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SW No.1
Partnership Liquidation
Name: Score:
Course/Year/Section: Date:
Instructions: Encircle the answer chosen, erasures and alterations of answers are strictly not allowed. Do not use frixion pen.
1. This results when a partner dies, and the remaining
partners decided to terminate the business. Items 12 to 15 are based on the following:
a. dissolution c. incorporation
b. liquidation d. recognition King, Queen and Prince are partners sharing profit and
2. In liquidation, the sale of the non-cash assets is called loss in the ratio of 2:1:1 respectively. Their capital
a. realization c. gain from sale balances are P400,000 for King, P200,000 for Queen
b. net proceeds d. loss from sale and P100,000 for Prince. Claims of suppliers
amounted to P500,000 including the loan extended by
3. When there is a capital deficiency, the effect is that
Prince, P50,000. The cash balance amounted to
a. the partners’ equity will increase. P300,000 and it increased to P1,050,000 as a result of
b. the cash and other assets will also be deficient. the sale of the non-cash assets.
c. the liabilities and the partners equity will also
12. How much was the non-cash assets of the partnership?
decrease. a. 950,000 c. 1,200,000
d. there is no effect on the assets and liabilities. b. 1,250,000 d. 900,000
4. If A’s capital is deficient but there is a loan payable to 13. How much was the cash proceeds?
B, the right of offset can be applied a. 1,100,000 c. 750,000
True False b. 800,000 d. 1,050,000
14. How much cash was the available cash for distribution
5. A loan payable to a partner may be offset against his
to the partners?
capital deficiency just as a loan receivable from a
a. 650,000 c. 600,000
partner may be offset against his capital balance.
b. 700,000 d. 750,000
True False
15. How much cash will Prince receive?
6. A partner whose personal assets are less than his
a. 112,500 c. 137,500
personal liabilities is b. 62,500 d. 187,500
a. deficient c. deficient but solvent 16. As of December 31, 2015, the books of AEZ
b. solvent d. insolvent Partnership showed capital balance of: Amurao,
7. A deficient and insolvent partner will still have a P40,000; Estoque, P25,000; Zulueta, P5,000. The
chance to receive cash from the partnership if partners’ profit and loss ratio were 3:2:1, respectively.
a. there is a loan payable to him which is higher than The partners decided to liquidate, and they sold all
the deficiency and insolvency of the partner. non-cash assets for P37,000. After settlement of all
b. there is a loan payable to him which is higher than liabilities amounting to P12,000, they still have cash of
P28,000 left for distribution. Assuming that any capital
his capital deficiency.
deficiency is uncollectible, the share of Amurao in the
c. if he makes additional investment. distribution of cash would be:
d. if the other partners will absorb his deficiency. a. 17,000 c. 18,000
8. If the proceeds from the sale is less than the book b. 17,800 d. 19,000
value of the non-cash assets sold, this will 17. Mactal, Macadang and Pangan are partners with
a. decrease the partnership assets but increase the capital balances of 350,000, P250,000 and 350,000
partners’ equity. and sharing profits 30% 20% and 50% respectively.
b. increase the partnership assets but decrease the Partners agreed to dissolve the business and upon
partners’ equity. liquidation, all of the partnership assets are sold and
c. decrease both the partnership assets and sufficient cash is realized to pay all the claims except
partners’ equity. one for P50,000. Pangan is personally insolvent, but
d. increase both the partnership assets and partners’ the other two partners are able to meet any
equity. indebtedness to the firm. On the remaining claims
9. The feature of Unlimited Liability covers all partners against the partnership, Mactal is to absorb:
except a. 15,000 c. 25,000
a. general partners c. capitalist partners b. 30,000 d. 40,000
b. industrial partners d. limited partners
18. After all non-cash assets have been converted into
10. A schedule of cash distribution is prepared, when the
cash in the liquidation of the Alpha and Beta
cash is sufficient, to determine who among the
partners should be paid and at what amount. Partnership, the ledger contains the following account
True False balances:
11. A deficiency occurs for a partner when Cash P47,000 Dr.
a. his personal assets are less than his personal Accounts Payable 32,000 Cr.
liabilities. Loan Payable to Alpha 15,000 Cr.
b. his share in the losses of the partnership is more Alpha, Capital 7,000 Dr.
than his capital balance. Beta, Capital 7,000 Cr.
c. his personal assets are less than his capital Available cash should be distributed with P32,000
balance.
going to accounts payable and
d. loan payable by the partnership to him is greater
than his capital balance. a. 8,000 to Alpha and 7,000 to Bet
b. 7,000 to Alpha and 8,000 to Bet

“If any of you lack wisdom, let him ask God, that giveth to all men liberally, and upbraideth not; and it shall be given
him.”>> James 1:5 1|P a g e 2
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c. 7,500 each to Alpha and Bet b. 140,000 d. 145,000

d. 15,000 to the loan payable to Alpha 23. The sale of the non-cash resulted in a total loss of
a. 70,000 c. 65,000
19. In a partnership liquidation, the final cash distribution
b. 60,000 d. 80,000
to the partners should be made in accordance with the
24. How much is the cash available for distribution to the
a. ratio of the capital contributions by the partners. partners?
b. balances of the partners’ loan and capital a. 20,000 c. 60,000
accounts. b. 80,000 d. 43,000
c. ratio of capital contributions less withdrawals by
the partners. 25. The sale resulted in a capital deficiency for
d. partners’ profit or loss ratio. a. Doods c. Dino
b. Dong d. No one of the partners
20. Prior to partnership liquidation, a schedule of possible
losses is frequently prepared to determine the amount
26. Assuming that any deficiency is uncollectible, the cash
of cash that may be safely distributed to the partners.
paid to Dong is
The schedule of possible losses,
a. 36,000 c. 2,667
b. 3,500 d. 33,333
a. indicates the distribution of successive amounts of
available cash to each partner. 27. As of December 31, 2015, the books of SIA Partnership
b. assumes contribution of personal assets by showed the capital balances of: S, P40,000; I, P25,000;
partners unless there is a substantial presumption A, P5,000. The partners’ profit and loss ratio were
of personal insolvency by the partners. 3:2:1, respectively. The partners decided to liquidate,
c. consists of each partner’s capital account plus loan and they sold all non-cash assets for P37,000. After
balance, divided by that partner’s profit or loss settlement of all liabilities amounting P12,000, they
ratio. still have cash of P28,000 left for distribution. The
d. shows the successive losses necessary to share of S in the distribution of the P28,000 cash
eliminate the capital accounts of partners would be:
(assuming no contribution of personal assets by a. 17,800 c. 19,000
the partners). b. 18,000 d. 17,000

21. Partners Aga and Huli have capital balances of 28. A, B, and C, partners to a firm, have capital balances of
P15,000 and P12,000, respectively. They share profits P11,200, P13,000, and P5,800, respectively, and share
and losses in a 2:1 ratio. They sold all the partnership profits in the ratio of 4:2:1. Prepare a schedule
assets for P60,000, which resulted to a P6,000 gain on showing how available cash will be given to the
realization. The amount that Huli should receive her partners as it become available. Who among the
share of cash upon liquidation of the partnership is partners shall be paid first with an available cash of
a. 12,000 c. 20,000 P1,400?
b. 14,000 d. 23,000 a. A c. C
b. B d. No one of the partners
Items 22-26 are based on the following: 29. DD, EE, FF, and GG, partners to an accounting firm,
shares profits at the ratio of 5:3:1:1. On June 30,
Dino, Doods and Dong have the following accounts relevant partners’ accounts follow:
and their normal balances on January 31, 2015, the date Advances to Loan Due to Capital
the partners agreed to liquidate their 3D Partnership: DD - P20,000 P160,000
Cash P20,000 EE - 40,000 120,000
Accounts Receivable 25,000 FF P18,000 - 60,000
Allowance for Bad Debts 5,000 GG 10,000 - 100,000
Merchandise Inventory 60,000 On this day, cash of P72,000 is declared as available for
Furniture and Fixtures 50,000 distribution to partners as profits. Who among the
Accumulated Depreciation 5,000 partners will benefit from the P72,000 cash distribution?
Accounts Payable 10,000 a. FF and GG c. EE and GG
Notes Payable 27,000 b. All, equally d. DD and EE
Loan due to Dino 5,000 30. When Alice and Allen, partners who share earnings
Loan due to Doods 7,000 equally, were incapacitated in an airplane accident, a
Dino, Capital 20,000 liquidator was appointed to wind up their business.
Doods, Capital 40,000 The accounts showed cash, P35,000; other assets,
Dong, Capital 36,000 P110,000; liabilities, P20,000; Alice, capital, P71,000;
The partners divide profits and losses 4:1:5, respectively. and Allen, capital, P54,000. Because of highly
Sales proceeds follow: specialized nature of the non-cash assets, the
Accounts Receivable P10,000 liquidator anticipated that considerable time would be
Merchandise Inventory 30,000 required to dispose them. The expenses of liquidating
Furniture and Fixtures 20,000 the business (advertising, rent, travel, et ) are
22. Non-cash assets amounted to
a. 125,000 c. 130,000
“If any of you lack wisdom, let him ask God, that giveth to all men liberally, and upbraideth not; and it shall be given
him.”>> James 1:5 2|P a g e 2
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estimated at P10,000. How much cash can be

distributed safely to each partner at this point?
A. Alice, P5,000; and Allen, P0
B. Alice, P3,000; and Allen, P0
C. Alice, P5,000; and Allen, P500
D. Alice, P5,000; and Allen, P1,000

 //End// 

“If any of you lack wisdom, let him ask God, that giveth to all men liberally, and upbraideth not; and it shall be given
him.”>> James 1:5 3|P a g e 2