Multiple Choices

Instruction: Indicate your choice by encircling the letter that contains the
best answer for each of the following questions. Present good form
computations as needed.

1. Ro and Que are partners who share profits and losses equally. Each has a
capital balance of P40,000 and P50,000, respectively. The agree to admit
Lix as a new partner upon investment of land costing P50,000, but which
is appraised at P60,000. Profits and losses are to be shared equally after
the admission of Lix. What is the percentage of Lix’s interest in the firm?
a. 40.00% c. 33.00%
b. 33.71% d. 35.71%

2. Based on above, what is the capital balance of Ro, Que and Lix in the
partnership?
a. P50,000 each
b. P40,000, P50,000 and P60,000, respectively
c. P40,000, P50,000 and P50,000, respectively
d. P46,667 each

3. If the original partnership capital is P100,000 and the new partner is

admitted by investing P10,000 for 20% interest in the partnership under
bonus method, the new partnership’s accounting elements would be
Net assets Total capital
a. P125,000 P125,000.
b. P125,000 P110,000.
c. P110,000 P110,000.
d P100,000 P100,000.

4. If the total assets of the existing partnership is P500,000, and the new
partner is admitted by investing P100,000 for 20% interest in the
partnership, under bonus method the new basic accounting elements of
the partnership is described as
Net assets Total capital
a. P500,000 P600,000.
b. P600,000 P600,000.
c. P625,000 P625,000.
d P625,000 P600,000.

5. Supposing that the old partnership of A & B reported the following:

Partners Capital Profit and loss ratio
A P200,000 40%
B 300,000 60%
If C is to be admitted for 20% interest in the partnership’s asset and profit
by investing P125,000, then the new profit and loss ratio of the new
partnership, without specific agreement would be
A B
a. 40% 60%
b. 40% 60%
c. 32% 48%
d 33% 33%

6. If an existing partnership admits a new partner for a 1/5 interest in the

partnership’s total agreed capital of P40,000 for an investment of
P10,000, the admission of the new partner will result to the recognition of
a. bonus to the old partners if total net assets contributed is P40,000.
b. bonus to the new partner if total net assets contributed is P40,000.
c. Bonus to the new partner if total net assets contributed by old
partners is P30,000.
d. no bonus if total net assets contributed by old partners is P30,000.
7. Before the admission of C, the partnership of A and B reported a net asset
of P180,000 which A and B partners contributed equally. C is admitted by
investing P60,000 for capital credit of P80,000. Which of the following
is/are the effect under bonus method?

The above transaction will effect

a. A decrease on the capital balances of the old partner amounting to
P10,000 each.
b. A bonus of P20,000 to the new partner.
c. A balance of P80,000 capital to all of the partners.
d. All of the above.

10. The capital balances and profit/loss sharing of X, Y, and Z just before the
retirement of X are:

Partners Capital Profit and loss ratio

X P150,000 30%
Y 160,000 30%
Z 200,000 40%

Upon retirement of X he is paid P165,000. If they agreed that bonus is to

be recognized, the partnership’s total capital balance after retirement of X
would be
a. P360,000. c. P295,000.
b. P345,000. d. P290,000.

11. The existing capital balances of Abnoy, Bitoy and Caloy prior to
retirement of Abnoy were as follows:
Partners Capital Profit and loss ratio
Abnoy P150,000 20%
Bitoy 200,000 30%
Caloy 250,000 50%

Abnoy retired from the partnership by selling his whole interest in the
partnership to Doy for P120,000. This retirement of Abnoy will result to
the total partnership’s assets and capital as:
Net assets Total capital
a. P450,000 P450,000
b. P480,000 P480,000
c. P600,000 P600,000
d P720,000 P720,000

12. The existing capital balances of Ali, Billy and Clay prior to retirement of
Ali were as follows:
Partners Capital Profit and loss ratio
Ali P100,000 25%
Billy 200,000 35%
Clay 300,000 40%

Ali retired from the partnership by selling his whole interest in the
partnership to Billy and Clay for P120,000. This retirement of Ali will
result to the total partnership’s assets and capital as:
Net assets Total capital
a. P480,000 P480,000
b. P500,000 P500,000
c. P600,000 P600,000
d P720,000 P720,000
13. Gerry and Narda are partners who has a capital of P90,000 each and
share profits and losses equally. They offer to admit Art for a one third
interest in the firm upon his investment of P60,000. Under the bonus
method, what is the total agreed capital of the partnership?

a. P180,000 c. P270,000
b. P240,000 d. P150,000

14. Ba and Ka are partners who share profit and losses in the ratio of 7:3,
respectively. On December 31, 200C, their respective capital accounts
were as follows:
Ba P350,000
Ka 300,000
Total capital P650,000

On that date, they agreed to admit Daw as a partner with a one-third

interest in the capital and profits and losses, and upon his investment of
P250,000. Under the bonus method, what are the capital balances of Ba,
Ka, and Daw immediately after the admission of Daw?
Ba, Capital Ka, Capital Daw, Capital
a. P350,000 P300,000 P325,000
b. P315,000 P285,000 P300,000
c. P316,667 P283,333 P300,000
d. P350,000 P300,000 P250,000

15. The existing capital balances of old partners prior to admission of D are
as follows:
Partners A B C
Capital balances P100,000 P200,000 P300,000
Profit and loss ratio 20% 30% 50%

D is to be admitted to the partnership by direct purchase of 20% each of

the existing partners’ capital for P100,000. The net assets of the
partnership, right after the admission of D would be
a. P340,000. c. P600,000.
b. P300,000. d. P480,000.

16. The existing capital balances of old partners prior to admission of D are
as follows:
Partners A B C
Capital balances P200,000 P280,000 P320,000

D is to be admitted to the partnership by investing P200,000 for 18%

interest in capital and profits of the partnership for his investment. The
assets of the partnership are not to be revalued. Under the bonus
method, the total partnership’s capital after admission of D is
a. P 800,000. c. P1,000,000.
b. P 975,610. d. P650,000.

17. Dunn and Grey are partners with capital account balances of P60,000
and P90,000 respectively. They agree to admit Zorn as a partner with a
one-third interest in capital and profits, after agreed revaluation of
partnership's assets, for his investment of P100,000.
The increase in Grey's capital as a result of the revaluation of
partnership's assets for the admission of Zorn is
a. P 20,000 c. P 50,000.
b. P 30,000. d. P 66,667.
18. On June 30,200A, the partnership balance sheet of Coll, Maduro, and
Prieto is as follows:
Assets, at cost P180,000
Profit and Loss Ratio
Coll, Loan 9,000
Coll, Capital 20% 42,000
Maduro, Capital 20% 39,000
Prieto, Capital 60% 90,000

Coll has decided to retire from the partnership. By mutual agreement, the
assets are to be adjusted to their fair value of P216,000 at June 30, 200A.
It was agreed that the partnership would pay Coll P61,200 cash for Coll’s
partnership interest, including Coll’s loan which is to be repaid in full.
Bonus to Coll is to be recognized. After Coll’s retirement, what is the
balance of Maduro’s capital account?
a. P 36,450 c. P 45,450
b. P 39,000 d. P 46,200

19. The capital balances in the FSH are Farrah’s capital P600,000, Sarrah’s
capital P500,000, and Hannah capital P400,000, and income ratios are
5:3:2, respectively. The FISH Partnership is formed by admitting Irish to
the firm with a cash investment of P600,000 for a 25% capital interest.
The bonus to be credited to Hannah’s capital in admitting Irish is
a. P100,000.
b. P 75,000.
c. P 37,500.
d. P 15,000