PART I - Multiple Choice. Read carefully and analytically. Choose the BEST answer. . If a partner with a debit balance during liquidation is personally solvent, the a. Partner must invest additional assets in the partnership Partner's with a debit balances will be allocated to the other partners. Other partners will give the partner enough cash to absorb the debit balance. Partnership will loan the partner to absorb the debit balance. 2. Simple partnership liquidation requires a. b. Periodic payments to creditors and partners determined by a safe payments schedule Partnership assets to be converted into cash with full payment made to all outside creditors before remaining cash is distributed to partners in a lump sum payment. C. Only creditors to be paid in an orderly manner. Periodic payments to partners as cash becomes available. 3. In a schedule of assumed loss absorptions a. the partner with lowest loss absorption is eliminated last. it is necessary to have a cash distribution plan first. the least vulnerable partner is eliminated first the most vulnerable partner is eliminated first. A partnership dissolution differs from a liquidation in that a. Payments are made to creditors before partners receive value. periodic payments to partners are made when cash becomes available. a partner withdraws from the business and the enterprise continues to function. full payment is made to all outside creditors before remaining cash is distributed to partners in a final lump sum payment. 5. If conditions produce a debit balance in a partner's capital account when liquidation losses are allocated a. the partner receives further allocations of liquidation losses, but not gains. the partner receives no further allocation of liquidation losses and gains. the partner is no longer obligated to partnership creditors. the partner has an obligation of personal net assets to the other partners. PART II - Write WINNER, if the statement is TRUE, and LOSER if the statement is FALSE. 1. A partnership is said to be dissolved when the business is terminated. 2. The loss absorption balances represent the maximum loss that the partners could absorb without reducing the equity below zero. 3. The creditors of the Partnership are preferred with respect to the separate or personal properties of the partners. In partnership liquidation, one partner may have to make up for the deficit in another partner's account. The cash settlement of all liabilities is referred to as realization. PART III - Problem Solving. Please show your solutions. Problem 1 The following balances as of end of 2021 for LTL Partnership together with the respective profit and loss ratios of partners were as follows: DR CR 40,000.00 Cash 360,000.00 Other Assets 60,000.00 Accounts Payable 18,000.00 Loans Payable - Leo 84,000.00 Leo Capital 78,000.00 Tito Capital 160,000.00 Lito Capital 400,000.00 400,000.00 TOTAL Leo decided to retire from the partnership. Parties agreed to adjust the assets to their fair value of P432,000 as of December 31, 2021. Leo will be paid of P150,000 by the partnership for his interest. apital balances of each partner after the Retirement of Leo. 5 points