AFAR Solution.doc

# Share of b from bonus given by c p20000 x 45 16000

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Share of B from Bonus given by C (P20,000 x 4/5) 16,000 Capital Balance of B after the retirement of C 316,000 Capital balance of C before retirement 100,000 Cash received by C upon retirement 80,000 Bonus given by C 20,000 Page 3 Number 11 Answer A Capital Balance of C before the admission of D 900,000 Add: Share of C in bonus given by D (P200,000 x 30%) 60,000 Capital Balance of C after the admission of D (16) (A) 960,000 Capital of A 1,400,000

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Capital of B 700,000 Capital of C 900,000 Capital of D 1,000,000 Total capital 4,000,000 Contribution of D 1,000,0000 Interest of D (20% x 4,000,000) 800,000 Bonus given by D 200,000 Number 12 Answer B Capital credit of D to the new partnership (P3,000,000 x 10%) 300,000 Number 13 Answer A Capital Balance of C before the admission of D 700,000 Less: C’s share in asset impairment (P500,000 x 40%) (200,000) Add: C’s share in bonus given by D (P200,000 x 40%) 80,000 Capital Balance of C after the admission of D 580,000 Contributed capital by D to the new partnership 500,000 Less: Capital credit to D in the new partnership (P3,000,000 x 10%) 300,000 Bonus given by D to the existing partners 200,000 Total contributed capital of all partners (P3,000,000 + P500,000) 3,500,000 Less: Total agreed capitalization of new partnership 3,000,000 Asset impairment to be shared by old partners only 500,000 Number 14 Answer A Capital Balance of B before liquidation ( 650,000) Add: Payable to B 1,000,000 Capital Balance of B after the right of offset 350,000 Less: Share of B in Total Loss on Liquidation (600,000 x 10%) 60,000 Capital Balance of B after loss on liquidation but before absorption of A’s insolvency 290,000 Less: Share of B in A’s debit capital balance (P160,000 x 1/4) (40,000) Cash received by B at the end of partnership liquidation 250,000 Noncash assets 2,000,000 Sale price 1,500,000 Loss on sale 500,000 Liquidation expenses 100,000 Total loss on liquidation 600,000 Capital of A 700,000 Receivable from A (500,000) Net capital of A 200,000 Share in total loss (60% x 600,000) (360,000)
Debit balance in capital of A (160,000) Page 4 Number 15 Answer B Capital Balance of C before liquidation 350,000 Add: Payable to C 100,000 Capital Balance of C after the right of offset 450,000 Less: Share of C in Total Loss on Liquidation (600,000 x 30%) 180,000 Capital Balance of C after loss on liquidation but before absorption of A’s insolvency 270,000 Less: Share of C in A’s debit capital balance (P160,000 x 3/4) (120,000) Cash received by C at the end of partnership liquidation 150,000 Number 16 Answer B Capital Balance of C before liquidation 400,000 Less: Share of C in Total Loss in Liquidation during January (P500,000* x 20%) (100,000) Capital Balance of C after loss on liquidation but before absorption of A’s insolvency 300,000 Less: Share of C in A’s debit balance (P150,000 x 2/5) ( 60,000) Cash received by C at the end of partnership liquidation 240,000 Cash balance before start of liquidation 1,600,000 Add: Net proceeds from sale of noncash asset during January (1,000,000 + 100,000) 1,100,000 Less: Cash paid for liquidation expenses during January (50,000) Less: Cash paid for liabilities to third person during January (P2,000,000 x 20%) (400,000) Less: Cash withheld for unpaid liabilities to third persons (P2,000,000 x 80%) (1,600,000) Less: Cash withheld for estimated future liquidating expenses (150,000) Cash available for distribution to partners 500,000 Less: Total capital of all partners (100,000+500,000+400,000) (1,000,000) Total loss on liquidation for the first month of installment 500,000* Capital of A before liquidation 100,000 Share in loss on liquidation (50% x 500,000) (250,000 )

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