A, B, C partnership began the process of liquidation with the following balance sheet:
Assets Liabilities and Capital Cash P 16,000 Liabilities P 150,000 Non-cash assets 434,000 A, Capital (30%) 80,000 B, Capital (20%) 90,000 C, Capital (50%) 130,000 Total P 450,000 P 450,000
Liquidation expenses are expected to be P12,000. After the liquidation expenses of P12,000 had been paid and the non-cash assets are sold, C had a deficit of P8,000. For what amount were the non-cash assets sold?
In process of liquidation first the liabilities are paid by selling the non cash assets. And other assets are distributed in the ratio of their capital.
First liabilities are paid by cash.
Remaining liability = 150000 - 16000
Means this amount is included in selling price of non cash assets.
Applying basic mathematics
If capital of C is 130000 then capital of A is 80000
As we know C got 8000 less, for now he got capital of 122000.
If C will get 122000 then A will get 80000*122000/130000 = 75076.92
Similarly B will get
Now we know amount paid for liabilities and to the partners individually.
By adding these amounts we will get the selling price of non cash assets.
Selling price of non cash assets = 134000 + 75076.92 + 84461.53 + 122000
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