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 acount. Only 60% of the deficiency can be covered.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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.
Transcribed Image Text: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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