Partership and Corporation Accounting - Partnership Liquidation PROFESSOR:The partnership of Sarabia, Selisana and Gevera is about to be liquidated. All the assetsDetermine the manner of distribution of the remaining P720,000 under the followingThe three partners share profits and losses equally. There remains P720,000 cash forhave been sold for cash and the creditors have been fully paid. The capital accounts ofProblem #12/Final Cash Distribution to Partnersthe partners have the following balances at the date of liquidation:P600,000 credit240,000 debitSarabiaSelisanaGevera360,000 creditdistribution to the partners.Required:independent assumptions:1. Selisana is personally insolvent. He has no personal assets.2. Selisana is personally solvent and is willing to contribute additional funds into thepartnership to cover his deficit.3. Selisana is willing to make additional contributions but his personal assets are notsufficient to accommodate the deficit in his capital account. Only 60% of thedeficiency can be covered.

Liquidation of partnership means when the partnership comes to an end and the partnership agreement…

Answered: 1. Selisana is personally insolvent. He…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Partership and Corporation Accounting - Partnership Liquidation

PROFESSOR:
The partnership of Sarabia, Selisana and Gevera is about to be liquidated. All the assets
Determine the manner of distribution of the remaining P720,000 under the following
The three partners share profits and losses equally. There remains P720,000 cash for
have been sold for cash and the creditors have been fully paid. The capital accounts of
Problem #12/
Final Cash Distribution to Partners
the partners have the following balances at the date of liquidation:
P600,000 credit
240,000 debit
Sarabia
Selisana
Gevera
360,000 credit
distribution to the partners.
Required:
independent assumptions:
1. Selisana is personally insolvent. He has no personal assets.
2. Selisana is personally solvent and is willing to contribute additional funds into the
partnership to cover his deficit.
3. Selisana is willing to make additional contributions but his personal assets are not
sufficient to accommodate the deficit in his capital account. Only 60% of the
deficiency can be covered.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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