MULTIPLE CHOICE — Problems PROB. 1-1 (Adapted) On April 30, 2020, Al, Ben, and Ces formed a partnership by combin; separate business proprietorships. Al contributed cash of PS0,0 contributed property with a P36,000 carrying amount, a P40,000 and P80,000 fair value. The partnership accepted responsibility for mortgage attached to the property. Ces contributed equipment w carrying amount, a P75,000 original cost, and P55,000 fair value. The agreement specifies that profits and losses are to be shared equally | regarding capital contributions. Which partner has the largest balance at April 30, 2020? Ng theit 000. Ben Original Cost, T the P35,099 ith a P30,009 Partnership but is silent Capital account a Al b. Ben c. Ces d. All capital balances are equal PROB. 1-2 (Adapted) Al, Sharif, and Booba formed a partnership. Al will contribute cash of P50,000 and his’ store equipment that originally cost P60,000 with a second-hand value of P25,000. Sharif will contribute P80,000 in cash. Booba, whose family sells computers, will contribute P25,000 cash and a brand new computer that cost his family’s computer dealership P50,000 but with a regular selling price of P60,000. They agreed to share profits and losses equally. Upon formation, what are the capital balances of the partners? Al Sharif Booba —AL__ __Sharif___Booba _ &. 75,000 80,000 85,000 b. —&0,000 80,000 * 80,000 8323 88,333 88,334 a | 110,000 80,000 75,000 Scanned with CamScannerPROB. 1-3 (Adapted) On January 1, 2020, Ama and Boy agreed to form a partnership commiting thew respective aesets and equities subject to adpumtments. On that date, the following were provided Boy___ Com rr Accounts recervable 600,000 Inventories 200,909 Land Buriding 500,006 Furniture & fixtures 35,000 Intangsble assets 3,000 Accounts payable 240,000 Other lisbeltes 350,000 Capaal $00,000 The following adjustments were agrend pot a. Accounts receivable of F20,000 and 40,000 are uncollectible in Ama’s and Phoy"s respective books. bh. lewemtorie: of 6,000 and 77,000 are worthiens in Amta’s and Boy's respective books Intangible ansets are to be arisen off tm beth books What wil! he the capital balances of the partners after adjustments? Al E PROB. 1-4 (Adapted) stany admits Jane as « pariacr inthe business. Balance shot seaman of M0) Man sins ie nbmissice of ane show: Cas, F500), Meee ius Merchandise inventor, P180,000, and Accounts PRVADIG P62,000. It aaa sroifer purposes of establishing Mary's interest, the following wns ars be made 1.) 0 allowance fr Got accounts fs reted adjust is w be esablished. 2) merchandise inventory is 0 be adjusted MATER DEIGON! EGE Lice Scanned with CamScannerChapter 1 - Partnership liabiliti upward by P25,000; and 3.) prepaid expenses of P3,600 and accrued liabilities of P4,000 are to be recognized. i it it artnership, how If Jane is to invest sufficient cash to obtain 2/5 sn in the pi ip. much would Jane contribute to the new partnership? a. 176,000 b. 190,000 c. 95,000 d. 113,980 PROB. 1-5 (AICPA) Roberts and Smith drafted’a partnership agreement that lists the following assets contributed at the partnership’s formation: ___Contributed by _ ~ Roberts __Smith__ Cash 20,000 30,000 Inventory 15,000 Building 40,000 Furniture & equipment 15,000 The building is subject to a mortgage of P10,000, which the partnership has assumed. The partnership agreement also specifies that profits and losses are to be distributed evenly. What amounts should be recorded as capital for Roberts and Smith at the formation of the partnership? Roberts Smith 35,000 85,000 35,000 75,000 55,000 55,000 60,000 60,000 ao oP PROB. 1-6 (AICPA) On May sash ae es be Mott formed a partnership and agreed to share profits cost him P10,000, Mon aoe respectively. Cobb contributed a parcel of land that wv Mott contributed P40,000 cash. The land was sold for P18,000 Scanned with CamScannerChapter L= Partnership a on May 1, 2020, immediatel, aft ee . : ch nld be recorded in Coble eaittet forination of the partnership. What amount capital account on formation of the partnership? a. 18,000 b. 17,400 c. 15,000 d. 10,000 PROB. 1-7 (Adapted) On April 30, 2020, Alex, Benjie, and Cesar formed a partnership by combining their separate business proprietorships. Alex contributed cash of P500,000. Benjie contributed property with a P360,000 carrying amount, a P400,000 original cost, and P800,000 fair market value. The partnership accepted responsibility for the P350,000 mortgage attached to the property. Cesar contributed equipment with a P300,000 carrying amount, a P750,000 original cost, and P550,000 fair value. The partnership agreement specifies that profits and losses are to be shared equally but is silent regarding capital contributions. What are the capital balances of the partners at April 30, 2020? Alex. Benjie Cesar 500,000 800,000 550,000 500,000 450,000 550,000 500,000 360,000 300,000 -500,000 400,000 750,000 Be op PROB. 1-8 (AICPA) Abel and Carr formed a partvership and agreed to divide initial capital equally, even though Abel contributed P100,000 and Carr contributed P84,000 in identifiable assets. Under the bonus approach to adjust the capital accounts, Carr’s unidentifiable asset should be debited for a. 46,000 b. 16,000 c. 8,000 d, 0 Scanned with CamScannerChapter I - Partnership 24 PROB. 1-9 (AICPA) on January 2, 2020, Under the Se equal intial capital balance, Partnership net income or loss is allocated 60% to Grey and 4006 fo Hedd. To form the partnership, Grey originally contributed assets costing oo aa Are a fair value of P60,000 on January 2, 2020, and Redd contribute - ,000 cash, Drawings by the partners during 2020 totaled P3,000 by Grey a P9,000 by Redd. The partnership net income in 2020 was P25,000. What is the amount of bonus? a. 20,000 bonus to Grey b. 20,000 bonus to Redd c. 40,000 bonus to Grey d. 40,000 bonus to Redd ~ The Grey and Redd Partnership wa: partnership agreement, each partnei PROB. 1-10 (Author) A, B and C decided to form ABC Partnership. It was agreed that A will contribute an equipment with assessed value of P100,000 with historical cost of P800,000 and accumulated depreciation of P600,000. B will contribute a land and building with book value of P1,200,000 and fair market value of P1,500,000, The Jand and building is subject to a mortgage payable amounting to P300,000 to be assumed by the partnership. The partners agreed that B will have 60% capital interest in the partnership. They agreed that C will contribute sufficient cash to the partnership. A day after the partnership formation, the equipment was sold for P 300,000. a, What is the total agreed capitalization of the ABC Partnership? a, 1,500,000 f b. — 2,000,000 c. 2,500,000 d. 3,000,000 b. What is the capital credit of A in the ABC Partnership after the formation? a. 10,000 b. 200,000 ‘ c. 300,000 d. 400,000 Scanned with CamScannerer 1 — Partnership copper Pore ls eo 900,000 in the ABC Partnership after the formation? 1,500,000 1,400,000 1,200,000 ci . cannon y C in the ABC Partnership? 600,000 700,000 b. c. d d. What is the cash to be contributed b a. b c. d. 800,000 PROB. 1-11 (AICPA) A partnership has the following accounting amounts: Sales P 700,000 Cost of goods sold - 400,000 Operating expenses 100,000 Salary allocations to partners 130,000 Interest paid to banks 20,000 Partners’ drawings 80,000 What is the partnership net income (loss)? a. 200,000 b. 180,000 c. 50,000 d (30,000) PROB. 1-12 (Adapted) Partners A and B share profits and losses equally after each has been credited in all circumstances with annual salary allowances of P30,000 and P24,000, respectively, Based on this agreement, in which of the following circumstances will Partner A benefit by P6,000 more than Partner B? sales a. Only if the partnership has net income of P54,000 or more for the year. b. Only if the partnership does not incur a loss for the year. ¢. —Inall earnings or loss situation. d. Only if the partnership has earnings of at least P6,000 for the year. Scanned with CamScanneroS . 1-13 (AICPA) te partners A, B, and C What is the share of Pi it Pe . If The ABC Partnership reports net income of 60,000. given a capital ratio ively. have income ratio of 50%, 30%, and 20%, eta foo Partner C from the net income of the partnership, of 25%? a 30,000 b. 12,000 c 18,000 A d. 15,000 PROB. 1-14 (Adapted) On January 2, 2020, Abel, Cain, and Josuah formed a partnership. Abel contributed cash of P100,000 and a delivery equipment that originally costs him P120,000, but with a second hand value of P50,000. Cain contributed P160,000 in cash. Josuah, whose family sells office equipment, contributed P50,000 in cash and office equipment that cost his family’s dealership P100,000° but with a regular selling price of P120,000. In 2020, the partnership reported net income of P120,000. On December 31, 2020, what would be the capital balance of the partners? Abel Cain Josuah a. 257,500 200,000 192,500 b. 190,000 200,000 210,000 c. 260,000 200,000 190,000 d. 187,500 200,000 212,500 PROB. 1-15 (AICPA) The partnership agreement of Reid and Si i , year is to be credited to each eid and Simm provides that interest at 10% per partner on the basis of wei: 7 balances. A summa aay . of weighted-average capital ry of Simm’s ge cap! 31, 2020, is as follows: capital account for the year-ended December Balance, January 1 Additional investment, July 1 J agen Withdrawal, August 1 000) Balance Decora “'ss005 Scanned with CamScanner= 0 shit Chapter = Partnership - What amount of interest should be credited to Simms capital account for 2020? a. (15,250 b. 15,375 c. 16,500 4. 17,250 pROB. 1-16 (AICPA) Partner Ae first contributed P50,000 of capital into existing partnership on March 1, 2020. On June 1, 2020, said partner contributed another P20,000. On September 1, 2020, he withdrew P15,000 from the partnership, Withdrawal in excess of P10,000 are charged to the partner's capital accounts. What is the annual weighted average capital balance of Partner Ae? a. 32,500 b. 51,667 c. 60,000 4. 48,333 PROB. 1-17 (RPCPA) In the calendar year 2020, the partnership of A and B realized a net profit of P240,000. The capital accounts of the partners show the following postings: A, capital B, capital Debit Credit Debit Credit Jan. 1 P120,000 P80,000 May | P20,000 P10,000 July 1 20,000 Aug. 1 10,000 Oct. 1 10,000 5,000 a. If the profits are to be divided based on average capital, the share of A and B, respectively are: a. 129,600 110,400 b. 144,000 96,000 c. 136,800 103,200 d. 136,543 103,457 Scanned with CamScannerChapter! = Sarinership if ir is allowed ang i 1 at the end © the b. If 20% incest es ihe 40,000 profit is divided equally, the tot iven and the : are of Aand B, respectively are: a. 121,500 118,500 b. 124,000 116,000 c. 123,000 117,000 - d. 122,625 117,375 PROB. 1-18 (AICPA) During 2020, Young capital balances ‘in their partnership of P160,000 and P100,000, respectively. The pater recive 1% P . and residual pro! it or loss ually, interest on average capital balances, i ot esounk vided eal Partnership profit before interest was 4,000. capital account change for the year? and Zinc maintained average a. 1,000 decrease b. 2,000 increase c. 11,000 decrease d. 12,000 increase PROB. 1-19 (AICPA) Red and White formed a partnership in 2020. The partnership agreement provides for oan aay allowances of P55,000 for Red and P45,000 for White. partners share profits equally and losses in a 60/40 ratio. The partnershi had earings of Ea 2020 before any allowance to partners. What aaa of ese earnings shoul credited to each partner’ it ; a eae partner’s capital account? 40,000 40,000 43,000 37,000 44,000 36,000 45,000 35,000 BO SP PROB. 1-20 (AICPA) Fox, Greg, and Howe are i Pio Pcanonteas Pa0.008 ea avemee capital balances during 2020 of eir aver i es, Al ae i i rage capital balanets. Aer deducing cole ey ead ) lo ° Scanned with CamScanneryapter_ 1 — Partnership Chap! 9 P20,000 to Howe, the residual profit and partnership sustained a P33,000 loss befor what amount should Fox’s:capital account a. 7,000 increase b. 11,000 decrease c. 35,000 decrease d. 42,000 increase loss is divided equally. In 2020, the re interest and salaries to partners. By change? PROB. 1-21 (Adapted) Ifa partnership has net income of P44,000 and Partner X is to be allocated bonus of leet income after the bonus. What is the amount of bonus Partner X will receive? a. 3,000 b. 3,300 c. 4,000 d. 4,400 PROB. 1-22 (AICPA) The partnership agreement of Donn, Eddy, and Farr provides for annual distribution of profit and loss in the following sequence: © Donn, the managing partner, receives a bonus of 10% of profit. ¢ Each partner receives 6% interest on average capital investment. © Residual profit or loss is divided equally. Average capital investments for 2020 were: Donn P80,000 Eddy 50,000 Farr 30,000 What portion of the P100,000 partnership profit for 2020 should be allocated to Farr? a. 28,600 b. 29,800 c. 35,133 d. 41,600 Scanned with CamScannerChapter 1 - Partnership PROB. 1-23 (Adapted) _ i ovisions were The Articles of Partnership of Adam and Eve the following P stipulated: a. Annual salary of P60,000 each. b. Bonus to Adam of 20% of the net income after bonus being treated as an expense. c. Balance to be divided equally. da net income of 360,000 after partn Eve in the profit? partners” salaries, the ‘The partnership reporte ers’ salaries but before bonus. How much is the share of | a. 60,000 b. 90,000 c. 150,000 . d. 210,000 PROB. 1-24 (Adapted) Partners AA and BB have profit and loss agreement with the following provisions: salaries of P30,000 and P45,000 for AA and BB, respectively; a bonus to AA of 10% of net income after salaries and bonus; and interest of 10% on average capital balances of P20,000 and P35,000 for AA and BB, respectively. One-third of any remaining profits will be allocated to AA and the balance to BB. If the partnership had net income of P102,500, how much should be allocated to Partner AA? a. 44,250 b. 47,500 c. 41,000 d. 41,167 PROB. 1-25 (Adapted) Partners AA and BB have profit and loss i ner M agreement wi $ pov salts of 30,000 and P40 for A and BB repens # nus to AA of 10% of net income after salaries and bon d int 0 i nus; a ere: 0% a average cenit balances of P20,000 and P35,000 rs ee BB oe 0 pie ot any remaining profits will be allocated to AA and the . Partnership had net income of P22,000, how much should Scanned with CamScanner4 Partnership be allocated to Partner AA, assum ing that the Provisions of the profit and loss agreement ereramed by order of priority starting with salaries? a -" : b. 12.500 a 12,000 a 8.800 PROB. 1-26 (Adapted) Luz, Vi, and Minda are partners when the partnership earned a profit of P30,000. ee agreement provides the following regarding the allocation of profits and losses: a, 8% interest on partners? ending capital in excess of P75,000. b. Salaries of P20,000 for Luz and P30,000 for Vi. c. Any balance is to be distributed 2:1:1 for Luz, Vi, and Minda, respectively. Assume ending capital balances of P60,000, P80,000, and P100,000 for partners Luz, Vi, and Minda, respectively. What is the amount of profit allocated for Minda, if each provision of the profit and loss agreement is satisfied to whatever extent possible using the priority order shown above? a 3,600) b. 3,600 ©. (2,000) a. 2,000 PROB, 1-27 (Adapted) XYZ Partnership provided for the following in their distribution of profits and losses: First: X to receive 10% of net income up to P100,000 and 20% of the amount in excess thereof. Then: Y and Z are each to receive 5% of the remaining income in excess of P150,000 after X’s share. Finally: The balance is to be distributed equally to the three partners. Scanned with CamScannerChapter 1 - Partnership t is the total share of If the partnership earned a net income of P250,000, wha Partner X? a. 100,000 b. 108,000 c. 110,000 d. 130,000 PROB. 1-28 (AICPA) Hanz, Ivy, Jasper, and Kelly own a publishing company that they operate as a partnership. Their agreement includes the following: , © Hanz will receive a salary of P20,000 and a bonus of 3% of income after all the bonuses. . © Ivy will receive a salary of P10,000 and a bonus of 2% of income after all the bonuses. All partners are to receive the following: Hanz — P5,000; Ivy — P4,500; Jasper — P2,000; and Kelly — P4,700, representing 10% interest on their average capital balances. © Any remaining profits are to be divided equally among the partners. a. How would a net loss of P40,000 would be allocated among the partners? Hanz Ivy Jasper Kell a. 3,261.75 (7,169.25) (18,181.25) (17,911.25) b. 3,450.00 (7,050.00) (19,550.00) (16,850.00) c. 4,116.75 (6,764.25) (20,026.25) (17,326.25) d. 45,000.00 4,500.00 (8,000.00) (5,300.00) Assuming a profit, of P40,000, how would this amount be distributed to them given the following order of priority: Interest on invested capital, then bonuses, then salary, and then according to profit and loss Paces ; —Hanz__ __lvy Jasper a. “B2675 1383075 81 a b. 20,867.00 12,433.00 —-2'000.00 al 88.75 c. 20,740.00 12,560.00 2000.00 aun 4. 18,038.00 15,262.00 2000.00 a aoo'gn Scanned with CamScannerchapter 1 Karimer smi 33 pROB. 1-29 (Adapted) ‘On October Aiea Zita and Jones formed a partnership by investing cash of 300,000 and P200,000, respectively. The partners agreed to receive an annual salary allowance of P360,000, and to give Zita a bonus of 20% of the net income after partners’ salaries, the bonus being treated as an expense. If the profits after salaries and bonus are io be divided e qually, and the profits on December 31, 2020 after partners’ salaries but before bonus of Zita is P360,000, how much is the share of Zita in the profit? a. 100,000 b. 120,000 c 210,000 d. 270,000 PROB. 1-30 (AICPA) Maxwell is trying to decide whether to accept a salary of P40,000 or salary of P25,000 plus a bonus of 10% of net income after salaries and bonus as a means of allocating profit among partners. Salaries traceable to the other partners are estimated to be P100,000. What amount of income would be necessary so that Maxwell would consider choices to be equal? a. 165,000 b 290,000 c. 265,000 d. 305,000 PROB. 1-31 (Adapted) Alder, Benson, and Carl are capitalist partners and Denver, an industrial partner. The partnership reported a net loss of P100,000. How much is the share of Denver in the reported net loss? a, 0 b. 10,000 co 25,000 d. 100,000 Scanned with CamScannerChapter. 1 Partnership, ti OB. 1-32 (AICPA) | pe eral partnership to act as and Vick formed the DEV erty ms would receive 40% manufacturer's representatives, The partners mevould each receive 30% of such of any partnership profits and Frey and Vic! terminate for 5 years. i uld not ofits. It was also agreed that the partnership wou hip. At that ier the fourth year, the partners agreed to terminate the partners! ip. , P20,000; Frey, time, the partners capital accounts were a5 eee of P30,000. P15,000; and Vick P10,000. There also were unt Vick's share of the undistributed losses will be a, 0 Downs, Frey, follows: distributed b. 1,000 c. 9,000 4. 10,000 PROB. 1-33 (AUTHOR) On January 1, 2021, A, B and C formed ABC Partnership with total agreed capitalization of P1,000,000. The capital interest ratio of the ABC Partnership is 5:1:4 while the profit or loss ratio is 3:2:5, respectively for A, B and C. During 2021, A and B made additional investments of P200,000 and P500,000, respectively. At the end of 2021, B and C made drawings of P300,000 and P100,000, respectively. On December 31, 2021, the capital balance of B is reported at P200,000. a. What is the net income or net loss of ABC Partnership for the year ended December 31, 20217 a. (500,000) b. (1,000,000) c. 800,000 d. 1,200,000 b. What is the capital balance of A 2 ¥ sn one on December 31, 20219 b. 350,000 c. 550,000 d. 400,000 Scanned with CamScannerChapter 1— Partnership c. What is the capital balance of C on December 3 1, 2021? a. 150,000 b. 50,000 c. 200,000 d. 250,000 pROB. 1-34 (AUTHOR) On January 1, 2018, A, B and C formed ABC Partnership with original capital contribution of P300,000, P500,000 and P200,000. A is appointed as managins, partner. During 2018, A, B and C made additional investments of P500,00), 200,000 and P300,000, respectively. At the end of 2018, A, B and C mide drawings of P200,000, P100,000 and P400,000, respectively. At the end of 7018, the capital balance of C is reported at P320,000. The profit or loss agreement of the partners is provided below: ‘© 10% interest on original capital contribution of the partners. Quarterly salary of P40,000 and P10,000 for A and B, respectively Bonus to A equivalent to 20% of Net Income after interest and alary to all partners ¢ Remainder is to be distributed equally among the partners. a. What is C’s share in the partnership profit for the year ende 4 December 31, 2018? : a. 120,000 b. 320,000 c. 180,000 d. 220,000 b. What is the partnership profit for the year ended December 31, 2018? a. 900,000 b, 1,020,000 ce. 1,050,000 d. 960,000 - c. What is the bonus given to A as managing partner for the year ended December 31, 2018? a. 120,000 s b. 150,000 Scanned with CamScanner60,000 « d. 100,000 12018? d. What is the capital balance of A 0” December 3 a. 1,140,000 b. 1,110,000 c. 1,050,000 4. 1,200,000 8 What is the capital balance of B on December 31,201 a. 850,000 b. 840,000 c. 890,000 d. 940,000 PROB. 1-35 (AICPA) and losses in the ratio of 6:4, Blau and Rubi are partners who share profits respectively. On May 1, 2020, their respective capital accounts were as follows: Blau 60,000 Rubi 50,000 On that date, Lind was admitted as a partner with one-third interest in capital, and profits for an investment ‘of P40,000. The new partnership began with total capital of P150,000. Immediately after Lind’s admission, Blau’s capital should be a. 50,000 b. 54,000 c. 56,667 d. 60,000 PROB. 1-36 (AICPA) Partnership as has an existing capital of P70,000. Two partners currently own the ahi \ip split profits 50/50. A new partner is to be admitted and will contribute net assets with a fair value of P90,000. For no bonus to be recogni Scanned with CamScannerchapter Partnership 36.25% 4 _75.00% proB.1-37 (AICPA) Ranken purchases 50% of Lark’s capital i . , 722,000. If the capital balances of Kim and Lark neha b Parmeship for respectively, Ranken’s capital balance fol ,000 and P30,000, 23,000 owing the purchase is b. 35,000 a 20,000 d. 15,000 PROB. 1-38 (Adapted) The following information pertains to ABC Partnership of Amor, Bing, and Cora: Amor, capital (20%) P 200,000 Bing, capital (30%) 200,000 Cora, capital (50%) 300,000 On this date, the partners agreed to admit Dolly into the partnership. Assuming Dolly purchased fifty percent of the partners’ capital and pays P500,000 to the old partners, how would this amount be distributed to them? a 100,000 150,000 250,000 b. 130,000 145,000 225,000 c 166,667 166,667 166,666 d. 150,000 150,000 200,000 PROB. 1-39 (AICPA) The following balance sheet is presented for the partnership of A, B, and C, who share profits and losses in the respectively ratio of 5:3:2. Assets Cash 120,000 Liabilities 280,000 Other assets 1,080,000 A, capital 560,000 B, capital 320,000 C, capital 40,000 Total 7,200,000. Total 7,200,000 ————— ——— Scanned with CamScannerthe balance sheet, i jrly valued on ; , liabilities 4°© fairly finer with one-fifth interes and it D as a 0 1d D contribute in cash or othe, ww much show ‘Assume that the assets and the partnership decided to adm! no bonus is to be recorded. Ho assets? a. 147,200 b, 184,000 c. 230,000 d. 240,000 PROB. 1-40 (Adapted) a ital P60,000; E, capi The capital balances in DEA Partnership are: Ds ena en 50,000; and A, capital P40,000 and income Sth aah cash investment i DEAR Partnership is formed by admitting R to the firm aa eri of 60,000 for a 25% interest in capital. What is the amount 0 edited to A capital in admitting R? a. 10,000 b. 7,500 c. 3,750 d. 1,500 PROB. 1-41 (Adapted) On October 31, 2020, Morris retired from the partnership of Morris, Philip, and Marl, Morris received P55,000 representing final settlement of his interest in the amount of P50,000. Under the bonus method, a, 5,000 was recorded as goodwill. b. P5,000 was recorded as expense. c. Charged P5,000 against the capital balances of Philip and Marl. d. — P55,000 was recorded as bonus. PROB. 1-42 (Adapted) In May 2020, Imelda, a partner of an accounting fi i i hen ), Imel ig firm, d w whe the partners’ capital balances were: Mikee, Pao0,000% Raul P0000: and Imelda, P400,000. It was agreed that Imelda is "s fll a ; to take ship's full) depreciated computer with a second-hand value of ra 000. “that fost the Scanned with CamScannerershij onopttt ls Partnership 39 artnership P36,000. If profits and | 1 balances of th losses are shared equally, what would be the cari ice oe Ral es after the retirement of Imelda? a. 600,000 600,000 b. 592,000 592,000 c 608,000 608,000 d 612,000 612,000 prob. 1-43 (Adapted) Penny, Naty, and Mary are partners and share profits and losses equally. Each has a capital balancer of P1,800,000. Naty retires from the partnership and receives P1,500,000. Taking the partnership assets to be fairly stated, the entry to record Naty’s retirement is a. Naty, capital 1,800,000 (dr) Goodwill 300,000 (cr) Cash 1,500,000 (cr) b. Naty, capital 1,800,000 (dr) Partnership assets 300,000 (cr) Cash 1,500,000 (cr) c. Naty, capital 1,500,000 (dr) Cash 1,500,000 (cr) d. Naty, capital 1,800,000 (dr) Mary, capital 150,000 (cr) Penny, capital 150,000 (cr) Cash 1,500,000 (cr) PROB. 1-44 (AICPA) On June 30, 2020, the balance sheet for the partnership of Coll, Maduro, anc Prieto, together with their respective profit and loss ratios, were as follows: Assets, at cost 180,000 Coll, loan 9,000 Coll, capital (20%) 42,000 Maduro, capital (20%) 39,000 Prieto, capital (60%) 90,000 Total 180,000 Scanned with CamScannerChapter 1 - Partnership it, the assets . mutual agreemen are Coll decided to retire from the partnership, OY fun 30, 2020. Tt WS aareed thy to be adjusted to their fair value of P216.0 Osh for Coll’s partnership int the partnership would pay Coll P6120 in fall. After Coll’s retirement, what jg including Coll’s loan which is paid! the balance of Maduro’s capital to be re] account? a. 36,450 b. 39,000 c. 45,450 d. 46,200 PROB. 1-45 (Adapted) it ital balances of P300,000, P300,000, EE ee ee ares Pe fits and losses equally. Roy is to and. P200,000, respectively; and sharing pro! o 2 retire and it is agreed that he is to take certain office equipment wi sce lend value of P50,000 and a note for his interest. The office equipment carried in the books at P65,000 but brand new would cost P80,000. Roy’s acquisition of the office equipment would result in Redu in capital of P5,000 each for Peter, Queen, and Roy. Reduction in capital of P7,5000 each for Peter, Queen, and Roy. Reduction in capital of P15,000 for Roy. Reduction in capital of P55,000 for Roy. Boge PROB. 1-46 (AUTHOR) On December 31, 2020, the Statement of Financial Position of ABC Partnership provided the following data with profit or loss ratio of 1:6:3: Cash P 1,000,000 Total Liabiliti Non-current asset 2,000,000 A, capital ons em B, capital 800,000 C, capital 700,000 On January 1, 2021, D is admitted to the capital interest of B at a price of 509.000. st by purchasing 40% of the What is the capital balance of ssi poet the oo of B after the admission of D on January 1, 2021? b. 480,000 Scanned with CamScannerchapter — 41 ¢.. 420,000 g. 300,000 proB. 1-47 (AUTHOR) On December 31, 2020, the Statement of Financi . eae if iti : provided the following data with profit or ae eaten of ABC Partnership Cash P 1,300,000 Te iabiliti 300, otal Liabilities P 300,000 Non-current asset 2,000,000 A, capital 1,400,000 B, capital 700,000 C, capital 900,000 On January 1, 2021, D is admitted to the partnership by investi on Naot Apter lids partnership by investing P1,000,000 to a. Ifthe all the assets of the existing partnership are properly valued, what is the capital balance of C after the admission of D? a. 960,000 b. 900,000 c. ° 840,000 d. _ 1,200,000 b. Ifan existing asset of ABC partnership is not properly valued, what is the capital balance of B after the admission of D? a. 820,000 b. 1,300,000 c 960,000 d. 780,000 PROB, 1-48 (AUTHOR) On December 31, 2018, the Statement of Financial Position of ABC Partnership provided the following data with profit or loss ratio of 5: Cash P 1,500,000 Total Liabilities P 500,000 Non-current asset 2,000,000 A, capital 1,100,000 B, capital 1,200,000 C, capital 700,000 Scanned with CamScannerChapter 1 - Partnership : : P500,000 to the . ship by investing, Hl le ary |, D is admitted to the partners italization of the n vrnership be 0% cenit interest. The total agreed capital lew partnership is P3,000,000. a. What isthe share of A in the asset impairment? a. 120,000 b. 80,000 c. 150,000 4. 250,000 b. Whats the amount of bonus given by D to the existing partners? a. 200.000 b. 300,000 cc. 100,000 d. 150,000 ¢. What is the capital balance of D after his admission to the partnership? a. 500,000 b. 300,000 c. 350,000 d. 400,000 d. What is the capital balance of C after the admission of D to the partnership? a. 580,000 b. 820,000 c. 500,000 4. 780,000 PROB. 1-49 (AUTHOR) On December 31, 2020, ABC. Partnership’s Statement of Financial Positions shows that A, B and C have capital balances of P500,000, P300,000 and 200,000 with profit or loss ratio of 1:3:6. On January 1 2019. Cc i “ from the partnership and received P350,000. At the time of Cs retireme ai set of the partnership is undervalued. What is the capital balance of A after the retiree of C? a. 462,500 b. 937,500 c. $62,500 d. $25,000 Scanned with CamScannera pros. 1-50 (AUTHOR) December 31, 2020, ABC i On Oat Ay Band C fa ae Statement of Financial Position 100,000 wih eee Tatio of 1:4:5, On January ironic ced fo ‘te nership ved P80,000. At the time of C's retirement the ares md fibilities of the partnership are vaerthe retirement of C2. ProPeTly valued. What isthe capital balance of B 284,000 308,000 316,000 320,000 a. b. c. d. PROB. 1-51 (RPCPA) N, X, and Y are partners sharing profits and losses in the ratio of 4:3:3, Tt The condensed balance sheet of NXY Partnership as of December 7 is: Cash P 50,000 Liabilities P 40,000 Other assets 130,000 N, capital 60,000 X, capital 40,000 Y, capital 40,000 Total Total P a. All the partners agree to admit Z as a 1/5 partner in the partnership without any bonus. Z shall contribute assets amounting to a 28,000 b. 10,000 c. 35,000 d. 60,000 solved and liquidated by installments. The first s on the sale of other assets with book value of available is distributed to b. The NXY Partnership is dis: realization of P40,000 cash i P80,000. After payment of the liabilities, the cash N, X, and Y, respectively as follows: a. 36,000 27,000 ~—-27,000 b. 44,000 28,000 28,000 ‘. 16,000 12,000 12,000 a. 24,000 13,000 13,000 Scanned with CamScannerPROB. 1-52 (AICPA) The following condensed bala and Beda, who share profits and losses Cash Other assets Beda, loan Accounts payable Alfa, capital Beda, a. The assets and liabilities are fairly valued capital nce sheet is preset jn the ratio 45,000 625,000 30,000 00 700,000 oor 120,000 348,000 232,000 2a 700,000, ———_—- ited for the partnership of Alf, of 60:40, respectively: ‘on the balance sheet. Alfa and Beda decide to admit Capp as a new partner with a 20% interest. No bonus is to be recorded. What amount should Capp contribute in cash or other assets? b, c d. 110,000 116,000 140,000 145,000 b. Instead of admitting a new partner, Alfa and Beda decide to liquidate the partnership. If the other assets are sold for P500,000, what amount of the available cash should be distributed to Alfa? a. b. c. d. 255,000 273,000 327,000 348,000 PROB. 1-53 (AICPA) Cohen, Butler, and Davis are partners in a i y 1» partnership and share profits and losses 50%, 30%, and 20%, respectively. The partners have agreed ls liquidate the partnership et anticipate that liquidation expenses will total P14,000. Prior to the liquidation, the partnership balance sheet reflects the following book values: Scanned with CamScannerChaps! 45 Cash Non-cash assets 21,000 Notes payable to Davis 248,000 Other liabilities 32,000 Cohen, capital lee Butler, capital (deficit) ! Davis, capital (10,000) 33,000 Assuming that the actual liquidation expenses are P14,000 and that non-cash assets are sold for P218,000, how would the assets be distri i Butler has net personal assets of P8,500? eNO aes Cohen Butler Davis a 15,500 - 5 b. 21,429 : 49,571 ©. 30,650 - 53,260 d 27,500 - 52,000 PROB. 1-54 (AICPA) The following condensed balance sheet is presented for the partnership of Axel, Barr, and Cain, who share profits and losses in the ratio of 4:3:3, respectively: Cash P100,000 Other assets 300,000 Total P400,000 Liabilities P150,000 Axel, capital 40,000 Barr, capital 180,000 Cain, capital 30,000 Total P400,000 The partners agreed to dissolve the partnership after selling the other asset for P200,000. Upon dissolution of the partnership, Axel should have received a. 0 b. 40,000 c. 60,000 da. 70,000 Scanned with CamScannerog PROB. 1-55 (Adapted) sa Low, nd Ge ied jal, oh Because of very unprofitable operations Panos and profit and loss ratio dissolve the partnership when their cal were: 175,000 Nal, capital (30%) 125,000 Lou, capital (20%) 175,000 Gee, capital (50%) —7475,000_ —_—__ Total sold and sufficient cash is ea io are Upon liquidation, all of the partnership's assets << personally insolve , pt 000. Gee is P' nt, realized to pay all liabilities except one for eames of the firm. By what but the others are capable of meeting any amount would the capital of Nal change? a. 7,500 decrease b. 150,000 decrease c. 195,000 decrease d. No change PROB. 1-56 (RPCPA) Peter and John, who share profits and losses equally, decided to liquidate their partnership when their net assets ‘amounted to P260,000, and capital balances of P170,000 and P90,000, respectively. If the noncash assets were sold for amount equal to its book value, what amount of cash should Peter and John received? Peter John a. 130,000 130,000 b. 170,000 90,000 c. 180,000 80,000 d. 195,000 65,000 PROB. 1-57 (Adapted) Sammy and Michael are partners of SM Partnershij i p t ip sharing prot d. losses equally. They decided to terminate the partnership when their Se ieee are: Sammy, P750,000; Michael, P500,000. At this time, the partnership owes Micha becomes llble Aeon fo fone oe nt ena distribution to th I istributi what would be the respective share of Sangend titan alcuah dist? Scanned with CamScannerchapter 1 Partnership 47 Samm; Michael A 150,000 ~ 150,0007 b. 175,000 125,000 c. 200,000 100/000 d. 275,000 25,000 pRoB. 1-58 (AICPA) The following condensed balance sheet is presented for the partnership of Smith and Jones, who share profits and losses in the ratio of 60:40, respectively: Other assets P 450,000 Smith, loan 20,000 P_ 470,000 Accounts payable P 120,000 Smith, capital 195,000 Jones, capital 155,000 P_ 470,000 The partners decided to liquidate the partnership. If the other assets are sold for 385,000, what amount of the available cash should be distributed to Smith? 136,000 156,000 159,000 195,000 Beep PROB. 1-59 (Adapted) On December 31, 2020, the partners of MNP Partnership decided to liquidate their business. Immediately before liquidation, the following condensed balance sheet was prepared: Cash P 50,000 Liabilities P375,000 Noncash assets 900,000 Nieva, loan 80,000 Perez, loan 25,000 Munoz, capital (50%) 312,500 Nieva, capital (30%) 107,500 Perez, capital (20%) 50,000 Total P950,000 Total P950,000 Scanned with CamScannercnuy the only solvent ‘The noncash assets were sold for P400,000. ASS req by Perez? (rounded tg Assuming Perez is partners, what amount of additional cash WH the nearest peso) a. 37,143 b. 25,000 c 5,000 d. 0 PROB. 1-60 (RPCPA) AME Partnership showed capital balances of, 5,000. The partners” profit and loss ratio was vod to dissolve and liquidate. They sold all After settlement of all liabilities amounting for distribution. ‘As of December 31, the books of A - P40,000; M - P25,000; and E - P. 3:2:1, respectively. The partners deci the non-cash assets for P37,000 cash. to P12,000, they still have P28,000 cash left a. The loss on the realization of the non-cash assets was a. 40,000 b. 42,000 c. 44,000 d. 45,000 b. Assuming that any partner’s capital debit balance is.uncollectible, the share of A in the P28,000 cash for distribution would be 19,000 18,000 17,800 40,000 BPP PROB. 1-61 (RPCPA) The following balance sheet is presented for the partnership of A, B, and C, who share profits and losses in the respectively ratio of 5:3:2. tt Assets i it Liabilities and Capital Cash 120,000 Liabilities 280,000 Other assets 1,080,000 A, capital 560,000 ee capital 320,000 ee , capital 40,000 Total 1,200,000 Total 1,200,000 aa 200; Scanned with CamScannerfnapter 1 — Partnership copie lPermersip lt ‘Assume that the three partners deci ae assets are sold for P800,000, tow then the partnership. If the other available cash be distributed to each partner? A —B__ Cc a. 280,000 320,000 —a00007 b. 324,000 236,000 16,000 c. 410,000 230,000 0 d. 412,000 228,000 0 PROB. 1-62 (Author) On December 31, 201 9, the Statement of Financial Position of ABC Partnership with profit or loss ratio of 6:1:3 is presented as follows: Cash P 1,000,000 Receivable from A 500,000 Other non-cash asset 2,000,000 Total Liabilities P 2,000,000 Payable to B 1,000,000 Payable to C 100,000 A, capital 700,000 B, capital (650,000) C, capital 350,000 On January 1, 2020, the partners decided to liquidate the partnership. All partners are legally declared to be personally insolvent. The other noncash assets were sold for P1,500,000. Liquidation expenses am: ounting to P100,000 were incurred. a, How much cash was received by B at the end of partnership liquidation? a. 250,000 b. 150,000 c. 290,000 d. 270,000 b. How much cash was received b; ee 270,000 b. 150,006 c. 350,000 d 220,000 yy C at the end of partnership liquidation? Scanned with CamScannerChaptir | - Partnership 50. PROB. 1-63 (AUTHOR) acp edi ition of A artnershi On December 31, 2019, the Statement of Finsacie Fae C ip with profit or loss ratio of 1:4:5 is presented as follows: Cash P 1,200,000 Total Liabilities P Sern Non-cash asset 00,000 A, capital S00 000 B, capital Q C, capital 50,000 On January 1, 2020, the partners decided to liquidate the paftnership- All parners are legally declared to be personally insolvent. The other m5, nn were sold at a specific price. Liquidation expenses amounting to . ‘ere incurred. At the end of liquidation, A received P80,000. a. What is the amount of cash received by B at the end of liquidation? a. 40,000 b. 30,000 ©. 10,000 d. 20,000 b. What is the net proceeds from the sale of noncash asset during partnership p P liquidation? a. 450,000 b. 350,000 c. 400,000 d. 500,000 PROB. 1-64 (RPCPA) A condensed balance sheet of Alex, Jay, and John as of March 31, 2020 follows: , P 48,000 Cash P 28,000 Liabiliti Other assets 265,000 Alex, capital 95,000 Jay, capital —~80,000 John, capital 70,000 Total P_ 293,000 Toul ~P393-000 Scanned with CamScanner~ Partnership. spapter L Chapte 51 n 7 respectively. The partners voted to s rt by selling other assets in installmer st calito fu ssets allments. ep eee he ae cash sale of other assets with a book value of 50,000. A ith creditors, all cash available was distributed to the partners: How much cash was received by John? The income and loss ratios are jssolve their partnership and liquidate a. 10,500 b. 20,000 c. 21,250 d. 32,500 PROB. 1-65 (Adapted) After incurring losses resulting from very unprofitable operations, the Goh Kong Wei Partnership decided to liquidate when the partners’ capital balances were: Goh, capital (40%) P80,000 Kong, capital (40%) 130,000 Wei, capital (20%) 96,000 ‘The non-cash assets were sold in installment. Available cash were distributed to partners in every sale of non-cash asset. After the second sale of non-cash assets, the partners received the same amount of cash in the distribution. And from the third sale of non-cash assets, cash available for distribution amounts to P28,000, and unsold non-cash assets has a book value of P12,500. Using cash priority program, what amount did Wei received in the third installment of cash? a 11,600 b. 8,000 c 5,600 d. 0 PROB. 1-66 (AICPA) Partners Able, Baker, and Chapman, who share profit and loss equally, have the following personal assets, personal liabilities, and partnership capital balances: Able __Baker____Chapman_ Personal assets —P 30,000 ~ P-80,000 P 60,000 Personal liabilities 25,000 50,000 72,000 50,000 (32,000) 70,000 Capital balances Scanned with CamScannerChapter 1 ~ Partnership of assets, the capital balances of Able, After applying the doctrine of marshalling would be Baker, and Chapman, respectively, a. 50,000 (2,000) 58,008 b. 48,000 0 58,00 ©. 49,000 57,000 d 34,000 0 54,000 PROB. 1-67 (Adapted) Partner Morgan is personally insolvent, owing P600,000. Pee ee a only bring 200,000 when liquidated. At the same time, Morgan hes & erat capital balance in the partnership of P120,000. The capital a f marshall sa! partners total a credit balance of P250,000. Under the doctrine of marshalling of assets, how much the personal creditors of Morgan can collect? a. 120,000 b. 200,000 c. 320,000 d. 570,000 PROB. 1-68 (RPCPA) The balance sheet of the partnership of Salve, Galo, and Norma, who share in the profits and losses in the ratio of 5:3:2, respectively is as follows: Assets Cash 30,000 Other assets 320,000 Salve, capital 80,000 Galo, capital 115,000 Norma, capital 105,000 Total 350,000 Total 350,000 The partnership is liquidated by installment. The first sale of non-cash assets with a book value of P150,000 realizes P100,000, How should the remaining cash be distributed? Salve Galo Norma a. 50,000 30,000 20,000 b. 40,000 24,000 16,000 c. 0 31,000 49,000 d. 0 48,000 32,000 Scanned with CamScannereee papter g 53 proB. 1-69 (AICPA) yartners Almond, Barney, and Colors have i cay FN ee eee rts atie eblt Profits in the ratio of 2:4:4 vel De om in Tiquidatio ‘eat Plan, one of the partners will ‘get the follow ae tal a ty tol 0 fore any other partners get anything: pital balances of P20,000, P50,000, a. b. 15,000 a 40,000 d. 180,000 pROB. 1-70 (AICPA) The ABC Partnership has assets with book value of P195,000, outside liabilities of P70,000, ioe ars Spat Aue of 20,000, and capital balances for Partners Able, Baker, and Chapman of P70,000, P30,000, and P50,000, respectively. The partners share profits and losses equally. a. How would the first,P100,000 of available assets be distributed? a. P70,000 to outside liabilities, P20,000 to Able, and the balance equally among partners. b. P70,000 to outside liabilities, and P30,000 to Able. c. 70,000 to outside liabilities, P25,000 to Able, and P5,000 to Chapman. d. —P40,000 to Able, P20,000 to Chapman, and the balance equally among partners. ditors and loans to partners had been paid. How would the b. If all outside cre ssuming Chapman had already received balance of the assets be distributed a: assets with a value of P30,000? a. Each of the partners would received P25,000. Each of the partners would received P40,000. Able: P70,000, Baker: P30,000, Chapman: P20,000 b. c. d. Able: P55,000, Baker: P15,000, Chapman: P5,000. Scanned with CamScannerChapter 1 - Partnershy, aioe hs ee PROB. 1-71 (AUTHOR) nt of Financial Position of ABC Partnership On December 31, 2020, the Statement OT rot ows: with profit or loss ratio of 5:3:2 is pre: can P 1,600,000 Total Liabilities Pp 20 ot as 600, ital 000 Non-cash asset 1,400,000 a ‘anita 500,009 C, capital 400,000 ‘ded to liquidate the partnership jn On January 1, 2021, the partners a “o be personally insolvent. installment. All partners are legally declare As of January 31, 2021, the following transactions occurred: ; Noncash assets with a book value P1,000,000 were sold at 2 gain of P100,000. © Liquidation expenses for the month of January amounting to P50,000 were paid. A ¢ It is estimated that liquidation expenses amounting to P150,000 will be incurred for the month of February, 2021. © 20% of the liabilities to third persons were settled. e Available cash were distributed to the partners. As of February 28, 2021, the following transactions occurred: ¢ Remaining noncash assets were sold at a loss of P100,000. © The final liquidation expenses for the month of February amounted to P100,000. © The remaining liabilities to third perso i amount of PI,500,000. a eines Mt 8 compe Remaining cash were finally distributed to the partners, a. What is the amount of cash received by partner C o; ae n January 31, 2021? b. 240,000 c. * 300,000 d, 350,000 b. What is the share of B i i i ea in the maximum possible loss on January 31, 2021? b. 110,000 Scanned with CamScannerchapter. 1 — Partnership 55 c. 120,000 d. 165,000 What is the amount of tot i c W 550,000 tal cash withheld on January 31, 2021? 1,600,000 1,750,000 1,700,000 75,000 25,000 50,000 b. c d. d, What is the amount of cash received by A on February 28, 2021? a. , : b. c 4. 0 PROB. 1-72 (RPCPA) Roy and Gil are partners sharing profits and losses in the ratio of 1:2, respectively. On July 1, they decided to form the R&G Corporation by transferring the assets and liabilities of the partnership to the corporation in exchange for the latter’s stock. The following is the post-closing trial balance of the partnership. Debit Credit Cash P 45,000 Accounts receivable (net) 60,000 Inventory 90,000 Fixed assets (net) 174,000 Liabilities P aa Roy, capital 5 Gil, capital 214,200 309,000 —»-P369,000 It was agreed that adjustments be made to the following assets to be transferred to the corporation: Accounts receivable ee I | Inventory ae eod Fixed assets Scanned with CamScannershapter I= Partnership —e Pe ar ferred stock and P}g «eye P1OO par prefer’ a a ized to iss¥e 6 their equity in The R&G Corporation was re to receive na rnultiples ean = oan Sas oaveon stock each, Plus partnership 7. o mn te interests. shares of preferred stock for their remaining " common a. The total number of shares of prefered a0 TTF the pa corporation in exchange for the assets and stocks issued by the rtnership are: Preferred Common a. 2,540 shares 7,500 shares b. 2,592 shares 1,440 shares c. 2,642 shares 1.440 shares 4. 2.642 shares 1,550 shares b. The distribution of the stocks to Roy and Gil would ah oy = Prefered 7 Common __Preferred _ _Common_ a “TiSdwre’ “Tidsares «914 snerea, 720 shares b. 773shares —-750shares 1,843 shares 750 shares c. 758shares -720shares. «1,834 shares 720 shares d. 738shares 720 shares 1,758 shares 720 shares PROB, 1-73 (AICPA) The condensed balance sheet of Adams & Gray, a partnership, at December 31, 2020, follows: Current assets P 250,000 Equipment (net) 30,000 Total assets P_ 280,000 —_— Liabilities P 20,000 Adams, capital 160,000 Gray, capital 100,000 Total lities and capital P 280,000 _— On December 31, 2020, the fair values of the assets and liabilities were appraised at P240,000 and P20,000, respectively, by an independent appraiser. On daniaeh 2, 2021, the partnership was incorporated and ue common stock were issued. 1,000 shares of PS par val Scanned with CamScannerchapter 1 Partnership 57 immediately after the incorporation, what amount should the new corporation report as additional paid in capital? 275,000 b, 260,000 ¢, 215,000 a 0 Scanned with CamScanner