Exercise 2 The balance sheet of the Omar, Paolo, and Quek partnership on November 1, 2016 (before commencement of partnership liquidation) was as follows: 58,000 60,000 8,000 14,000 70,000 Accounts payable Notes payable Omar, capital(40%) Paolo, capital(25%) Quek, capital (35%) Cash 34,000 62,000 24,000 26,000 64,000 Inventory Loan to Omar Loan to Quek Plant assets-net Total assets 210,000 Total liab./equity 210,000 Liquidation events in November were as follows: - The inventory was sold for P10,000 above book value; - Plant assets with a book value of P60,000 were sold for P34,000. Other assumptions • All non-cash assets left unsold would be considered as a contingent loss of the partnership and should be deducted from the capital accounts of the partners according to their profit or loss sharing ratio. • No additional cash contribution from a partner with a deficit balance. A partner's deficit balance will be absorbed by the other partners based on their profit or loss sharing ratio Partner's right to offset is allowed. Required: 1. Problem 2 - How much is the gain on sale of inventory? 2. Problem 2 - How much is the loss on sale of plant assets? 3. Problem 2 - How much is the contingent loss on non-sale of non-cash assets? P.
Exercise 2 The balance sheet of the Omar, Paolo, and Quek partnership on November 1, 2016 (before commencement of partnership liquidation) was as follows: 58,000 60,000 8,000 14,000 70,000 Accounts payable Notes payable Omar, capital(40%) Paolo, capital(25%) Quek, capital (35%) Cash 34,000 62,000 24,000 26,000 64,000 Inventory Loan to Omar Loan to Quek Plant assets-net Total assets 210,000 Total liab./equity 210,000 Liquidation events in November were as follows: - The inventory was sold for P10,000 above book value; - Plant assets with a book value of P60,000 were sold for P34,000. Other assumptions • All non-cash assets left unsold would be considered as a contingent loss of the partnership and should be deducted from the capital accounts of the partners according to their profit or loss sharing ratio. • No additional cash contribution from a partner with a deficit balance. A partner's deficit balance will be absorbed by the other partners based on their profit or loss sharing ratio Partner's right to offset is allowed. Required: 1. Problem 2 - How much is the gain on sale of inventory? 2. Problem 2 - How much is the loss on sale of plant assets? 3. Problem 2 - How much is the contingent loss on non-sale of non-cash assets? P.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 2
The balance sheet of the Omar, Paolo, and Quek partnership on November 1, 2016 (before
commencement of partnership liquidation) was as follows:
Cash
Inventory
Loan to Omar
Accounts payable
Notes payable
Omar, capital(40%)
Paolo, capital(25%)
Quek, capital (35%)
P
58,000
60,000
8,000
14,000
70,000
34,000
62,000
24,000
26,000
64,000
Loan to Quek
Plant assets-net
Total assets
P
210,000
Total liab./equity
P
210,000
Liquidation events in November were as follows:
- The inventory was sold for P10,000 above book value;
- Plant assets with a book value of P60,000 were sold for P34,000.
Other assumptions
All non-cash assets left unsold would be considered as a contingent loss of the
partnership and should be deducted from the capital accounts of the partners
according to their profit or loss sharing ratio.
No additional cash contribution from a partner with a deficit balance. A partner's deficit
balance will be absorbed by the other partners based on their profit or loss sharing
ratio
• Partner's right to offset is allowed.
Required:
1. Problem 2 - How much is the gain on sale of inventory?
2. Problem 2 - How much is the loss on sale of plant assets?
3. Problem 2 - How much is the contingent loss on non-sale of non-cash assets?
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