Installment Liquidation: Cash Priority Program

Pepsi and Coke decided to dissolve and liquidate their partnership on Sept. 23, 2020. On that date, the statement of financial

position of the partnership is as follows:

Assets Liabilities & Capital

Cash P 5,000

Other Assets 100,000

Total Assets P 105,000

Accounts Payable P 15,000

Loan Payable - Coke 10,000

Pepsi, Capital 60,000

Coke, Capital 20,000

Total Liabilities & Capital P 105,000

On Sept. 23, 2020, non-cash assets with a carrying amount of P 70,000 realized P60,000, and P64,000 was paid to creditors

and partners, P 1,000 being retained to cover possible liquidation costs. On Oct. 1, 2020, the remaining non-cash assets realized

P 18,000 (net of liquidation costs), and all available cash was distributed to partners Pepsi and Coke who share profits and

losses 40% and 60%, respectively.

How to prepare the cash priority program?

How to prepare the liquidation journal entries and the statement of liquidation?