Question

The balance sheet of the Alba, Blick, and Calvo partnership onJanuary 1, 2006 (the date of...

The balance sheet of the Alba, Blick, and Calvo partnership onJanuary 1, 2006 (the date of partnership dissolution) was as follows:CashP2,000LiabilitiesP4,010Other assets13,000Loan from Alba500Loan to Calvo1,000Alba, capital (20%)990Blick, capital(40%)4,500Calvo, capital(40%)6,000Total assetsP16,000Total liab./equityP16,000In January, other assets with a book value of P8,000 were sold forP5,000 in cash.Required:Determine how the available cash on January 31, 2006 will bedistributed

For information purpose:

Cash P2,000    Liabilities P4,010

Other assets 13,000 Loan from Alba 500

Loan to Calvo 1,000

Alba, capital (20%) 990

Blick, capital(40%) 4,500

Calvo, capital(40%) 6,000

Total assetsP16,000 Total liab./equity P16,000

Since the assets of book value P8,000 have been sold and cash of P5000 is recovered, therefore total cash balance shall be equal to P2000 + P5000 = P7000

First of all, the outside liabilities shall be paid = P4,010

Remaining cash balance = P7,000 - P4,010 = P2,990

Now the loan from Alba shall be paid = P500

Remaining balance shall be distributed among the partners but before that loan to Calvo shall be realised = P1,000

Hence the balance = P2990 + P1000 - P500 = P3490 should be distributed to partners.

Alba, capital (20% * 3490) = 698

Blick, capital(40% * 3490) = 1396

Calvo, capital(40% * 3490) = 1396