tNAME:

SECTION:
ISCORE:
~ROFESSOR :
j
Multiple Choice

on May 1, 2015, Gonzaga and Balace fo rm d partn ership and agreed to share
l. profits and losses in th e ra t io of 3:7, resp ctively. Gonzaga contributed a parcel of
land that cost Pl0,000 . Balac contributed P40,000 cash . The land was sold for
P18,000 on May 1, 2015, imm ediately after formation of the partnership. What
amount should be recorded in Gonzaga's capital account on formation of the
partnership?

a. PlS,000
b. P17,400
c. Pl0,000
d. P18,000
_.,,,.,..
2. On Mar. 1, 2015, Sarabia and Abad decided to combine their businesses and form a
partnership. Their statements of financial position on Mar. 1, before adjustments,
showed the following:

Sarabia Abad
Cash p 9,000 P 3,750
Accounts receivable. 18,500 t ~ 13,500
Inventories 30,QQQ { r 19,500
Furniture and Fixtures (net) 30,000 9,000
Office Equipment (net) 11,500 2,750
Prepaid Expenses 6,375 3,000
Total Pl0S,375 PSl,500

Accounts Payable P 45,750 P18,000

Capital 59,625 33,500
Total Pl0S,375 PSl,500
. .,,, Mr
They agreed to have the _following items recorded in their books:
· .. !~ 1,t ~1 ltlV
1. Provide 2% allowance for doubtful accounts.
2. Sar~bia's f~rniture and fixtures should be P31,000, while Abad's office
equipment 1s under-depreciated by P250.
3. Rent expense incur ct-~reviously by Sarabia was not yet recorded ·
Pl 000 h'I I . amounting to
, , w I e sa ary expense incurred by Abad was not also reco d d ·
to P800. r e amounting
4. The fair market values of inventory amounted to :

For Sarabia
P29,S00
For Abad
21,000

Basic Considerations and Formation I 1 - Ll ~

 . d Abad :
Sarabia an
. edit adjustment for Aba d
Compute the net (debit ) er b'1a
Sara _ -
Sarabia Abad p 180
c. P(870) P( 180)
p 2,820
a. P 2,870 ·c( p 870
P(2,870) P(2,820)
b. what is amount of total
number,
. in the previous
3. Using the same information
liabilities after the formation 7
c. P63,750
a. P63,950 P61,950
d.
b. P65,550
,/' I assets after the
. . . hat is the amount of tota
4. Using the same information is #2, w
formation?
C. P157,985
a.
b.
P160, 765
P152,985 er. P156,875

· · t that lists the following assets

/ 5. Ables and Galang executed a partnership agreemen
contributed at the partners_hip's formation :
Contributed by:
Ables Galang
Cash P20,000 P30,000
Inventory 15,000
Building 40,000
Furniture and Equipment 15,000

The building is subject to a mortgage of Pl0,000, which the partnership has

assumed. The partnership agreement also specified that profits and losses are to be
distributed equally. What amounts should be recorded as capital for Ables and
Galang at the formation of the partnership?

Ables Galang
a. P35,000 -
P85,000
b. P35,000
.,,- P75,000
c. PSS,000 PSS,000
d. PG0,000 P60,000

6. Orcajada invested in a partnership a parcel of land h" h

The land had a market value of P300 ooo wh w ~c cost his father P200,ooo.
, en OrcaJada inh ·t d ·
ago. Currently, the land is independently appr . en e 1t three ye
ars
Orcajada insisted that he ''wouldn't take p
900 0 ~~ed a~ PS00,000 even though
recorded in the accounts of the partnership at ' for it." The la nd should be

a. P300,000.
b. PS00,000.
 c. P900,000.
d. P200,000.
On Apr. 30, 2015, Lacson, Yacapin, and Bernal formed a partn ership by combi ning
7
· their separate business proprietorships. Lacson contributed cash of PS0,OOO.
Yacapin contributed property with a P36,000 carrying amount, a P40,000 origin al
cost, and PS0,000 fair value. The partnership accepted respon sibility for th e
P35,000 mortgage attached to the property.

Bernal contrib\Jted equipment with a P30,000 carrying amount, a P75,000 original

cost, and PSS,000 fair value. The partnership agreement specifies that profits and
losses are to be shared equally but is silent regarding capital contributions . Which
partner has the largest Apr. 30, 2015, capital balance?

a. Lacson Bernal
Yacapin
~ All capital account balances are equal
b. d.

8. On Aug. 1, lsada and Ureta-Reyes pooled their assets to form a partnership, with
the firm to take over their business assets and assume the liabilities. Partnership
capitals are to be based on net assets transferred after the following adjustment s.
Profits and losses are allocated equally.

The inventory of Ureta-Reyes is to be increased by P4,000; an allowance for

doubtful accounts of _P1.QOQ and Pl,~00_are to be set up in the books of lsada and
Ureta-Reyes, respectively; and accounts payable of P4,000 is to be recognized in
1£ada's books. The individual trial balances on August, before adjustments, follow :

lsada Ureta-Reyes

Assets P75,000 P113,000

Liabilities 5,000 34,500
.,0 000 ?«
J"OO
What is the capital of lsada and Ureta-Reyes afterthe above adjustments?

a. lsada, P68, 750; U. Reyes, P77,250 c. lsada, PGS,000; U. Reyes, P76,000

-
b. lsada, PGS,000; U. Reyes, P81,000 d. lsada, P75,000; U. Reyes, P81,000

9. Calma and Abella formed a partnership on April 1 and contributed the following
assets:

Calma Abella
Cash P 150,000 P 50,000
land 310,000
.5llO 000
The land was subject to a mortgage of P30,000, which was assumed by the
partnership. Under the partnership agreement, Calm a and Abella will share profit
and loss in the ratio of one-third and two-thirds, resp ectively. Abello' s capital
account at April 1 should be
 P330,000.
P360,000 .
c. P300,000.
d. P340,000 .
hip. pedernal is to inve
.. new partner S s
10. Pedernal, Patin , and Li gayu are form ing a . ·nallY costing P120,000 but has a
cash of 100 000 an stapling quipment or~g, . t o invest ca sh of Pl60,0oo
, 0 Pating IS "b .
econd -hand market valu of P O,OO · .. uipment, is to contn Ute tas~
. ll'Ing stapling eq h.
Ligg yu, whos f mily i engag d in se b used by the partners 1p Wi
. ·pm ent t o e
of PS0,000 and br nd new t apllng equ, .. . , bu siness Pl00,000. Partner
. h t t heir tam 11Y 5
a regular pri c of 120,000 but w h 1c cos on formation are
agreed to share profits eq ually. The ca pital balances up
d L'ggayu PlS0,000.
a. Pederna l, P220,000; Pating, P160,000; an ~ ' Pl 70 000 .
~ Pedernal, PlS0,000; Pating, P160,000; and L~ggayu, PlGO, OOO .
c. Pedern al, P160,000; Pating, PlG0,000; and Llggayu, '
668
d. Pedern al, Pl 76,666; Pating, Pl 76,666; and Liggayu, Pl 76, ·

11. Estrada and Molina formed a partnership on Mar. 1, 2015 and contributed t ~
foHowing assets :
Estrada Molina

Cash P80,000
Equipment PS0,000

The equipment was subject

'
to a chattel mortgage of PlO I 000 that was assumed 1
the partnership. The partners agreed to share profits and losses equa lly, Molina'
ca pital account at Mar. 1, 2015 should be

a. PS0,000. _;:.- P40,000.

b. P45,000. d. P60,000.

12. On Mar. 1, 2015, Kalaw and Borromeo formed a partnershi with . tin
t he following assets: P each contnbu

Kalaw
Borromeo
Cash P30,000
M achinery and Equipm ent P 70,000
25,000
Bu ilding 75,000
Furn iture and Fixtures 225,000
10,000

The buildi ng is subject to mortgage loan of . . Pao 000

partnership. Agreement provides t hat K law ;d .' which 15 to be assumed by th
8
30% and 70%, respectively. On M ar. 1, 20lS th
orromeo share profits and lossf
account should be e balance in Borromeo's capiti

" ... o I o,....+n orchin nnd Corporation Accountina

 a. P370,000. c. P305,000.
b. P314,000. d. P290,000.
, .--
l3 . The same information in the previous number except that th~ mortgage lo,an is ~ot
assumed by the partnership. On Mar. 1, 2015 the balance rn Borromeo s capital
account should be

a. P370,000. c. P305,000.
P314,000. d. P290,000.

14. On July 1, Faminial and Fetalvero formed a partnership, agreeing to share profits
and losses in the ratio of 4:6 respectively. Faminial contributed a parcel of land that
cost P25,000. Fetalvero contributed PS0,000 cash. The land was sold for PS0,000
on July 1, three hours after formation of the partnership. How much should be
recorded in Faminial's capital account on formation of the partnership?

a PS0,000. c. P25,000.
b. P20,000. d. Pl0,000.

15. On Apr. 30, 2015, Foja, Lupian, and Retada formed a partnership by combining the ir
separate business proprietorships. Foja contributed cash of P50,000. Lupian
contributed property with a P36,000 carrying amount, a P40,000 original cost, and
P80,000 fair value. The partnership assumed the P35,000 mortgage attached to the
property. Retada contributed equipment with a P30,000 carrying amount, a
P75,000 original cost, and P55,000 fair value. The partnership agreement specified
that profits and losses are to be shared equally. Which partner has the largest Apr.
30, 2015, capital account balance?

a. Foja.
_E> Retada.
c. Lupian.
d. All capital account balances are equal.

16. Lacson and Solis started a partnership. Lacson contributed a building that she
purchased 10 years ago for Pl00,000. The accumulated depreciation on the
building on the date of formation of the partnership is P25,000 and the fair value is
Pll0,000. For what amount will Lacson's capital account be credited on the books
of the partnership?

a. Pl00,000 c. Pll0,000
.,,-.
b. P75,000 d. P25,000
 SCORE:
NAME:
I

' . ' /

SECTION: PROFESSOR:

Multiple Choice

1. Ceradoy, Manongsong and Anuran are partners sharing residual profits i~ the ratio
of 3:2:1. The partnership agreement provides for 8% interest on capital and · a
salary for Manongsong of PB0,000 per annum . . Profit for 2015 was P840,000 and
the year-end balances on partners' capital accounts are as follows: Ceradoy,
· P200,000; Manongsong, PlS0,000 and Anuran, Pl20,000. What was Anuran's share
of residual profits for 2015?

>b.
P120,400
P12G,G10
8<\o 000
2.r (,oQ
-
\\, '\ •u
7d. P13o,ooo 0ltt qoo ~o
P140,000 foO-W'D
. q-,,~ 400 ' ,-,
2. Malaluan and Baral are in partnership. They share profits in the ratio 3:2 and close
their accounts ·on June 30 each year.On jan. 1, 291s, Castro jorned the partnership.
The profit-sharing ratio was revised to become Malaluan 50%, Baral 25% and Castro
25%, after providing for annual salaries as follows : Baral, P20,000 and Castro,
P12,000. The partnership profit for the year ended June 30, 2015 was P480,000,
accruing evenly over the year. What are the partners' total share in profits for the
year ended June 30, 2015?

Malaluan Baral Castro

a. P256,000 P162,000 P62,000
b. ~248,000 P168,000 P64,000
C. P264,000 P166,000 P66,000
d. P264,000 P156,000 PG0,000

3. Refozar, Martinez and Magsino formed a partnership. It's on a calendar year basis.
The profit-sharing arrangements are as follows:

Until June 30, 2015, the annual salaries are provided as follows: Martinez, P40,000
a'nd Magsino, P20,000. The residual profit will b1e shared in the ratio of 6:2:2.

From July 1, 2015, the salaries will be discontinued and the profit to be divided in
the revised ratio"of 5:3:2.

Profit for the ye,ar ended Dec. 31, 2015 was P400,000 before charging partners'
salaries, acc_ruing evenly through tne year, and after charging an e·xpen.se of
P40,000, which it was agreed related wholly to the first six mont_hs of the_year.
How should the profit for the year be divided among the partners?

Refozar Martinez Magsino

a. P182,000 P130,000 P88,000
h PJn·n nnn P116 .000 PRL1 nnn
 C. P198,000 P118,000 P88,000
d. P180,000 P1 32,000 P88,000

4. Rubio and Bi ana est abli hed a trading partnership. Th ey share ~rofits e,quall~ after
allowing s lari es of P40,000 per yea r for Rubio and interest on partne~ s capital at
5% per y ar. On Jan. 1, 2015, t heir capital balan ces are as follows : Rubio, Pl00,000
and Bi ana, Pl00,000.

On July 1, 2015, Bisa na invest ed an additional Pl00,000 and Rubia's salary was
discontin ued . Th e partn ership profit for the year ended Dec. 3l, 2015 was
P337, 500. Wh at wa s Rubie's total profit share for the year ended Dec. 31, 2015?

a. P182,500
b. P1 78,750
C. P180,000
d. P190,000

5. Villanueva and Mulles are partners sharing profits in the ratio 3:2. On Jan. 1, 2015,
Lucena joined the partnership and the new profit sharing ratio is as fo llows:
Villanueva 40%, Mulles 30% and Lucena 30%. Profits for the year ended June 30,
2015 were :

6 months ended Dec. 31, 2014 P300,000

6 months ended June 30, 2015 P450,000

An irrecoverable debt of P50,000 was written off in the six months to June 30 in
computing the P450,000 profit. It was agreed that this expense should be borne by
Villanueva and Mulles only. What is Villanueva's total profit share for the year
ended June 30, 2015?

a. P330,000
b. P310,000
c. P340,000
d. P350,000

6. Figueroa and Aguhob are partners in a CPA Review School. They share profits in the
ra t io of 2:1. On July 1, 2015 they ad.mitted Figueroa's son Dobias as a partner.
Figueroa guaranteed that Dobias' profit share would not be less than P25,000 tor
the six months to Dec. 31, 2015 . The profit sharing arrangements after Dobias'
admission is as follows: Figueroa 50%, Aguhob 30% and Dobias 20%. The profit for
the year ended Dec.31, 2015 was P240,000 accruing evenly over the year. What
should Figueroa's total profit share be for the year ended Dec. 31, 2015?
a. P140,000
b. P139,000
c. Pl14,000
- d. P139,375
 ~E~:_ _ _ _ _ _ _ _ _.J,~S~CO~R~E::,_: ----------,1
§ij;::.O::,N:..,:_ _ _ _ _ _ _ _ __l,.!:P~R~O~FE::S~SO~R~:_ _ _ _ _ _ _ _ __

Multiple Choice

partners Del Mundo, Burgos, and Gonzales have capital balances in a partnership of
p1so,ooo, Pl00,000, and P200,000, respectively. Loss for the year was P330,000.

1. What will be the capital balance for Burgos if the three partners share profits and
losses at a 4:3:3 ratio, respectively?

a. Pl,000 credit balance

b. Pl0,000 debit balance
c. P99,000 debit balance
d. Pl0,000 credit balance

2. What will be Burgos's capital balance if Del Mundo gets an P180,000 salary, Burgos
gets a P70,000 salary, and Gonzales gets a 10% interest on his beginning balance
with the remainder being divided at a 2:2:1 ratio, respectively?

a. Pl 70,000 debit balance

b. P32,000 debit balance
c. P70,000 debit balance
d. P128,000 debit balance

3. The most equitable distribution of partnership profit based on capita~ contributions

uses which of the following capital concept?

a. Beginning capital
b. Average capital
c. Ending capital
d. Equally

4. Periodic withdrawals by partners are best viewed as

a. distribution of partnership assets to the partners.

b. payment for partners' personal services to the partnership.
c. expense of doing business.
d. taxable income to the partners.

5. If the partnership agreement does not specify how profit is to be allocated, profits
or losses should be allocated

a. equitably so that partners are well compensated for their time and effort.
b. in proportion to the average of capital invested during the period.

t
I
Partnership Operations and Financial Reporting I 2-35
 c. in accordance with their capital contribution.
d. equally.
th
6. A statement of changes in partners' equity should include all of e fo ll owing except

a. Ending capital balances.

b. Share of profit for the period .
c. Beginning capital balances.
d. Investments during the period .
e. Partner' s payments of loans.
f. Withdrawals during the period.

7. Which of the following is not considered a legitimate expense of a partnership?

a. Interest paid to partners based on the amount of their invested capital.

b. Depreciation on assets contributed to the partnership by the partners.
c. Salaries for management hired to run the business.
d. Supplies used in the partners' offices.

8. A partner who contributes money or property as well as his work or industry to the
capital of the partnership is called

a. Managing partner
b. Capitalist-industrial partner
c. Industrial partner
d. Capitalist partner

9. Partners ·Manalo . an.d Capuno receive an interest allowance of Pl00 000 d

PlS0,000, respectively, and divide the remaining profits and losses in a 3 .i
t' anlf
the company sustained a loss of Pll0,000 during th h . . ra to.
Manalo's capital? e year, w at ts the effect on

a. P82,S00 decrease
b. Pl0S,000 decrease
c. P120,000 decrease
d. Pl 70,000 e:tecrease

10. Partners De Guzman and Tugade receive a salar

P70,000, respectively, anc;j share the rema · d y allowance of P30,000 and
P40,000 during the period, what is the ff in er equally. If the company earned
~ ect on Tugade's capitaP
a. P30,000 decrease ·
b. P40,000 increase
c. PS0,000 increase
d. P90,000 increase
 11. Partners Lusterio and Advincula receive a salary of PlS0,000 and P300,000,
respectively, and share profit and losses in a 2:1 ratio, respectively. If the
partnership suffered a Pl50,000 loss in 2015, by how much would Lusterio's
account decrease?

a. P400,000
b. P250,000
c. P200,000
d. Pl00,000

12. Which of the following best describes the nature of salary and interest allowances
in a partnership profit and loss sharing agreement?

a. A means of determining reasonable monthly withdrawals by each partner.

b. The amount upon which each partner will have to pay personal income tax.
c. A means of distributing profit in relation to services rendered and capital
invested by partners.
d. Expenses of the business that should be deducted from revenue in determining
profit.

13. Arzadon, Ballada and Castro are partners. Their contributions are as follows :
Arzadon, P600,000; Ballada, P400,000 and Castro, services. Partners Arzadon,
Ballada and Castro agreed to divide profits or losses in the ratio of 35:25:40,
respectively. How should a loss of Pl00,000 be shared by the partners?

a. Arzadon, P30,000; Ballada, P20,000 and Castro, P50,000.

b. Arzadon, P35,000; Ballada, P25,000 and Castro, P40,000.
c. Arzadon, P35,000; Ballada, P3S.,000 and Castro, P30,000.
d. Arzadon, P60,000; Ballada, P40,000 and Castro, nothing. •
14. The division of partnership profits on the basis of salaries, interest and an agreed
ratio is usually necessary because

a. this prevents arguments among the partners.

b. most investors require this method of distribution.
c. partners 'seldom contribute time, effort, and resources equally.
d. this reflects the amount of time devoted to the partnership by the partners.

15. Orosco is an industrial partner. Besides his services, he also contributed capital to
the partnership. There is no agreement as to the distribution of profits or losses.
The share of Orosco in the profit is

a. to be determined by the remaining partners.

b. combination of c and d below.
c. pro-rata to his contribution.
d. such share as may be just and equitable under the circumstances.

Partnership Operations and Financial Reporting I 2-37

 ot th e tormu la used t o 01str1oute profit?
... '""-• • u, Lne ro11 owing 1s not co mpon nt
·, n , th ·,nd r divided according to the profit and
a. Afte r all oth r lie
h
b. m n in partn r .
C. m n .
n r .

17 . n r hip in lud ntri -s to

a. h to th partn r .
th capit I ccount and r cord the di tribution of assets to pa rtner
i:o,,., th partn r hip t rmination and liqu idation.
0 ,..~

n1e and expense acco unts to the income summary account; and the
do r fi ts or losse to the drawing accounts .
clo e the p o its or losses and dividends declared accounts to retained earn·ngs.

18 . on, e tic and Biore are partners. Pozon is an industrial partner. During t e
fi st year of oper ation, the firm realized a profit of P60,000 . During the seco
ear, t e firm sustained a loss of P30,000. So, the total profit for the _two years o
peraf ons was only P30,000. In the Articles of Partnership, it was agreed t a
Pozon, the industrial partner would get one-third of the profit but wou ld not s are
int e losses. How much will Pozon, the industrial partner get?

a. Pozon will get only Pl0,000 which is one-third of the profit.

b. Pozon w ill get only P20,000 in the first year and none in the second year.
c. Pozon wm share in the loss in the second year.
d. Pozon will get only P20,000 which is 1/3 of the profit of the first ea r o
operations .

19. A partne r has a capital balance of P400J000 for five month , PS00,000 for our
mo th , and P600,000 for three mont hs. The average capital balan ce is

a. P483 ,333 .
b. P485,000 .
P491, 80.
d . PSO0,0O0 .

20. Opiso, Bomb o and P 1. t ino are p rtners . heir ontributi n ar· - s follows: Opiso,
P600,0 O; B m b o, P400,00 and P I ti o, rvi s. T rtn rs agreed to divide
profits or lo es i th, following p r · ntag . s: Opiso, 5%; Bombeo, 25% and
Palatine, 40%. lf th r is a profit of Pl00,0 0, how . h uld the profit be distributed
among the partners?

a. Opiso, P35,000; Bombeo, P35,000 and Palatino, P30,000.

b. Opiso, P30,000; Bombeo . PJO nnn :l n,... 0 - 1- .... : - - - - - -
 u . ' ·--,- --

b. P440,000
c. P387,500
d. P360,000

23. Arzadon, Ballada and Castro are partners. Their contributions are as follows:
Arzadon, P600,000; Ballada, P400,000 and Castro, services. The partners did not
agree on how to divide profits or losses. If there is a loss of Pl00,000, how should
the loss be shared by the partners?

a. Arzadon, P30,000; Ballada, P20,000 and Castro, PS0,000.

b. Arzadon, P35,000; Ballada, P25,000 and Castro, P40,000.
c. Arzadon, P35,000; Ballada, P35,000 and Castro, P30,000.
d. Arzadon, P60,000; B~llada, P40,000 and Castro, nothing.

24. Which of the following distributions would be made last in dividing profits to the
partners when interest on capital balances and salary allowances are involved?

a. Salary allowances.
b. Equally.
c. Specified ratio.
d. Interest on capital balances.
 I SCORE:
PROFESSOR: I
Multiple Choice

1. Perdio paid Tria P600,000 for her P400,000 interest in a partnership . On the
partnership books,

a. Perdio will receive a bonus.

b. Perdio will give up a bonus .
c. Perdio will have a capital balance of P600,000 .
~d . Perd io will have a capital balance of P400,000.

2. If a bonus is traceable to the old partners rather than to a new partner, it is

allocated among the partners according to the

> capital ratio of the old partners.

b. capital ratio of the new partnership.
c. profit and loss ratio of the old partnership.
d. profit and loss ratio of the new partnership.

3. Pascual invested P400,000 for a 10% interest in a partnership that has total capital
of P3,000,000 after admitting Pascual. Which of the following is true?

a. Pascual's capital is P260,000.

b. Pascual received a bonus of Pl00,000.
_s.... The original partners received a bonus of Pl00,000.
d. The original partners' capital in the business was P2,700,000 before admitting
Pascual.

4. Partners Yacapin, Babaran, and Cuenca share profits and losses in a 5:3:2 ratio,
respectively. Yacapin wishes to leave the partnership, so the assets are revalued
and are found to be overvalued by PG0,000. If each partner had a capital balance of
P200,000 prior to Yacapin's notification of withdrawal, what amount should. Yacapin
be allowed to withdraw from the partnership?

a. P230,000
b. PlS0,000

S.
--
C. P170,000
d . Pl40,000

Narvaez invested P400,000 for a one-fourth interest in a partnership in which the

· other partners have capital totaling PS00,000 before admitting Narvaez. After
distribution of the bonus, what is Narvaez's capital balance?
 a. P100 000
b. P200,000
y P O 0
d. p

-fi h in p rtn r hip in which the other

6. f
dm i ing Mull . Af e

f II in will not r sul in di ssolution of a pa r ner hip?

a. p cit of a partner
In
a I e capit al balance of a partn er
c. a up c of a partner
d . Ad i sion of a new partner

en a a · ner wit hdraws from a partnership ta king assets that represen less a
is ca pital bala ce,

a. no bonus res ults.

b. the emaining partners receive a bonus .
c. the ithdrawing partner receives a bonus.
d. t er ma ining partners owe the withdrawing partn er the difference.

9. T e adm 'ssion of a new partner under th e bonu s method will result i

a. bonus o t e old partners only.
b. bo us o th new partner only.
c. bo us to either th n w p rtner r t h old p rtn r , but n t b th .
d. non of the abov .

10. p rtne s Chu ng., Detoy , and Di p ofit. h r in :1: r ti

r p c iv I . D toy wi h · o I av th p rtn h"p,
are found to be ov rv lu d by P . If
PS00,000 p ior t D toy 's not'fi t , LI

b allow . d to withdr w ro h n r ip r

a. P400,000
>-c. P450,000
PS00,000
d. PSS0,000
 Marasigan, Ca bance, and Tan are in partn rship . Tan dec,a es ~"e v v u .. ~- d
11. · an an
withdraw from the partnership by s lling her Int r st to Bl anch · Marasig
cabance agree to thi . Mara igan' nd C b n ' c pita l a aunts

a. will not be affected wh n Blanch Is admit d.

b. cannot be determined from he inform tion giv n.
c. will increase when Blanche i admitt d. j
d. will decrease when Blanche is admitted.

12. Garachico invested Pl00,000 for one-third int rest in a partnershi p in wh ich th
other partners have ca pital totaling P260,000 before admitting Garachico. Afte r
distribution of the bonus, what is Garachico's capital?

a. P53,330
b. P86,670
c. Pl00,000
~ P120,000

13. De llosa bo ught longalong's interest in the Seechua and Longalong Partnersh ip by a
PG00,000 direct payment to Longalong. The capital balances before the sale were
P240,000 and P360,000, respectively. What will be the amount in Dellosa 's Capital
account?

a. P300,000
b. P360,000
c. P480,000
)- P600,000

14. Tolentino invested P400,000 for a 20% interest in a partnership that has capita l
totaling PlS0,000 after admitting Tolentino. Which of the following is true?

a. Tolentino's capital is P400,000.

b. Tolentino received a bonus of Pl00,000.
c. The original partners received a bonus of Pl00,000.
d. The original partners' capital in 'the business was Pl,200,000 before admitting
Tolentino.

15. Which of the following best characterizes t he bonus method of recording a new
partner's investment in a partnership?

a. Net assets of the old partnership are not revalued .

b. The new partner's initial capital balance .is equal to hi investment.
c. The bonus always results in an increase to the old partner ' capital balances.
d. Assuming that reco(ded assets are properly valued, the book value of the new
partnership is equal to the book value of the old pa rtnership and the investme nt
of the new partner.

Dissolution - Changes in Ownersh ip I 3 _1 q

16. Which of t he fo llowing resu lts in u 1e u,J.,~ -~nership.

Of rtner from a pa rtner

a. The withdrawal a ~a ft by an existing pa · hip by an existing Partner
b. ~~: ::~~i~~~:i:~a;;~~;;~o~al ass~ts todt~~:~:~~~sution of remaining assets tc
c. h rtnersh1p an
d. The winding up of t e pa
../ the partners. ·
h t assets be reappraised When
. . I will stipulate t a
17. A partnership agreement most like y

a. the partnership is liquidated .

b a partner leaves the partnership.
· · d. 'b ted
c profits and losses are being 1st n u · h.
d·. new partner is admitted to the partners ,p.
. partnership in which the other
f a 30% interest in a
18.. Villon invested P600, 000 or b f admitting Villon. After distr.ibution
partners have capital totaling Pl,000,000 e ore
of the bonus, what is Villon's capital balance?

y P720,000
b. PG00,000
c. P480,000
d. P300,000

19. Total partners' equity will not change when a withdrawing partner

a. withdraws assets equal to his capital balance.

b. sells his interest to a new or remaining partner.
c. withdraws assets amounting to less than his capital balance.
d. withdraws asset.s amountin'g to greater than his capital balance.

20. Perez and Daganta are partners who share profits and losses in a ratio of 2:1 and
have capital balances of P750,000 and Pl,500,000, respectively . The partners
agreed to admit Barros to the partnership. Barros invested P750 000 for a 35%
I ,
interest in the partnership. The new total capital balance after admitting Barros 15
P3,000,000 .. Daganta's capital balance after Barros is admitted is
a. Pl,600,000.
b. Pl,500,000.
__..
C. Pl,400,000.
d. Pl,350,000.
Multiple Choice

Bernal and Ruiz are partners who share profits and losses in a ratio of 3:2, respectively,
and have the following capital balances on Dec. 31, 2015: Bernal, Capital, P2,000,000
Cr. and Ruiz, Capital, Pl,500,000 Cr.

1. Assume that the partners agreed to let Gogola into the partnership by investing
Pl,000,000 for a one-fifth interest. Gogola's capital balance will be
a. P700,000. _s..,P900,000.
b. Pl,000,000 . d. P800,000.

2. Assume that the partners agreed to let Gogola into the partnership by investing
Pl,000,000 for a one-fourth interest. Gogola's capital balance will be
a. P750,000.
b. P875,000.
c. Pl,000,000.
d. Pl,125,000.
/
3. Assume that the partners agreed to let Gogola into the partnership by investing
Pl,000,000 for a one-fourth interest. Bernal's capital balance will be

a. P2,075,000.
b. P2,062,500.
c. Pl,937,500.
y1,925,000.

4. Assume that the partners agreed to let Gogola into the partnership by investing
P2,000,000 for a one-fourth interest. Gogola's capital balance will be

a. Pl,375,000.
-r P2,000,000.
C. P875,000.
d. Pl,625,000.

s. Assume that the partners agreed to let Gogola into the partnership by investing
Pl,000,000 for a one-fourth interest. Ruiz's capital balance will be

a. Pl,562,500.
b. Pl,550,000.
c. Pl,437,500 .
~ Pl,450,000.

Dissolution - Changes in Ownership I 3-21

I SECTION: I PROFESSUK: ....

Multiple Choice
.
1O
sses is frequently prepared
1. Prior to partnership liquidation, a schedule of possib 1e . .b t d to the partners
to determine the amount of cash that may be safely dtS t rt u e ·
The schedule of pos ible loss s
a. indicates the distribution of successive amounts of available cash to each
partner. · b 5 t t' I
b. assumes contribution of personal assets by partners unless th ere ,s a su an ia
presumption of personal insolvency by the partners. d. 'd d b th t
C. consists of each partner's capital account plus loan balance, ,v, e Y a
/
partner's profit and loss sharing ratio. .
d . shows the successive losses necessary to eliminate the capital accounts of
~
partners (assuming no contribution of personal assets by the partners).

The following are based on the Dec. 31, 2014 statement of financial position of the
Mendoza, Cabredo and Ibarra partnership:

Cash P 20,000
Inventory 120,000
Property and Equipment, net 300,000
Accounts Payable 170,000
Mendoza, Capital (50%) 100,000
Cabredo, Capital (30%) 90,000
Ibarra, Capital (20%) , 80,000

On Jan . 1, 2015, the partners decided to liquidate the partnership. They agreed that
all cash should be distributed as soon as it becomes available. A cash distribution
plan is necessary to facilitate the distribution of cash . .

2. The distribution plan should be based on relative vulnerability to losses. For the
Mendoza, Cabredo and Ibarra partnership, the relative vulnerability should show
that

a. Cabredo is the most vulnerable .

b. Cabredo is the least vulnerable.
c.
,- Mendoza is the most vulnerable.
d. Mendoza is the least vulnerable.

3. If cash of P180,000, including the P20,000 cash on hand b .

. 'b d · · , ecomes available It
shou Id b e d Istn ute tn accordance with a. cash priority 1 '
. ·b d · P an. How much cash
shou Id be d tstn ute to the cr~d1tors and partners, respectively?
 Credit ors
Mendoza Cabredo Ibarra
a. P170,000
P170,000 Pl0,000
b. P10,ooo
~

;;-- P170,000
d. P170,000 Pl0,000
p. 5,000 P 3,000 P 2,000
22
4. If cash of ~ ?,000, including the P20,000 cash on hand, becomes available, it
should be di st nbuted first to settle the accounts payable and then to
Mendoza Cabredo Ibarra
a. P25,000 PlS,000 Pl0,000
b. P-0- P26,000 P24,000
c. Pl0,000 P32,000 P 8,000
d. P-0- P18,000 P32,000
/

5. Partners Agaton and Valdepenas have capital balances of PlS,000 and Pl2,000,
respectively. They share profits and losses in a 2:1 ratio. They sold all the
partnership assets for PG0,000, which resulted to a PG,000 gain on realization. The
amount that Valdepenas should receive as her share of cash upon liquidation of the
partnership is

a. P12,000.
~ P14,000.
c. P20,000.
d. P23,000.

6. The Tantingco, Mariano and Onate Company decided to liquidate its operations on
January 1. The capital accounts and profit and loss percentages on that date for the
three partners are as follows:
Partner Balance in Capital Accounts Profit and Loss
Pe rcentages

Tantingco Pl0,000 20%

Mariano 12,000 30%
Onate (4,000) 50%

0 nate .1s una bl e to con tr'ibute any assets to the partnership

. . . to ?cover her deficit.
How much woul d b e d .1st n'buted to Tantingco from the .l1qu1dat1on .

a. Pl0,000
b. P9,200
.,S. P8,400
d. PG,000
) . . h business, selling the assets, paying the liabi lit ies and
· · The process of terminating t e ·s called
1
disbursing remaining cash to th e partners

I in 11 irlr1 ti,... _ I A --
 a. withdrawal.
b. liquidation.
~ dissolution. h'
d. formation of a n W partn ers ip. . 'd d for Alvaro and Arrtpil
is prov, e
8. The condensed stat ment of fin anci~dl pt~snit_ion
· 't l'qUI
1 a 10 ·
Company, immediately prio r to I s
p 10,000

Pl00,000
Liabilities so,ooo
Ca h Alvaro, Capital 90,000
Non-cash As ets 50,000
Ampil, capital PlS0,000
PlS0,000

d Al ro and Ampil share profits and

If the non-cash assets are sold for P90,000 an . vat Alvaro? •
· . h d' t ·but1on o ·
losses equally, what will be the final cas 1s n

a. PS0,000
b. P65,000
.> P70,000
d. P95,000

9. Nozue'io, Campillo and Sorio are partners sharing profits and losses equally. The
partnership is being liquidated and after all assets are converted to cash and all
liabilities paid, there remained P52,000 cash available for distribution to the
partners. Nozuelo and Campillo have capital balances of P40,000 and P30,000,
resipectrvely. Sorio has a debit balance of Pl8,000 in her capital account. If Sorio is
personally insolvent, how much cash will be distributed to Nozuelo?

a. P26,000
~ P31,000
c. P34,000
d. P40,000

10. Arzadon and Millado have shared profits a d 1

the final cash disbursement in the ., .dn . osses equally. Immediately prior to
1 qui at,on of th ·
showed: eir partnership, the books

Cash = Liabilities + Arzadon, Capital

Pl00,000 -0- +
PGo,ooo Millado, Capital
P40,000
How much cash should Arzadon rece·IVe.?
a. P40,000
b. PS0,000
,> P60,000
d. Pl00,000
 ECTION:
ISCORE:
PROFESSOR:

Multiple Choice

1. The co~densed statement of financial position of Ricablanca Tac-an and Dimalanta

partnership as of March 31, 201 5 follows: '

Assets
Cash P 28,000
Non-cash Assets 265,000
Total P293,000

Liabilities P 48,000
Ricablanca, Capital 95,000
Tac-an, Capital 80,000
Dimalanta, Capital 70,000
Total P293,000

Profit and loss ratio is 50:25:25, respectively. The partners voted to dissolve the
partnership and liquidate by selling assets in installments. P70,000 was realized on
the first cash sale of other non-cash assets which has a book value of P150,000.
After settlement with creditors, all cash available was distributed to partners. How
much cash did Dimalanta receive?

a. Pl0,500

-
b.
C.
d.
P20,000
P32,500
P21,250

2. The statement of financial position of the partnership of Balino, Andres and Ignacio
who share in the profits and losses in the ratio of 5:3:2, respectively, is as foll?ws :

Assets Liabilities and Capital

P 30,000 Liabilities P 50,000

Cash
320,000 Salina, Capital 80,000
Other assets
Andres, Capital 115,000
Ignacio, Capital 105,000
P350,000 Total P350,000
Total

to liquidate the partnership by installment. Immediately there

The partners agree d . . .
. f Pl00 ooo cash m selling other assets with book value of
was a realization o '
available . - .1s t he payment of t he 11a
priority · ·b·1· . an d t he
11t1es
PlS0 000 On t he cas h ' . .
' .· d' t ·buted to the partners. How should the remammg cash be
balance 1s to be is n
distributed?
P30,000; Ignacio, P20,000
PS0,000; Andres,
a. Balino, P24,000; Ignaci o, Pl6,000
P40,000; Andres,
b. Balino, P48,000; Ignacio, P32,000
Andres,
C. Ba lino, PO P31,000; Ignacio, P49,000
Andres,
j_..- Balino, PO
Liquidation I 4-69
 f p40 000 PS0,000 and Pl8 OQQ
.t I balances o ' , f R d , ,
3. Rueda, Ca stro and Pural have capt a . _ . respectively. I ue a received
42 1
respectively and a profit sharing ratio of · ." 'd by all the partners was:
P8,000 upon liquidation , the total amount receive

a. P108, 00
b. PS6,000
c. P24,000
~ P52,000
2
4. Assume the same facts in No. 3 above except that Rueda. received P G,OOO as a
result of the liquidation, Pural received as part of the liquidation:

a. P26,000
b. P18,000
c. Pl4,500
.,.,,,,.-
d. P14,000

6. The partnership of Rivera, Colorado and Reyes share profits and losses in the ratio
of 5:3:2, respectively. The partners voted to dissolve the partnership wh.en its
assets, liabilities and capital were as follows:

Assets Liabilities and Capital

l
~ Cash P 40,000 Liabilities P 60,000
Other assets 210,000 Rivera, Capital 48,000
Colorado, Capital 72,000
Reyes, Capital 70,000
Total P250,000 Total P250,000

The. partnership
. . will .be . liquidated over a prolonged peno· d o f time.
· As cas h ·1s
available It will be distributed to the partners Th t·
. · e Irst sale of non-cash assets
having a book value of Pl20,000 realized P90 000 -
distributed to each partner after th· ? ' · How much cash should be
, Is sa 1e.
a. Rivera, P-0- Colorado,
.; Rivera, P-0- Colorado,
P28,800;
P30,000;
Reyes, P41,200
c. Rivera, P35,000; Colorado, Reyes, P40,000
P21,000;
d. Rivera , P45,000; Colorado, Reyes, P14,000
P27,000;
Reyes, P18,000
Corleto, Samonte and Bibonia are partners sharin .
4:3:3, respectively. The condensed st t g profits and losses in the ratio of
Partnership as of Dec. 1, 2015 Is: a ement of financial position of csB
Cash P 50,000
Ot her As set s Liabilities
130,000 P 40,000
Corleto, Capital
S~monte, Capital 60,000
B1bonia, Capital 40,000
Pl80,000
40,000
P180,000
6. The CSB Partnership was dissolved and . .
realization of P40,000 cash was on th liquidated by ThP first
e Sale 0 f ...,.._L installmPntc
 000. After t he pay
rnent of the r b'I· .
rIet , Samo nte and
Bibo . ,a 1It Ies, th e cash ava il able is distri buted to
n1a, respectively as follow s:
P36,000; P27,000; p 2 l ,0 00
b. P16 ooo; P12,ooo; p 12,
000
c. P44,ooo; P2B,ooo; Pia,ooo
d. P 4,000; P13,000; p 13 ,000

The follow ing statem ent 0 f f ' .

in anc1al p ·t · ·
illanuev Po zo n and y osi ion Is presented fo r t he partnership of
respect ively. ecyec who share prof its and losses in the rati o of 5:3:2,

Assets
Lia bilities and Capit al
C sh
P 120,000
t her Assets Li abilit ies p 280,000
1,080,000
Vill anueva, Capital 560,000
Pozon, Cap ital 320,000
Yecyec, Capital 40,000
Pl,200,000
Pl ,200,000

7. Assume th at th e partners decided to liquidate the partnership . If the other assets

w ere sold for P800,000, how should the available cash be distributed?

Villanueva Pozon Yecyec

a. P280,000 P320,000 P40,000
b. P324,000 P236,000 P16,000
C. P412,000 P228,000
~ P410,000 P230,000

As of Dec. 31, 2015, the books of Vicente, Garcia & Cabuyadao Partnersh ip show ed
capital balances of Vicente, P40,000; Garcia, P25,000 and Cabuyadao, PS,000. Th e
partners' profit and loss ratio was 3.2.1,_respectively. The partners decided to
dissolve and liquidate. They sold all the non-cash assets for P37,000 cash. Afte r
settlement of all liabilities amounting to P12,000, they still have P28,000 cash left
for distribution .

8. The loss on realization of the non-cash assets was :

a. P42,000
---
b. P40,000
C. P45,000
d. P21,000
9 . d b't balance of pa rt ners' capital is un collect ible, the shar e of
· Assuming that any e 1 • • • as·
Vi cente on P28,000 cash for dtS t nbution w ·

a. P19,000
b. PlG,000
c. P18,000
;t- P17,800
Liquidation I 4-71
 1
' VI 11 lilt:! recor as OT tne u I A t-'artners nIp, a ns w e 1 4 u c . n ov , I I·- - · -

OTA Partnership
Statement of Financial Position
Dec. 31, 2015

Assets
Cash p 2,000
Other non-cash assets 28,000
Tota l P30,000

Liabilities and Capita l

Liabil ities P 5, 000
De Mesa, Loan 2,500
De Mesa, Capital 12,500
Tudtud, Capital 7,000
Apostol, Capi t al 3,000
Tot al P30,000

Profit and loss ratio is 3:2:1 for De Mesa , Tudt ud and Apo sto l, respectively . Cash is
distributed as asset s are realized. Othe r a sets w er r al ize d as follows:

Date Cas Rec i ed oo Valu

Jan uary 2015 6 P ,000

February 201 5 ,5 7, 700
Ma rc h 2015 12,500 11, 00

10. The total loss t o De M esa is:

~ P3,000
b. P2,000
c. Pl,000
d. P-0 -

11. Tot al cash received by Tudtud is:

j, P2,000
b. Pl,500
7' PS,000
d. P-0-

12. Cash received by Apostol in January is:

a. P200
b. Pl,000
P-0-
>. PSOO
~

- - ~ , "- -· - .,.,.;,, ,- ,.. nnr1roroorationAccount;ng