The assets and equities of the NSW Partnership at the end of its fiscal year, October 31, 2020, are as follows:  Profit and loss agreement is 30:50:20.            Cash P 150,000            Accounts receivable -net 200,000            Inventory 400,000            Plant Assets - net 700,000            Loan to South 50,000            Liabilities   P 500,000          West, Loan   100,000          North, Capital   450,000          South, Capital   300,000          West, Capital   150,000               The partners decide to liquidate the partnership.  They estimate that the non-cash assets other than the loan to South can be realized into P 1,000,000 over the two-month period ending December 31, 2020.  Cash is to be distributed to the appropriate parties as it becomes available during the liquidation process.   Required:  a)      Assuming that P 650,000 is available for the first distribution, show how the available cash would be distributed. b)      Assuming that a total amount of P 75,000 is available for distribution to partners after liabilities to outside creditors have been paid, show how the cash will be distributed to the partners.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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A.

The assets and equities of the NSW Partnership at the end of its fiscal year, October 31, 2020, are as follows:  Profit and loss agreement is 30:50:20.

 

 

 

     Cash

P 150,000

 

 

 

     Accounts receivable -net

200,000

 

 

 

     Inventory

400,000

 

 

 

     Plant Assets - net

700,000

 

 

 

     Loan to South

50,000

 

 

 

     Liabilities

 

P 500,000

 

 

     West, Loan

 

100,000

 

 

     North, Capital

 

450,000

 

 

     South, Capital

 

300,000

 

 

     West, Capital

 

150,000

 

 

 

 

 

 

 

The partners decide to liquidate the partnership.  They estimate that the non-cash assets other than the loan to South can be realized into P 1,000,000 over the two-month period ending December 31, 2020.  Cash is to be distributed to the appropriate parties as it becomes available during the liquidation process.

 

Required: 

a)      Assuming that P 650,000 is available for the first distribution, show how the available cash would be distributed.

b)      Assuming that a total amount of P 75,000 is available for distribution to partners after liabilities to outside creditors have been paid, show how the cash will be distributed to the partners.

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