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Liquidation

The document outlines the financial details and liquidation process of two partnerships: Warle, Xin, and Yates in 2006, and ABC Partnership in 2018-2019. It details the assets, liabilities, capital distribution, and transactions during the liquidation phases, including collections, sales, and expenses. Both partnerships faced insolvency and proceeded with asset liquidation to settle debts and distribute remaining cash to partners.

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shayeavyanna27
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5 views1 page

Liquidation

The document outlines the financial details and liquidation process of two partnerships: Warle, Xin, and Yates in 2006, and ABC Partnership in 2018-2019. It details the assets, liabilities, capital distribution, and transactions during the liquidation phases, including collections, sales, and expenses. Both partnerships faced insolvency and proceeded with asset liquidation to settle debts and distribute remaining cash to partners.

Uploaded by

shayeavyanna27
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

1.

On June 30, 2006, the Warle, Xin, and Yates partnership had the following fiscal year-end
balance sheet:

Cash P 4,000 Accounts payable P 7,000


Accounts receivable 6,000 Loan from Xin 5,000
Inventory 14,000 Warle, capital(20%) 14,000
Plant assets-net 12,000 Xin, capital(30%) 10,000
Loan to Warle 6,000 Yates, capital(50%) 6,000
Total assets P 42,000 Total liab./equity P 42,000

The percentages shown are the residual profit and loss sharing ratios. The partners dissolved
the partnership on July 1, 2006,. and began the liquidation process. During July the following
events occurred:
* Receivables of P3,000 were collected.
* The inventory was sold for P4,000.
* All available cash was distributed on
July 31, except for P2,000 that was set aside for contingent expenses.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

On December 31, 2018, the Statement of Financial Position of ABC Partnership with profit or
loss ratio of 5:3:2 of respective partners A, B and C. showed the following information:

Cash 1,600,000 Total Liabilities 2,000,000


Noncash assets 1,400,000 A, Capital 100,000
B, Capital 500,000
C, Capital 400,000

On January 1, 2019, the partners decided to liquidate the partnership in installment. All partners
are legally declared to be personally insolvent.

As of January 31, 2019, the following transactions occurred:

 Noncash assets with a carrying amount P1,000,000 were sold at a gain of P100,000.
 Liquidation expenses for the month of January amounting to P50,000 were paid.
 It is estimated that liquidation expenses amounting to P150,000 will be incurred for the
month of February, 2019.
 20% of the liabilities to third persons were settled.
 Available cash was distributed to the partners.

As of February 28, 2019, the following transactions occurred:

 Remaining noncash assets were sold at a loss of P100,000.


 The final liquidation expenses for the month of February amounted to P100,000.
 The remaining liabilities to third persons were settled at a compromise amount of
P1,500,000.
 Remaining cash was finally distributed to the partners.

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