 6-2 Statement of Liquidation
1. Computation of total loss.
Esteban, Capital 144,000 Computation of Other Assets
Estiban, Drawing 12,000 Total Assets Including Cash 638,000
Total 132,000 Cash 70,000
Cash received by 568,000
the end of the Computed Loss 105,000
period 111,000 Selling Price 463,000
21,000 / 2/10 = 105,000
2. Statement of Liquidation
Cash Other Assets Liabilities Evaristo, Loan Eugenio, Evaristo, Esteban, Capital
Capital Capital
5 3 2
Balances before
Liquidation 70,000 568,000 200,000 40,000 132,000 134,000 132,000
Sale of Non-Cash Assets 463,000 (568,000) (52,500) (31,500) (21,000)
Balances 533,000 - 200,000 40,000 79,500 102,500 111,000
Payment of Liabilities (200,000) (200,000)
Balances 333,000 - - 40,000 79,500 102,500 111,000
Payment to Partners (333,000) - - (40,000) (79,500) (102,500) (111,000)
Closing of Withdrawal Accounts to Capital
Eugenio, Capital 32,000
Eugenio, Drawing 32,000 b. Payment of Liabilities
Liabilities 200,000
Esteban, Capital 12,000 Cash 200,000
Esteban, Drawing 12,000
c. Payment to Partners
a. Sale of non-cash assets Evaristo, Loan 40,000
Cash 463,000 Eugenio, Capital 79,500
Eugenio, Capital 132,000 Evaristo, Capital 102,500
Evaristo, Capital 134,000 Esteban, Capital 111,000
Esteban, Capital 132,000 Cash 333,000
Other Assets 568,000
Problem 6-4 Statement of Liquidation
1. Adjustment of Assets/Other Accounts
Asset Book Value Cash Realized Gain or Loss
Accounts Receivable 60,000 64,000 4,000
Merchandise Inventory 50,000 25,000 (25,000)
Prepaid Advertising 2,000 800 (1,200)
Machinery and Equipment 40,000 24,000 (16,000)
TOTAL 152,000 113,800 (38,200)
Liabilities 20,000 22,000 2,000
Notes Payable 86,000 87,000 1,000
2. Statement of Liquidation
Cash Other Assets Accounts Notes Payable Evasco, Capital Elor, Capital
Payable 4/10 6/10
Balances before
Liquidation 1,000 152,000 20,000 86,000 30,000 17,000
Sale of Non-Cash Assets 113,800 (152,000) (15,280) (22,920)
Balances 114,8000 - 20,000 86,000 14,720 (5,290)
Unrecorded Liabilities 2,000 1,000 (1,200) (1,800)
Payment of Liabilities 109,000 (22,000) (87,000)
Balances 5,800 - - - 13,520 (7,720)
Additional Investment of
Elor 4,000 4,000
Balances 9,800 - - - 13,520 (3,720)
Additional Loss to Evasco
due to Elor’s deficiency (3,720) 3,720
Balances 9,800 - - - 9,800 -
Payment to Partners (9,800) - - - (9,800) -
3. Journal Entries c. Elor’s Additional Investment
Cash 4,000
a. Sale of Non-Cash Assets Elor, Capital 4,000
Cash 113,800
Evasco, Capital 30,000 d. Additional Loss to Evasco for Elor’s Deficiency
Elor, Capital 17,000 Evasco, Capital 3,720
Other Assets 152,000 Elor, Capital 3,720
b. Payment of Liabilities e. Payment to Partners
Accounts Payable 22,000 Evasco, Capital 9,800
Notes Payable 87,000 Cash 9,800
Cash 109,000
Multiple Choice-1 Answers Multiple Choice-2 Answers
1.C. 1.A.
2.B. 2.D.
3.B. 3.D.
4.C. 4.C.
5.A. 5.D.
6.D. 6.C.
7.A. 7.B.
8.B. 8.A.
9.B. 9.C.
10.D. 10.D.
11.C. 11.D.
12.B. 12.A.
13.A. 13.B.
14.A. 14.C.
15.B. 15.D.
16.A.
17.C.
18,A.
19.C.
20.A.
