CASE DISCUSSION: Leni and Isko are partners of Lenko Partnership which is currently liquidating. The firm's financial information is as follows: Cash 20,000 Accounts Payable 30,000 Accounts Receivable 60,000 Payable to Isko 20,000 Receivable from Leni 10,000 Leni, Capital - 60% 250,000 Inventory 120,000 Isko, Capital-40% 200,000 Equipment, net 290,000 TOTAL 500,000 TOTAL 500,000 LUMP-SUM LIQUIDATION The non-cash assets were realized as follows: 。 70% of the accounts receivable was collected; the balance is uncollectible The entire Inventory was sold for P20,000 P310,000 was received when the Equipment was sold P12,000 liquidation expenses were paid. REQUIREMENT: Compute for the cash distributions to the partners. LUMP-SUM LIQUIDATION Collection from accounts receivable (60K x 70%) 42,000 Sale of inventory 20,000 Sale of equipment 310,000 Liquidation expenses (12,000) Net proceeds 360,000 Less: Carrying amt. of all non-cash assets, except Receivable from Leni (60K+ 120K +290K) (470,000) LOSS (110,000) Capital balance Payable to (Receivable from) partner Total Allocation of loss-110K x 60 % & 40% Amounts received by the partners Leni Isko TOTAL (60%) (40%) 450,000 10,000 250,000 200,000 (10,000) 20,000 240,000 220,000 460,000 (66,000) (44,000) (110,000) 174,000 176,000 350,000
CASE DISCUSSION: Leni and Isko are partners of Lenko Partnership which is currently liquidating. The firm's financial information is as follows: Cash 20,000 Accounts Payable 30,000 Accounts Receivable 60,000 Payable to Isko 20,000 Receivable from Leni 10,000 Leni, Capital - 60% 250,000 Inventory 120,000 Isko, Capital-40% 200,000 Equipment, net 290,000 TOTAL 500,000 TOTAL 500,000 LUMP-SUM LIQUIDATION The non-cash assets were realized as follows: 。 70% of the accounts receivable was collected; the balance is uncollectible The entire Inventory was sold for P20,000 P310,000 was received when the Equipment was sold P12,000 liquidation expenses were paid. REQUIREMENT: Compute for the cash distributions to the partners. LUMP-SUM LIQUIDATION Collection from accounts receivable (60K x 70%) 42,000 Sale of inventory 20,000 Sale of equipment 310,000 Liquidation expenses (12,000) Net proceeds 360,000 Less: Carrying amt. of all non-cash assets, except Receivable from Leni (60K+ 120K +290K) (470,000) LOSS (110,000) Capital balance Payable to (Receivable from) partner Total Allocation of loss-110K x 60 % & 40% Amounts received by the partners Leni Isko TOTAL (60%) (40%) 450,000 10,000 250,000 200,000 (10,000) 20,000 240,000 220,000 460,000 (66,000) (44,000) (110,000) 174,000 176,000 350,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
Question
Transcribed Image Text:CASE DISCUSSION:
o Leni and Isko are partners of Lenko Partnership which is currently
liquidating. The firm's financial information is as follows:
Cash
20,000
Accounts Payable
30,000
Accounts Receivable
60,000
Payable to Isko
20,000
Receivable from Leni
10,000
Leni, Capital – 60%
250,000
Inventory
120,000
Isko, Capital – 40%
200,000
Equipment, net
290,000
ТОTAL
500,000
ТОTAL
500,000
LUMP-SUM LIQUIDATION
The non-cash assets were realized as follows:
o 70% of the accounts receivable was collected; the balance is
uncollectible
o The entire Inventory was sold for P20,000
o P310,000 was received when the Equipment was sold
o P12,000 liquidation expenses were paid.
REQUIREMENT:
Compute for the cash distributions to the partners.
1
LUMP-SUM LIQUIDATION
Collection from accounts receivable (60K x 70%)
Sale of inventory
Sale of equipment
Liquidation expenses
Net proceeds
Less: Carrying amt. of all non-cash assets,
except Receivable from Leni (60K + 120K +290K)
42,000
20,000
310,000
(12,000)
360.000
(470,000)
(110,000)
LOSS
Leni
(60%)
250,000
Isko
(40%)
ТОTAL
Capital balance
Pavable to (Receivable from) partner
Total
450,000
200,000
20,000
220,000
(44.000) (110,000)
(10.000)
10,000
460,000
240,000
(66,000)
174.000
Allocation of loss -110K x 60% & 40%
Amounts received by the partners
176,000
350.000
1
Transcribed Image Text:RECONSTRUCTION OF INFORMATION
o After all the assets (except the receivable from Leni) were realized
and the liabilites to outside creditors were settled, Isko received
P140,000 in the cash distribution to the partners.
REQUIREMENT:
ANK
Compute for the following.
Only this part
Loss on sales
> Share of Leni in the cash distribution to the partners
> Cash available for distribution to the partners
> Net proceeds from the sale of the non-cash assets (except the
receivable from Leni)
NON-CASH ASSET USED AS PAYMENT FOR CLAIM
o All the assets (except the receivable from Leni) were realized,
except for the equipment with carrying amount of P60,000 which
Isko will take at an equity set-off price of P20,000. The remaining
cash of P35,000 is to be divided among the partners in a manner
that will avoid the possible recovery of cash from a partner.
REQUIREMENT:
Compute for the total payment to Isko in cash and in kind.
NON-CASH ASSET USED AS PAYMENT FOR CLAIM
Leni
Isko
ТОTAL
(40%)
200,000
20,000
220,000
(60%)
250,000
Capital balance
Payable to (Receivable from) partner
Total
Allocation of loss
Total
Раутеnt in equіртеnt
Total
Allocation of deficiency
Cash received by the partners
450,000
(10,000)
240,000
10,000
460.000
(243,000) (162,000) (405,000)
58,000
(20,000
38,000
(3,000)
55,000
(20,000)
(3,000)
35,000
(3,000)
35,000
3,000
35,000
LOSS COMPUTATION:
Cash (remaining)
Equipment (@ settlement price)
Equity
460,000*
Assets
Liabilities
%3D
35,000
20,000
55,000
Totals
???
460,000
Inclusive of the payable to, and recuivahle fm, the partner.
Total loss (balancing figure) = 55,000 – 460,000 = - 405.000
Payments to Isko (ANSWER)
Equipment (in kind)
Cash
TOTAL PAYMENTS
20,000
35,000
55,000
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