Determine the manner of distribution of the remaining P720,000 under the following 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.
Determine the manner of distribution of the remaining P720,000 under the following 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Problem #12
Final Cash Distribution to Partners
The partnership of Sarabia, Selisana and Gevera is about to be liquidated. All the assets
have been sold for cash and the creditors have been fully paid. The capital accounts of
the partners have the following balances at the date of liquidation:
P600,000 credit
240,000 debit
360,000 credit
Sarabia
Selisana
Gevera
The three partners share profits and losses equally. There remains P720,000 cash for
distribution to the partners.
Required:
Determine the manner of distribution of the remaining P720,000 under the following
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3219cd20-72ee-4658-b1d8-3cba29a8bb64%2Ffbe3f4c9-0d8f-4a99-ba69-9a069f36e298%2F0wrf87f_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem #12
Final Cash Distribution to Partners
The partnership of Sarabia, Selisana and Gevera is about to be liquidated. All the assets
have been sold for cash and the creditors have been fully paid. The capital accounts of
the partners have the following balances at the date of liquidation:
P600,000 credit
240,000 debit
360,000 credit
Sarabia
Selisana
Gevera
The three partners share profits and losses equally. There remains P720,000 cash for
distribution to the partners.
Required:
Determine the manner of distribution of the remaining P720,000 under the following
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.
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