As of December 31, 2011, the books of Vicente, Garcia and Cabuyadao Partnership showed capital balances of 40,000, 25,000 and 5,000. The partner's profit and loss ratio was 3:2:1 respectively. The partners decided to dissolve and liquidate. They sold all the non-cash assets for P37,000 cash. After settlement of all liabilities amounting to P12,000, they still have P28,000 cash left for distribution.

Q1. The loss on realization of the non-cash assets was:

a. 42,000

b. 40,000

c. 45,000

d. 21,000

Q 2. Assuming that any debit balance of partner's capital is uncollectible, the share of Vicente on P28,000 cash for distribution was:

a. 19,000

b. 16,000

c. 18,000

d. 17,800

Answer:

As of December 31, 2011, the books of Vicente, Garcia and Cabuyadao Partnership showed capital balances of 40,000, 25,000 and 5,000. The partner's profit and loss ratio was 3:2:1 respectively. The partners decided to dissolve and liquidate. They sold all the non-cash assets for P37,000 cash. After settlement of all liabilities amounting to P12,000, they still have P28,000 cash left for distribution.

Q1. The loss on realization of the non-cash assets was:

a. 42,000

Total Capital + Liabilities = Cash + Non cash Assets

45000+25000+5000 + 12000 = (28000 - (37000-12000) +Non cash Assets

82000 = 3000 + Non cash Assets

Non cash Assets = 79000 (Book Value)

Selling price = 37000

Loss = 79000 - 37000 = 42000

Q 2. Assuming that any debit balance of partner's capital is uncollectible, the share of Vicente on P28,000 cash for distribution was:

Vincente = 40000 - (42000 * 3/7) = 22000

Garcia = 25000 - (42000 * 2/7) = 13000

Cabuyadao = 5000 - (42000 * 1/7) = - 1000

Vincente = 28000 * 22/35 = 17800

d. 17,800