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D, E and F are partners in DEF Partnership. A condensed statement of financial position of the company on April 27, 2016, the day the partners decide to liquidate the business is presented as follows: DEF Partnership Statement of Financial Position April 26, 2016 Assets P 20,000 80,000 P 28,000 2,000 9,000 Cash Liabilities Other Assets D, Loan D, capital (40%) E, capital (40%) F, capital (20%) 21,000 40,000 Total Assets P100,000 Total Liabilities and Capital P 100,000 ======== CASE 1: Loss on Realization: Fully Absorbed by Partners' Capital Balances. Assume that the other assets, P80,000, were realized at P60,000 thus resulting to the total loss of P20,000. Hence, the distribution of cash to the partners does not present any problem. Requirement: a. Prepare the Statement of Liquidation as of April 26,2016. b. Journal entries required to record the liquidation transactions.

D, E and F are partners in DEF Partnership. A condensed statement of financial position of the company on April 27, 2016, the day the partners decide to liquidate the business is presented as follows: DEF Partnership Statement of Financial Position April 26, 2016 Assets P 20,000 80,000 P 28,000 2,000 9,000 Cash Liabilities Other Assets D, Loan D, capital (40%) E, capital (40%) F, capital (20%) 21,000 40,000 Total Assets P100,000 Total Liabilities and Capital P 100,000 ======== CASE 1: Loss on Realization: Fully Absorbed by Partners' Capital Balances. Assume that the other assets, P80,000, were realized at P60,000 thus resulting to the total loss of P20,000. Hence, the distribution of cash to the partners does not present any problem. Requirement: a. Prepare the Statement of Liquidation as of April 26,2016. b. Journal entries required to record the liquidation transactions.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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prepare the requirements on case 1

D, E and Fare partners in DEF Partnership. A condensed statement of financial position of the company on April 27, 2016, the day the partners decide to liquidate the business is presented as follows: DEF Partnership Statement of Financial Position April 26, 2016 Assets Cash P 20,000 Liabilities P 28,000 D, Loan D, capital (40%) E, capital (40%) F, capital (20%) 2,000 9,000 21,000 Other Assets 80,000 40,000 Total Assets P100,000 Total Liabilities and Capital P 100,000 ======== ========I CASE 1: Loss on Realization: Fully Absorbed by Partners' Capital Balances. Assume that the other assets, P80,000, were realized at P60,000 thus resulting to the total loss of P20,000. Hence, the distribution of cash to the partners does not present any problem. Requirement: a. Prepare the Statement of Liquidation as of April 26,2016. b. Journal entries required to record the liquidation transactions. CASE 2: Loss on Realization Resulting Capital Deficiency to a Partner with Loan Account. Assume that the Other Assets were realized at P55,000 resulting to a loss of P25,000. After the distribution of loss among the partners using the profit and loss ratio, D's capital account results in a debit balance of P1,000. To cancel his deficiency, D has to exercise the right of offset by transferring P1,000 from his loan account to his capital account. Requirement: a. Prepare the Statement of Liquidation as of April 26,2016. b. Journal entries required to record the liquidation transactions. CASE 3: Loss on Realization Resulting Capital Deficiency to a Solvent Partner Assume that the Other Assets were sold for P49,500, thus, resulting to a loss of P30,500 to be divided among the partners using the profit and loss ratio. After the distribution of loss, D's capital account would result to a debit balance of P3,200. Offsetting the entire amount of D's loan account against his capital account still leaves his capital account with a debit balance of P1,200. D has to invest additional cash to fully eliminate his deficiency. Requirement: a. Prepare the Statement of Liquidation as of April 26,2016. b. Journal entries required to record the liquidation transactions.
Transcribed Image Text:D, E and Fare partners in DEF Partnership. A condensed statement of financial position of the company on April 27, 2016, the day the partners decide to liquidate the business is presented as follows: DEF Partnership Statement of Financial Position April 26, 2016 Assets Cash P 20,000 Liabilities P 28,000 D, Loan D, capital (40%) E, capital (40%) F, capital (20%) 2,000 9,000 21,000 Other Assets 80,000 40,000 Total Assets P100,000 Total Liabilities and Capital P 100,000 ======== ========I CASE 1: Loss on Realization: Fully Absorbed by Partners' Capital Balances. Assume that the other assets, P80,000, were realized at P60,000 thus resulting to the total loss of P20,000. Hence, the distribution of cash to the partners does not present any problem. Requirement: a. Prepare the Statement of Liquidation as of April 26,2016. b. Journal entries required to record the liquidation transactions. CASE 2: Loss on Realization Resulting Capital Deficiency to a Partner with Loan Account. Assume that the Other Assets were realized at P55,000 resulting to a loss of P25,000. After the distribution of loss among the partners using the profit and loss ratio, D's capital account results in a debit balance of P1,000. To cancel his deficiency, D has to exercise the right of offset by transferring P1,000 from his loan account to his capital account. Requirement: a. Prepare the Statement of Liquidation as of April 26,2016. b. Journal entries required to record the liquidation transactions. CASE 3: Loss on Realization Resulting Capital Deficiency to a Solvent Partner Assume that the Other Assets were sold for P49,500, thus, resulting to a loss of P30,500 to be divided among the partners using the profit and loss ratio. After the distribution of loss, D's capital account would result to a debit balance of P3,200. Offsetting the entire amount of D's loan account against his capital account still leaves his capital account with a debit balance of P1,200. D has to invest additional cash to fully eliminate his deficiency. Requirement: a. Prepare the Statement of Liquidation as of April 26,2016. b. Journal entries required to record the liquidation transactions.
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