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Partnership Accounting Quiz 1

The document contains financial scenarios involving partnerships, detailing contributions, profit sharing, and capital balances for various partners. It includes specific calculations for partnership earnings, cash contributions, and capital account balances based on given data. The answers to the computations are provided for each scenario.

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juliana velasco
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167 views3 pages

Partnership Accounting Quiz 1

The document contains financial scenarios involving partnerships, detailing contributions, profit sharing, and capital balances for various partners. It includes specific calculations for partnership earnings, cash contributions, and capital account balances based on given data. The answers to the computations are provided for each scenario.

Uploaded by

juliana velasco
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Number 54

JJ, a partner in the JM partnership is entitled to 40% of the profits and losses. During
2024, JJ contributed land to the partnership that cost him P15,000,000, but had a
current value of P18,000,000. Also, during 2024, JJ had drawings of P24,000,000.
The balance of JJ’s capital accounts was P36,000,000 at the beginning of the year
and P45,000,000 at the end of the year.
Compute the partnership’s earnings (loss) for 2024:
A. (22,500,000)
B. (15,000,000)
C. 45,000,000
D. 37,500,000

Number 57
OO and PP formed a new partnership. OO invests P45,000,000 in cash for his 60%
interest in the capital and profits of the business. PP contributes land that has an
original cost of P6,000,000 and a fair market value of P10,500,000, and a building
that has a tax basis of P7,500,000 and a fair value of P13,500,000. The building is
subject to a P6,000,000 mortgage that the partnership will not assume. What
amount of cash should PP contribute?
A. 6,000,000
B. 12,000,000
C. 16,500,000
D. 22,500,000

Number 59
L, B, and C formed a partnership on January 1, 2024 with the following assets
contributed by each partner at their fair values.
P80,000 of the cash contribution of C came from a personal loan. The machinery
and equipment contributed by L has a mortgage of P200,000 which L decided to
settle using his personal assets. It
was also agreed that L’s depreciable assets will be adjusted due to under
depreciation by P15,000 each. The partners further agree to equalize their interest.
Cash settlement among the partners are to be made outside the partnership. How
much will be credited to the capital account of L?
A. 757,767
B. 752,767
C. 659,433
D. 726,100

Numbers 60 and 61
On April 1, 2024, K, L and M formed a partnership with respective capital
contribution of P2,000,000, P5,000,000 and P3,000,000. The Articles of Co-
Partnership provides that profit or loss shall be distributed accordingly:
⮚ 20% interest on original capital contribution.
⮚ P120,000 quarterly salary for K and P30,000 monthly salary for M.
⮚ The remainder shall be distributed on the basis of original capital contribution
ratio.
On December 31, 2024, K, L and M made withdrawals of P500,000, P1,000,000, and
P200,000,
respectively. The statement of financial position of the partnership shows that L’s
capital on December 31, 2024 is P6,500,000.
60. What is the capital balance of K on December 31, 2024?
A. 1,360,000
B. 3,360,000
C. 2,860,000
D. 2,960,000
61. What is the capital balance of M on December 31, 2024?
A. 4,970,000
B. 4,770,000
C. 4,570,000
D. 4,920,000

54. D
45,000,000 + 24,000,000 - 18,000,000 - 36,000,000 = 15,000,000 (share in NI) 15M
/ 40% =
37,500,000.
57. A
OO 45,000,000 / 60% = 75,000,000 x 40% = 30,000,000 (agreed capital of PP) -
24,000,000 =
6,000,000
59. B
L (1,487,500 -30,000) = 1,457,500 + 477,050 + 323,750 = 2,258,300 / 3 = 752,767
60. C
61. C

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