Jao, Mikay and Gino are partners in a law firm. They share profits and losses in...
Jao, Mikay and Gino are partners in a law firm. They share profits and losses in 5:3:2 ratio. The partnership agreement provided for annual salaries of P400,000, P350,000 and P300,000, respectively, interest of 12% on their Jan.1 capital balances and any balance to be divided in the Profit/Loss ratio.
The partners’ capital balances as of Jan.1, 2019 were Jao, P1,200,000; Mikay, P750,000 and Gino, P500,000. No additional investment was made during the year. Profit for 2019 was P1,600,000. Partners’ withdrawal for the year were as follows: Jao, P500,000; Mikay, P400,000 and Gino, P350,000.
On Mar.4, 2020, the partners decided to liquidate their law firm. On that date, the firm has a cash balance of P460,000, non-cash assets of P2,740,000 and liabilities of p400,000. No additional investments or withdrawals have been made in 2020. Between Mar.5 and Mar.31, the non-cash assets are sold for P2,900,00, the gain is divided in the profit and loss ratio. The liabilities are paid and the remaining cash is then distributed to the partners.
Required: Compute for the following independent assumptions:
Compute for the cash received by each partner as a result of liquidation on March 2020? PLEASE SHOW YOUR SOLUTIONS/COMPUTATIONS.
Homework Answers
| Cash Balance | |
| Liabilities | -400000 |
| Opening Cash balance | 460000 |
| closing Balance | 60000 |
| Particulars | Jao | Mikay | Gino |
| Salaries | 400000 | 350000 | 300000 |
| Interest @ 12% | 144000 | 90000 | 60000 |
| Profits | 800000 | 480000 | 320000 |
| withdrawl | -500000 | -400000 | -350000 |
| cash balance | 30000 | 18000 | 12000 |
| sale od asstes | 145000 | 87000 | 58000 |
| Cash distributed to partners | 1019000 | 625000 | 400000 |
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