BALIUAG UNIVERSITY

CPA Review Program

Advanced Financial Accounting and Reporting
Luisito V. Correa Jr., CPA, CAT, MBA
__________________________________________________________________________________________
Module 2: Partnership Dissolution and Liquidation L. V. CORREA

I. Partnership Dissolution
✓ Definition of terms per Civil Code of the Philippines
▪ Dissolution is the change in the relation of the partners caused by any partner ceasing to be
associated in the carrying of the business. (Art. 1828)
▪ Winding up is the process of settling the business or affairs of the partnership after dissolution (Art.
1829)

✓ Dissolution versus Liquidation

- Dissolution entails change in the ownership or change in the capital structure of the partnership
whereas liquidation pertains to the termination of the partnership operations.
- In dissolution, the partnership continues to exist although there may be new partner coming into the
partnership or that a partner may withdraw from the partnership.
- In liquidation, the partnership ceases to exist and that the partnership settles all its accounts to
outside creditors and to each partner.

✓ Causes of dissolution
a. Admission of a new partner
b. Retirement or withdrawal of an existing partner
c. Death of a partner

✓ Admission of a partner
a. Purchase of interest of one or more of the existing partner
- The cash paid by the incoming partner is not recorded because the purchase is a personal transaction
between the buyer and seller.
- The capital account of the old partner is debited for the interest purchased and the capital account of
the new partner is credited for the same amount.
- Asset revaluation may accompany the admission of partner by purchase. Goodwill may also be
recorded although only after all identifiable assets have been adjusted to their fair value.
b. Investment of asset in the partnership by an incoming partner
- The admission is recorded by debiting the investment of the new partner and crediting his capital
account.
- Sometimes the agreed capitalization of the new partner is different from his capital contribution. This
will necessitate additional accounting procedures. This may be accounted using the following
methods:
i. Bonus method – Total agreed capital and total contributed capital are equal, but the new
partner’s ownership interest is not equal to his capital contribution.
▪ Bonus to old partners – This occurs when the new partner’s is credited with an ownership
interest less than his contributed capital. For the difference, the old partners’ capital accounts
are credited on the basis of their profit and loss ratio. Thus increasing the old partners’
account balances.
▪ Bonus to new partner – This occurs when the new partner’s is credited with an ownership
interest greater than his contributed capital. For the difference, the old partners’ capital

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Module 2: Partnership Accounting: Dissolution & Liquidation L. V. CORREA
accounts are debited on the basis of their profit and loss ratio. Thus reducing the old partners’
account balances.
ii. Asset revaluation method – Prior to the admission of the new partner, the assets of the
partnership may be revalued to reflect the current fair market value. Upward revaluation
increases the capital accounts of the old partners on the basis of their profit and loss ratio.
Conversely, downward revaluation reduces the capital accounts of the old partners on the basis
of their profit and loss ratio.
Note: In accordance with IAS 38 and IFRS 3, goodwill is recognized by an acquirer in a business combination by
purchasing another entity for a consideration that is more than the fair value of the acquired entity’s net
identifiable assets. Hence, the contention against the use of goodwill method in partnership. However,
arguments that favors the use of goodwill method suggest that during admission, the net assets of the
partnership must be restated to their fair valuation. Consequently, assets should be recorded at their fair values
and may include previously unrecognized goodwill. Moreover, accounting for partnership may require a separate
generally accepted accounting principles that may differ from IFRS (i.e. IFRS 3 - Business Combination) which
affects only corporate entities.
✓ Illustration of dissolution by admission
Batman and Superman are partners to a firm who shares profits and losses 2:3, respectively. Each partner
has P50,000 capital account balance prior to admission of Wonderwoman.
Requirement: Record the admission of Wonder Woman in the following independent cases:
1. Wonderwoman paid P20,000 in total for purchasing 1/3 interest of Batman and Superman.
2. Wonderwoman invested P20,000 for a 1/6 interest in the partnership.
3. Wonderwoman invested P20,000 for a 1/8 interest in the partnership (Bonus method).
4. Wonderwoman invested P20,000 for a 1/4 interest in the partnership (Bonus method).
5. Wonderwoman invested P30,000 for a 20% interest in the partnership. The difference in consideration
paid and ownership interest acquired is attributable to undervaluation of land (Asset revaluation
method).
6. Wonderwoman invested P30,000 for a 25% interest in the partnership. The difference in consideration
paid and ownership interest acquired is attributable to inventory write-down (Asset revaluation
method).

Solution: Journal entries for admission of new partner

Case 1 Case 4

Case 2 Case 5

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Case 3 Case 6

✓ Retirement/Withdrawal of a partner
• The interest of the retiring partner is usually adjusted by the profit or loss from the partnership
operations thus far and by the revaluation of the net assets of the partnership. Retirement of a partner
may be done as follows:
a. Remaining partner buy out the retiring partner ownership interest in the partnership
- The accounting only involves transferring the capital account of the retiring partner to the
remaining partners who buy out the former ownership interest. The cash settlement is not
accounted because it is a personal transaction between the retiring partner and the remaining
partners.
b. Partnership acquires the retiring partner’s ownership interest
i. Settlement equals the retiring partner’s interest
- Retiring partner’s capital account is debited at the settlement price.
ii. Settlement more than the retiring partner’s interest
▪ Bonus to retiring partner – Debited to the remaining partners’ capital accounts based on
their profit and loss ratio.
iii. Settlement less than the retiring partner’s interest
- Difference may be accounted as follows:
▪ Allocated to specific assets which are overstated
▪ Bonus to remaining partners – Credited to the remaining partners’ capital accounts based
on their profit and loss ratio.
✓ Death of a partner
• The estate of the deceased partner is entitled to receive the amount of his interest in the partnership
at the time of his death.
• The deceased partner capital is adjusted similar to the retiring partner.
• The balance of his capital is transferred to a liability account until settlement.
✓ Illustration of retirement and death of a partner
The capital balances of the partners as of January 1, Year 1 are as follows:
Partners Capital Balances Profit and Loss Ratio
Faith P 25,000 40%
Hope 20,000 40%
Love 15,000 20%
On July 1, Year 1, the net income of the partnership for the first half of the year amounted to P50,000.
Additionally, Land will be increased by P5,000 to reflect the fair value.
Requirements: Record the following independent cases on July 1, Year 1 and compute the capital balances
of the remaining partners.

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1. Faith retires and the remaining partners paid her P60,000 such that each will obtain 50% of her capital
balance.
2. Faith agrees for a settlement price from the partnership equal to her ownership interest in the firm.
3. Faith agrees for a settlement price from the partnership with 10% premium on her capital balance.
(Bonus method)
4. Faith agrees for a settlement price from the partnership equals to 90% of her capital balance. (The
difference is attributable to overvaluation of inventories)
5. Faith agrees for a settlement price from the partnership equals to 90% of her capital balance. (Bonus
method)
6. Faith died and the partnership accrues the amount owed to her estate.

Solution: Journal entries and computation of capital accounts

Case 1 Hope, Capital Love, Capital

Case 2 Hope, Capital Love, Capital

Case 3 Hope, Capital Love, Capital

Case 4 Hope, Capital Love, Capital

Case 5 Hope, Capital Love, Capital

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 Module 2: Partnership Accounting: Dissolution & Liquidation L. V. CORREA
Case 6 Hope, Capital Love, Capital

✓ Incorporation of a partnership
• When a partnership is converted into a corporation, the corporation takes over the assets and assumes
the liabilities of the partnership in exchange for the share of stocks.
• Partnership net assets are revalued and the corporate equity accounts are recorded equal to the
partners’ capital accounts.
• The partnership may retain the books of the partnership or use a separate books of the corporation
✓ Illustration of incorporation of partnership
Partners Bee and You decided to convert their partnership into a corporation. The account balances of the
partnership prior to incorporation follows:
Assets P1,850,000 Bee, Capital P600,000
Liabilities 450,000 You, Capital 800,000
Other information follows:
• Bee and You share profits and losses equally.
• Land costing P800,000 must be revalued to its fair value of P1,000,000.
• Inventory is overvalued by P40,000.
• Unrecorded liabilities amounted to P60,000.
• The new corporation will issue 9,000 ordinary shares to the partners in proportion to their capital
balances. Par value of each share is P90.
Requirements: (1) Record the revaluation in the books of the partnership.
(2) Record the entries in the books of the corporation. (Assume new books were used)
(3) How many shares were received by Bee and You?
Solution: Journal entries
Partnership Books Corporation Books

II. Partnership Liquidation

✓ Definition
Liquidation is the winding up of the business or affairs of the partnership (Art. 1829). It involves selling of
noncash assets, payment of liabilities and final settlement to partners.
✓ Order of priority of cash distribution
1. Outside creditors
2. Partners’ loan accounts
3. Partners’ capital accounts
✓ Liquidation methods
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Module 2: Partnership Accounting: Dissolution & Liquidation L. V. CORREA
1. Lump-sum liquidation – One in which all the assets are sold in bulk and all creditors’ claims are satisfied
before a single liquidating distribution is made to partners.
Lump-sum liquidation normally includes:
a. Sale of noncash assets
b. Allocation of gain or loss from sale of noncash assets to partners.
c. Payment of outside creditors and liquidation expenses.
d. Elimination of capital deficiency of deficient partner
• Exercise right of offset (Apply loan due to partner against deficient capital)
• If there is still deficiency:
- Solvent partner will make additional investment to eliminate the deficiency.
- For Insolvent partner, the remaining partners will absorb the capital deficiency.
2. Installment liquidation – The assets are sold over a period of time and the cash is distributed to the
partners as it becomes available.
Ways to determine which partner will receive available cash:
a. Schedule of safe payment – Prepared each time payment will be made.
b. Cash priority program – Prepared at the beginning of the liquidation process.
✓ Illustration of partnership liquidation
Case 1: Lump-sum liquidation
The partnership of Do, Re and Mi agreed to terminate the partnership. The accounts of the partnership
consist of cash of P20,000, other assets of P80,000, liabilities of P20,000, and loan to Do of P4,000. The
capital balances of Do, Re and Mi, respectively, are P16,000, P40,000 and P20,000. Their profit and loss ratio
is 5:3:2, respectively. The noncash assets were sold at a loss of P50,000.
Requirement: Prepare statement of liquidation

Cash Other Assets Liabilities Loan D Do, Capital Re, Capital Mi, Capital
Balance
Sale of noncash assets
Balance
Payment of liabilities
Balance
Right of offset
Balance
Loss to by Re & Mi
Balance
Final cash settlement

Case 2: Installment liquidation

The partnership of Fa, So and La agreed to terminate the partnership on January 1, Year 3. At that time,
Cash equals P30,000, noncash assets totaled P245,000, and liabilities to outside creditors amounted to
P50,000. Their respective capital balances are P60,000, P45,000 and P20,000. Additionally, the respective
loans of the partnership to each partner are P20,000, P15,000 and P65,000. Lastly, the profit and loss ratio
of their partnership is 5:3:2, respectively. Realization of noncash assets are as follows:
Cash Available for
Date Cash proceeds Cash Withheld
Distribution
January 1 P50,000 P10,000 ?
February 1 30,000 5,000 ?
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March 1 100,000 -0- ?
Requirements: (1) Cash priority program
(2) Schedule of payments

Cash Priority Program

Balances Payments
Fa So La Fa So La Total
Capital balances
Loan balances
Total interest
P & L ratio
Loss absorption
Potential
Priority 1
Balances
Priority 2
Balances

Schedule of Payments
Payee January 1 February 1 March 1
Outside creditors
Fa
So
La
Total cash distributed
Cash withheld
Total Cash

❖ Multiple Choice Questions

1. Which of the following results in dissolution of a partnership?
A. Contribution of additional assets to the partnership by an existing partner
B. Receipt of a draw by an existing partner.
C. Winding up of the partnership and the distribution of remaining assets to the partners.
D. Withdrawal of a partner from a partnership.
2. In the Adel-Brick partnership, Adel and Brick had a capital ratio of 3:1 and a profit and loss ratio of 2:1,
respectively. The bonus method was used to record Colter’s admittance as a new partner. What ratio
would be used to allocate, to Adel and Brick, the excess of Colter’s contribution over the amount credited
to Colter’s capital account?
A. Adel and Brick’s new relative capital ratio. C. Adel and Brick’s new relative profit and loss ratio.
B. Adel and Brick’s old capital ratio. D. Adel and Brick’s old profit and loss ratio.
3. Which of the following best characterizes the bonus method of recording a new partner's investment in a
partnership?
A. Net assets of the previous partnership are not revalued.
B. The new partner's initial capital balance is equal to his or her investment.
C. Assuming that recorded assets are properly valued, the book value of the new partnership is equal to
the book value of the previous partnership and the investment of the new partner.
D. The bonus always results in an increase to the previous partners' capital balances.

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4. Before the withdrawal of Alice from their partnership, the partners agreed to adjust assets to their fair
values. Accordingly, the appraisal increase was credited to
A. Income Summary C. Partners’ Capital Accounts
B. Deferred Credit D. Appraisal Capital.
5. When NANA retired from the partnership of NANA, NINA, and NONA, the final settlement of NANA’s
interest exceeded her capital balance. Under the bonus method, the excess is
A. Recorded as goodwill.
B. Recorded as an expense.
C. Of no effect to the capital accounts of Nina and Nona.
D. Deducted from the capital account balances of Nina and None.
6. The admission of a new partner to a 20% interest in a partnership for an investment of P18,000, with the
total partnership capital to be P75,000, will result in
A. Bonus to old partners C. Goodwill to old partners
B. Bonus to new partner D. Goodwill to new partners
7. Assume that C has a P50,000 equity in the partnership of “A, B, and C.” Partner C arranges to sell his entire
interest to D for P80,000 cash. Partners A and B agree to the admission of D. At what amount will the equity
of the incoming partner, D, be shown in the balance sheet?
A. At P50,000.
B. At P50,000 and the P30,000 will be divided equally among the original partners.
C. At P80,000.
D. At P80,000 and the P30,000 will represent Goodwill which will be apportioned between the existing
equities of A and B.
8. Partners Ivy, Jay and Kay, who divide profits 4:3:3, have the following condensed statement of financial
position:
Assets P 1,880,000

Liabilities P 480,000
Ivy, Capital 620,000
Jay, Capital 400,000
Kay, Capital 380,000
Total P 1,880,000
Lay was admitted as a new partner with 20% interest, after he pays the three partners a premium of 10%.
Lee’s capital credit will be
A. 200,000 C. 350,000
B. 280,000 D. 376,000
9. On October, 31, Year 1, the balance sheet of partners Eva and Eda who share profits and losses of 3:2,
respectively, shows the following:
Assets P600,000
Eva, capital 360,000
Eda, capital 240,000
They agreed to take Ella as a new partner, with Ella purchasing 1/8 of both partners’ interests for P100,000
cash. What amount would be recorded in the partnership books as Ella’s capital, if bonus method is used?
A. 50,000 C. 100,000
B. 75,000 D. 120,000
10. Poland, Queensland and Rhode Island, partners in an accounting firm, share profits in the respective ratio of
3:3:2. Switzerland is admitted as a new partner and is allowed 25% share in profits with the balance to be
shared proportionately by the partners in their original ratio. What is the new profit-sharing ratio of Poland,
Queensland and Rhode Island
A. 28.125%, 28.125% and 18.75% C. 40%, 40% and 10%
B. 30%, 30% and 20% D. 37.5%, 37.5% and 25%
11. The capital balances of partners Eel and Flounder are P80,000 and P40,000, respectively. They share profits
in the ratio of 3:2. The have desperate need for cash and they agreed to admit Goldfish as a new partner

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with 1/3 interest in both capital and profits upon capital infusion of P30,000. After admission, assuming no
goodwill is recognized, the respective capital balances are
_ Eel__ Flounder Goldfish _ Eel__ Flounder Goldfish
A. 50,000 50,000 50,000 C. 68,000 32,000 50,000
12. P, Q and R are partners with capital balances of P300,000, P300,000 and P200,000, respectively and sharing
profits and losses equally. R is to retire and it is agreed that he is to take certain furniture with second-hand
value of P50,000 and a note for his interest. The furniture is carried in the books at P65,000, but brand new
would cost P80,000. Romy’s acquisition of furniture would result in
A. Reduction in capital of P15,000 for R C. Reduction in capital of P5,000 each for P, Q and R
B. Reduction in capital of P55,000 for R D. Reduction in capital of P7,500 each for P and Q
13. Ogie, Olie and Orly are partners sharing profits and losses in the respective ratio of 3:3:4. Orly gets permission
to withdraw from the partnership and they agree that settlement shall be made by the remaining partners.
Their capital balances are P30,000, P25,000 and P45,000, respectively, when Orly withdraws. If Orly is paid
P48,000 and the asset valuation method is used, the asset under valuation is
A. 500 C. 5,000
B. 3,000 D. 7,500
14. The condensed balance sheet of the partnership and the profit and loss ratio were as follows:
Assets P180,000

Call, loan P 9,000

Call, capital (20%) 42,000
Mole, capital (20%) 39,000
Poll, capital (60%) 90,000
Total P180,000
Call decided to retire from the partnership. By agreement, the assets are to be adjusted to their fair value
of P216,000. It was agreed that the partnership would pay Call P61,200 cash for Call’s interest in the
partnership, including the loan to be repaid in full. No goodwill is to be recorded. After Call’s retirement,
the balance of Mole’s capital would be
A. 36,450 C. 45,450
B. 39,000 D. 46,200
15. Jack and Jill partnership’s balance sheet at December 31, Year 1, reported the following:
Total assets P200,000
Total liabilities 40,000
Jack, capital 80,000
Jill, capital 80,000
On January 01, Year 2, the partners dissolved the partnership and transferred all the net assets to a newly
formed corporation. At the date of incorporation, the fair value of the net assets was P24,000 more than the
carrying amount on the partnership’s books. Jack and Jill were each issued 10,000 shares of the corporations
P1 par value ordinary shares. Immediately after the incorporation, the share premium should be credited for
A. 136,000 C. 154,000
B. 140,000 D. 164,000
16. Prior to partnership liquidation, a schedule of possible losses is frequently prepared to determine the amount
of cash that may be safely distributed to the partners. The schedule of possible losses
A. Consists of each partner’s capital account plus loan balance, divided by that partner’s profit-and-loss
sharing ratio.
B. Shows the successive losses necessary to eliminate the capital accounts of partners (assuming no
contribution of personal assets by partners).
C. Indicates the distribution of successive amounts of available cash to each partner.
D. Assumes contribution of personal assets by partners unless there is a substantial presumption of
personal insolvency by the partners.
17. The final cash distribution to the partners in a partnership lump-sum liquidation should be made in
accordance with

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Module 2: Partnership Accounting: Dissolution & Liquidation L. V. CORREA
A. Balances of the partners’ capital accounts.
B. Partners’ profit and loss sharing ratio.
C. Ratio of capital contributions made by the partners.
D. Ratio of capital contributions less withdrawals made by the partners.
18. A simple partnership liquidation requires
A. Periodic payments to creditors and partners determined by a safe payments schedule.
B. Partnership assets to be converted into cash with full payment made to all outside creditors before
remaining cash is distributed to partners in a lump sum payment.
C. Only creditors to be paid in an orderly manner.
D. Periodic payments to partners as cash becomes available.
19. If conditions produce a debit balance in a partner’s capital account when liquidation losses are allocated
A. The partner receives further allocations of liquidation losses, but not gains.
B. The partner receives no further allocation of liquidation losses and gains.
C. The partner is no longer obligated to partnership creditors.
D. The partner has an obligation of personal net assets to the other partners.
20. The following is the priority sequence in which liquidation proceeds will be distributed for a partnership:
A. Partnership drawings, partnership liabilities, partnership loans, partnership capital balances.
B. Partnership liabilities, partnership loans, partnership drawings and partnership capital balances.
C. Partnership liabilities, partnership loans and partnership capital balances.
D. Partnership liabilities, partnership capital balances and partnership loans.
21. Cohen, Butler and Davis are partners in a partnership and share profits and losses 5:3:2, respectively. The
partners have agreed to liquidate the partnership incurring P14,000 liquidation expenses. Prior to
liquidation, the partnership statement of financial position reflects the following values:
Cash P 21,000
Noncash assets 248,000
Notes payable to Davis 32,000
Other liabilities 154,000
Cohen, capital 60,000
Butler, capital (10,000)
Davis, capital 33,000
The noncash assets were sold for P218,000 cash. Butler has personal assets of P8,500. How would the cash
be distributed among partners
Cohen Butler_ _Davis_ Cohen Butler_ _Davis_
A. 15,500 -0- -0- C. 30,650 -0- 53,260
B. 21,429 -0- 49,571 D. 27,500 -0- 52,000
22. Bach, Lizst and Strauss, sharing profits and losses 4:4:2, decided to liquidate their partnership. Prior to
liquidation, the partnership statement of financial position follows:
Cash P 100,000 Liabilities P 140,000
Other assets 400,000 Bach, loan 10,000
Bach, capital 45,000
Lizst, capital 105,000
Strauss, capital 200,000
Total P 500,000 Total P 500,000
The other assets were sold for P247,500, and the partners agreed to make additional cash contributions to
answer for any capital deficiency. Identify the deficient partner, and indicate his additional cash
contribution.
A. Bach, P6,000 C. Lizst, P30,500
B. Bach, P16,000 D. Strauss, P44,000
23. Refer to the preceding problem. If the deficient partner(s) is/are insolvent, how much cash would Lizst
receive in the final cash distribution?
A. 40,000 C. 41,600
B. 41,000 D. 44,000
24. Prior to liquidation, the partnership statement of financial position with profit-sharing ratio follows:

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Cash P 120,000 Liabilities P 280,000
Other assets 1,080,000 Xena, capital (40%) 560,000
Yoyo, capital (30%) 320,000
Zebra, capital (30%) 40,000
Total P 1,200,000 Total P 1,200,000
The partners agreed to liquidate and they sold all the other assets for P800,000. How should the available
cash be distributed to partners?
Xena_ Yoyo_ Zebra_ Xena_ Yoyo_ Zebra_
A. 280,000 320,000 40,000 C. 410,000 230,000 -0-
B. 324,000 236,000 16,000 D. 412,000 228,000 -0-
25. Dell, Ell and Fell decided to liquidate their partnership on May 31, Year 1. On this date the capital balances
and profit-sharing ratio were as follows:
Dell P50,000 40%
Ell 60,000 30%
Fell 20,000 30%
The net income from January 1, Year 1 to May 31, Year 1 was P44,000. Also, on the said date, the
partnership’s cash and liabilities were P40,000 and P90,000, respectively. For Dell to receive P55,200 in full
settlement, how much must be realized from the sale of the partnership’s noncash assets?
A. 177,000 C. 190,000
B. 187,000 D. 193,000
26. The partners of Aida, Lorna, and Fe, sharing profits and losses 5:3:2, respectively, decided to liquidate their
partnership. Prior to liquidation, the partnership statement of financial position follows:
Cash P 30,000 Liabilities P 50,000
Other assets 320,000 Aida, capital 80,000
Lorna, capital 115,000
Fe, capital 105,000
Total P 350,000 Total P 350,000
The partnership agreed to liquidate the partnership by installments. Immediately, there was a realization
of P100,000 cash from selling other assets with book value of P150,000. Of the cash available, the priority
is the payment of liabilities and the balance is to be distributed to partners. How much should the
remaining cash be distributed among partners?
_Aida_ Lorna_ __Fe__ _Aida_ Lorna_ __Fe__
C. 50,000 30,000 20,000 C. -0- 31,000 49,000
D. 40,000 24,000 16,000 D. -0- 48,000 32,000
27. The following data were from ABC Partnership:
Cash P 2,000 Liabilities P 5,000
Other assets 28,000 A, loan 2,500
A, capital 12,500
B, capital 7,000
C, capital 3,000
Total P 30,000 Total P 30,000
Profit and loss ratio is 3:2:1 for A, B and C, respectively. Cash is to be distributed as assets are realized. The
noncash assets were realized as follows:
Date Cash Received Book Bavlue
Jan. Year 1 P 6,000 P 9,000
Feb. Year 1 3,500 7,700
Mar Year 1 12,500 11,300
The total loss to A was
A. 3,000 C. 1,000
B. 2,000 D. -0-
28. Refer to the preceding problem. Total cash received by B was
A. 2,200 C. 5,000
B. -0- D.1,500
29. Refer to the preceding problem. Total cash received by C in January was
A. 200 C. 500
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B. 1,000 D. -0-
30. Refer to the preceding problem. Total cash received by A in February was
A. 3,500 C. 3,000
B. 2,700 D. 2,100
31. Refer to the preceding problem. Total cash received by B in March was
A. 4,167 C. 4,100
B. 4,000 D. 4,200
32. Sanchez and Tan are partners sharing profits equally and with capital balances, respectively, of P750,000
and P500,000. The firm owes Tan P200,000, as evidenced by a promissory note. Upon liquidation, cash of
P300,000 becomes available for distribution to partners. In the final cash distribution, the respective shares
of Sanchez and Tan will be
A. 150,000 and 150,000 C. 200,000 and 100,000
B. 175,000 and 125,000 D. 275,000 and 25,000
33. Triple E Partnership decided to dissolve the business and liquidate the partnership on April 1, Year 1.
Partners Eli, Emi and Epi divide profits and losses in a 2:3:4 ratio. Their total assets include cash of P5,000
and a loan to Eli for P10,000. Their liabilities of P90,000, include a loan from Epi for P30,000. The partners
agreed to distribute cash as it becomes available at each month-end. Realization proceeds were P68,000 in
April, P56,000 in May and P63,000 in June. Just prior to liquidating their partnership, their respective
account balances were as follows:
Eli P50,000
Emi 96,000
Epi 74,000
In the cash distribution on April 30, Year 1, the share of Eli would be
A. -0- C. 1,600
B. 2,600 B. 2,889
34. Refer to the preceding problem. In the cash distribution on May 31, Year 1, the share of Emi would be
A. -0- C. 26,000
B. 13,000 B. 39,000
35. Refer to the preceding problem. In the cash distribution on June 30, Year 1, the share of Epi would be
A. 14,000 C. 35,000
B. 21,000 D. 28,000

“It is a thousand times better to have common sense without education than to have education without common
sense.” Robert Green Ingersoll

“Do not go where the path may lead, go instead where there is no path and leave a trail.” Ralph Waldo Emerson

“Follow your dreams, work hard, practice and persevere. Make sure you eat a variety of foods, get plenty of exercise
and maintain a healthy lifestyle.” Sasha Cohen

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