P 1,00 P 80,000 20,000 60,00 50,0 2,00
Chapter21: Partnerships
Section: Chapter Questions
Problem 11BCRQ
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Question
Transcribed Image Text:The partnership of Anthony and Davis had an unprotitable year and agreed to liquidate their
business on December 31, 2019. The Statement of Financial Position as of December 31, 2019 is
presented below:
ASSETS
P 1,000
Cash
P 80,000
20,000
Accounts Receivable
Less Allowance for Bad Debts
Merchandise Inventory
Prepaid Advertising
Office Equipment
Less Accumulated Depreciation
TOTAL ASSETS
60,000
50,000
2,000
P 100,000
60,000
40.000
P 153,000
LIABILITIES AND EQUITY
Accounts Payable
Notes Payable (due October 31, 2020)
Anthony, Capital
Davis, Capital
P 20,000
86,000
30,000
17,000
P 153,000
TOTAL LIABILITIES AND EQUITY
The information concerning liquidation are as follows:
1. Accounts receivable's net carrying value plus 20% of the estimated bad debts were collected.
2. Merchandise inventory were realized for P 25,000
3. The contract for Prepaid Advertising has a cancellation value of P 800.
4. Office Equipment were realized equal to 60% of their book value.
5. Unrecorded Accounts Payable of P 2,000 were discovered.
6. Bank charges of P 1,000 was added to the note for early payment than the due date.
Anthony is personally insolvent. However, Davis' personal assets exceeded his personal liabilities
by P 4,000. Anthony and Davis share profits and losses 40%; 60%, respectively.
Required:
1. Prepare a schedule showing the net amount of liquidation gain or loss.
2. Prepare a Statement of Liquidation.
3. Journal entries to record the liquidation.
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