Partnership
Formation
[1]. Emil and Pearl Pearl Pearl
a.
P40,000
b.
P80,000
c.
P110,000
d.
P15,0000
[2]. The
Green and Red partnership was formed on January 2, 2011. Under the partnership agreement, each partner
has an equal initial capital balance accounted for under the goodwill
method. Partnership net income or loss
is allocated 60% to Green and 40% to Red.
To form the partnership, Green originally contributed assets costing
P30,000 with a fair value of P60,000 on January 2, 2011, and Red contributed
P20,000 in cash. Drawings by the
partners during 2011 totaled P3,000 by Green and P9,000 by Red. The partnership’s 2011 net income was
P25,000. Red’s initial capital balance
in the partnership is:
a. P20,000.
b. P25,000.
c. P40,000.
d. P60,000.
[3]. Pirante
and Wilson drafted a partnership agreement that lists the following assets
contributed at the partnership’s formation:
Contributed by
Pirante Wilson
Cash P40,000 P60,000
Inventory - 30,000
Building - 80,000
Furniture and equipment
30,000 -
The building is subject to a
mortgage of P20,000, which the partnership assumed. The partnership agreement also specifies that
profits and losses are to be distributed evenly. What amounts should be recorded as capital
for Pirante and Wilson at the formation of the partnership?
a. P70,000 and P170,000, respectively.
b. P70,000 and P150,000, respectively.
c. P110,000 for each partner.
d. P120,000 for each partner.
[4]. AA and Belen formed a partnership and
they agreed to share initial capital equally, although AA contributed P150,000
and Belen contributed P126,000 in identifiable assets. Under the bonus approach
to adjust the capital accounts, Belen received (gave) a bonus equal to:
a.
P24,000
b.
P12,000
c.
(P24,000)
d.
(P12,000)
[5]. AA, BB, and CC are to
form a partnership. AA is to contribute cash of P100,000; BB, P10,000; and, CC,
P100,000. AA and CC are not to actively participate in the business but will
refer customers, while BB will manage the firm. BB has to give up his present
job which gives her an annual income of P120,000. The partners decided that
profits and losses shall be shared equally. Upon formation, partners’ capital
balances would be:
a.
P 70,000, P
70,000, and P 70,000, respectively.
b.
P100,000,
P10,000, and P100,000, respectively.
c.
P100,000,
P130,000, and P100,000, respectively.
d.
P110,000,
P110,000, and P110,000, respectively.
[6]. Brenda and Cathy formed a partnership and agreed to divide initial
capital equally, even though Brenda contributed P200,000 and Cathy contributed
P168,000 in identifiable assets. Under
the bonus approach to record the contributions of the partners, Cathy’s capital
account should be credited for
a. P200,000. c. P184,000
b. P168,000. d. P100,000
[7]. On May, 31, 2011, Allen, Belen, and Cenen
formed a partnership by combining their businesses. Allen give cash of P50,000.
Belen gave a property with a carrying amount of P30,000, an original cost of
P40,000, and a fair market value of P80,000. Belen’s property, however, has a
P35,000 mortgage for which the new partnership accepted legal responsibility. Cenen
gave a delivery equipment with a book value of P30,000, an acquisition cost of
P75,000, and an appraised value of P55,000. It was agreed that profits and
losses are to be shared equally. The partner with the biggest capital account balance
as of May 31, 2011, is
a.
Allen
b.
Belen
c.
Cenen
d.
Allen
have equal capital balance.
[8]. Abel and Carr formed a partnership and
agreed to divide initial capital outlay 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.
P46,000
b.
P8,0000
c.
P16,000
d.
P-0-
[9]. On October 1, 2011, Carla and Clara
joined in a partnership. Carla contributed cash while Clara contributed
merchandise worth P25,000 and a second-hand delivery truck currently valued at
P50,000 but encumbered by a one-year chattel mortgage note for P15,000. If
initial capital balances are to conform to the profit-sharing ratio of 2:3,
respectively, the amount of cash contributed by Carla was:
a.
P24,000
b.
P30,000
c.
P40,000
d.
P50,000
[10]. AA,
BB, and CC are to form a partnership. AA
is to contribute cash of P100,000; BB, P10,000, and CC, an equipment valued at
P100,000. AA and CC are not to actively
participate in the business but will refer customers, while BB will manage the
firm. BB has to give up her present job
which gives her an annual income of P120,000.
The partners decided that profits and losses shall be shared
equally. Upon formation, assuming a
chattel mortgage of P10,000 on the equipment is assumed by the partnership, the
net assets of the partnership is equal to:
a. P210,000
b. P200,000
c. P220,000
d. P330,000
[11]. On October 1, 2011, Mel and Garri pooled
their assets and form a partnership, with the firm to take over their business
assets and assume their liabilities. The partner’s capitals are to be based on
net assets transferred after the following adjustments: Garri’s inventory is to
be increased by P3,000; an allowance for bad debts of P1,000 and P1,500 are to
be set up in the books of Mel and Garri, respectively; and P4,000 of accounts
payable are to be recognized in Mel’s books. The individual trial balances on
October 1 show the following:
Mel Garri
Assets P113,000 P75,000
Liabilities 34,500 5,000
Capital 78,500 70,000
What is the capital
balance of Mel and Garri assuming they agree to share capital equally?
a.
P65,000
b.
P72,500
c.
P74,250
d.
P80,000
[12]. Chona and Charo formed a partnership on
May 31, 2011. Chona’s contribution
consisted of her proprietorship’s net assets with current fair value of
P60,000. Charo contributed enough cash
to secure a one-fourth interest in the partnership. If Chona is allowed goodwill credit equal to
20% of her initial capital, Charo’s cash contribution was:
a.
P15,000
b.
P20,000
c.
P25,000
d.
P30,000
[13]. Flores,
Peralta, and Jose are forming a new partnership. Flores will
invest cash of P120,000 and his office equipment costing P144,000 but has a market
value of P60,000. Peralta is to invest
cash of P192,000 and Jose is to contribute P60,000 cash and a brand new
delivery truck with a market value of P144,000 although he bought it for only
P120,000. The partners will share
profits and losses in the ratio of 25:25:50 for Flores, Peralta and Jose,
respectively.
The capital balances of the partners
upon formation are:
Flores Peralta Jose
a. P264,000 P192,000 P180,000
b. P180,000 P192,000 P204,000
c. P192,000 P192,000 P192,000
d. P212,000 P212,000 P211,200
[14]. DJ and EJ, on May 31, 2011, pooled their
net assets to form a partnership, with the new firm taking over the business
assets and assuming their liabilities. The partner’s capitals are to be based
on net assets transferred after the following adjustments: allowance for
doubtful accounts of P1,000 and P1,500 are to be set up on the books of DJ and EJ,
respectively; EJ’s inventory is to be increased by P3,000; and, accounts
payable of P4,000 is to be recorded on DJ’s books. The individual trial balances
on this date show:
DJ EJ
Assets P105,000 P113,000
Liabilities 35,000 34,500
Capital 70,000 78,500
What is EJ’s adjusted
capital balance?
a.
P77,000
b.
P80,000
c.
P81,500
d.
P85,500
[15]. When property other than cash is
invested in a partnership, at what amount should the non-cash property be
credited to the contributing partner’s capital account?
a.
Fair
value at the date of contribution.
b.
Contributing
partner’s original cost.
c.
Assessed
valuation for property tax purposes.
d.
Contributing
partner’s tax basis.
[16]. Pula Pula Pula
The
capital account of Pula
a.
P300,000
and P120,000, respectively;
b.
P290,100
and P120,000, respectively;
c.
P287,070
and P123,030, respectively;
d.
P287,070
and P 40,000, respectively.
[17]. On March 1, 2011, Jhan and Feb formed a
partnership with each contributing the following assets:
|
|
Jhan
|
Feb
|
|
Cash
|
P30,000
|
P70,000
|
|
Machinery and Equipment
|
25,000
|
75,000
|
|
Building
|
-
|
225,000
|
|
Furniture and Fixtures
|
10,000
|
-
|
The building is
subject to a mortgage loan of P90,000, which is to be assumed by the
partnership. The partnership agreement
provides that Jhan and Feb share profits and losses 30 percent and 70 percent,
respectively.
Assuming that the
partners agreed to bring their respective capital in proportion to their
respective profit and loss ratio, and using Feb’s capital as the base, how much
cash is to be invested by Jhan?
a.
P19,000
b.
P30,000
c.
P40,000
d.
P55,000
[18]. Bel, Joy, and Franco, new CPAs, are to form a
partnership. Bel will contribute cash of P50,000 and his computer that
originally cost P60,000 but with a second-hand value of P25,000. Joy will
contribute P80,000 in cash. Franco, whose family sells computers, will
contribute P25,000 in cash and a brand new computer with printer that cost his
family’s computer dealership P50,000 but with a regular selling price of
P60,000. The three agree to share profits and losses equally. Upon formation,
capital balances are:
a.
Bel,
P 75,000; Joy, P80,000; and, Franco,
P85,000
b.
Bel,
P 80,000; Joy, P80,000; and, Franco,
P80,000
c.
Bel,
P 88,333; Joy, P88,333; and, Franco,
P88,334
d.
Bel,
P110,000; Joy, P80,000; and, Franco, P75,000
[19]. Mark admits Jimenez as a partner in the
business. Balance sheet accounts of Mark
just before the admission of Jimenez show:
Cash, P26,000, accounts receivable, P120,000, merchandise inventory,
P180,000, and accounts payable P62,000.
It was agreed that for purposes of establishing Mark’s interest, the
following adjustments be made:
A.
An
allowance for doubtful accounts of 3% of accounts receivable is to be
established;
B.
Merchandise
inventory is to be adjusted upward by P25,000; and
C.
Prepaid
expenses of P3,600 and accrued liabilities of P4,000 are to be recognized.
If Jimenez is to
invest sufficient cash to obtain 2/5 equity in the partnership, how much would
Jimenez contribute to the new partnership?
a.
P176,000
b.
P190,000
c.
P 95,000
d.
P113,980
[20]. The balance sheet as of July 31, 2011
for the business owned by Gloriants shows the following assets and liabilities:
|
Cash
|
P 2,500
|
|
Accounts Receivable
|
10,000
|
|
Merchandise Inventory
|
15,000
|
|
Fixtures
|
18,000
|
|
Accounts Payable
|
6,000
|
It is estimated that
5% of the accounts receivables may prove uncollectible. Merchandise inventory includes obsolete items
costing P5,000 of which P2,000 might still be realized. Depreciation has never been recorded for the
fixtures which are already two years old.
They have an estimated useful life of 10 years, and have a current fair
value of P20,000. Cruzants is to be
admitted as a partner upon his investment of P20,000 cash and P10,000 worth of
merchandise. What is the total assets of
the partnership?
a.
70,500
b.
48,000
c.
67,500
d.
74,000
Questions 21 and 22 are based on the
following information:
Selected balance
sheet accounts of Silvano on December 31, 2011 are shown below:
Cash P30,000
Accounts receivable
25,000
Inventory 45,000
Furniture 32,000
Accounts payable 8,000
The
following adjustments are to be made before he agree to admit Pegasus as a
partner in exchange for his investment of P20,000 cash:
§ 3% bad debts should
be provided.
§ The fair value of the
furniture is P27,000.
§ P5,000 of the
inventory is obsolete but can still be sold for P3,000.
[21]. After adjustment, how much capital
should be reflected in the books of Silvano?
a.
P115,250
b.
P116,250
c.
P124,000
d.
P132,250
[22]. How much is the total assets of the new
partnership?
a.
P116,250
b.
P124,000
c.
P124,250
d.
P144,250
[23]. On September 30, 2011, Pain admits Gain
for an interest in his business. On this
date, Pain’s capital account shows a balance of P158,400. The following were agreed upon before the
formation of the partnership:
1.
Prepaid
expenses of P17,500 and accrued expenses of P5,000 are to be recognized.
2.
5% of the outstanding accounts receivable of
Lopez amounting to P100,000 is to be recognized as uncollectibles.
3.
Gain
is to be credited with a one-third equity in the partnership and is to invest
cash aside from the P50,000 worth of merchandise.
The
amount of cash to be invested by Gain and the total capital of the partnership
are:
a.
32,950
and 248,850, respectively.
b.
55,300
and 221,200, respectively.
c.
82,950
and 248,850, respectively.
d.
32,950
and 171,200, respectively.
[24]. On May 1, 2011, July and June formed a
partnership and agreed to share profits and losses in the ratio of 3:7,
respectively. July contributed a
computer that cost him P50,000. June
contributed P200,000 cash. The computer
was sold for 55,000 on May 1, 2011 immediately after the formation of the
partnership. What amount should be
recorded in July’s capital account on formation of the partnership?
a.
P55,000
b.
P51,000
c.
P60,000
d.
P50,000
[25]. Yellow, Orange Orange
a.
P 40,000
b.
P 60,000
c.
P120,000
d.
P180,000
[26]. Wilder and Nest will pool their net
assets and form a partnership, which will take over the assets and assume the
liabilities. The agreed capital of the
new partnership is the total net assets to be transferred subject to the
following adjustments:
§ Wilder’s inventory is
to be increased by P3,000.
§ Accounts receivable
of P1,000 and P1,500 for Wilder and Nest respectively, will be written off.
§ Accrued expenses of
P4,000 are to be recognized in Wilder’s books.
The
unadjusted capital of Wilder is P78,500 and Nest is P70,000.
What is the capital
balance of each partner assuming they agree to be equal partners?
a.
P65,000
b.
P72,500
c.
P74,250
d.
P80,000
[27]. On October 1, 2011, Clara and Maria
joined in a partnership. Clara
contributed cash while Maria contributed merchandise worth P25,000 and a
second–hand delivery truck currently valued at P50,000 but encumbered by a
one-year chattel mortgage note for P15,000.
If initial capital balances are to conform to the profit-sharing ratio
of 2:3, respectively, the amount of cash contributed by Clara was:
a.
P24,000
b.
P30,000
c.
P40,000
d.
P50,000
Questions 28 and 29 are based on the
following information about Aga-Mata Partnership:
Aga and Mata are planning to form a
partnership. Aga will invest P20,000 for
a 20% interest in the new partnership.
Mata will invest cash and his equipment with a market value of
P50,000. They will share profits and
losses equally.
[28]. How
much cash should Mata invest?
a.
P30,000
b.
P50,000
c.
P60,000
d.
P80,000
[29]. How much is the total cash investment of
the partners?
a.
P30,000
b.
P50,000
c.
P60,000
d.
P80,000
[30]. Al and Macmod decide to form a
partnership. The initial investments of
the partners will include cash of P120,000 for Al and P80,000 for Macmod. Al will transfer his office equipment with a
book value of P96,000 and a fair market value of P84,000 to the
partnership. Macmod will transfer his
land fairly valued at P1,000,000 and the building thereon fairly valued at
P600,000. Macmod has just bought these
at a lump sum price of P1,800,000. In
addition, the partnership will assume the mortgage of P400,000 on the building.
What will be the total capital of
the partnership?
a.
P1,484,000
b.
P1,496,000
c.
P1,684,000
d.
P1,946,000
Partnership
Operation
[31]. Mr. Zoom and his very close friend, Mr.
Boom, formed a partnership on January 1, 2011, with Zoom contributing P16,000
cash and Boom contributing equipment, with a book value of P6,400 and fair
value of P4,800, and inventory items, with a book value of P2,400 and fair
value of P3,200. During 2011, Boom made additional investments of P1,600 on
April 1 and P1,600 on June 1, and withdrew P4,000 on September 1. Zoom had no
additional investments or withdrawals during the year. What was the average
capital balance of Mr. Boom during 2011?
a.
P9,600
b.
P8,800
c.
P8,000
d.
P7,200
[32]. Dulce Martin, a partner in a partnership
that carries the name of The Sweet Shop, has a 30% participation in partnership
profits. Her capital account has a net decrease of P48,000 during 2011. In the
same year, she withdrew P104,000 (charged against her capital account) and
contributed property valued at P20,000 to the partnership. The net income of
the partnership for 2011 was:
a.
P 36,000
b.
P120,000
c.
P132,000
d.
P440,000
[33]. Partners Jose, Luciano, and Placido have
average capital balances of P240,000, P120,000, and P80,000, respectively,
during 2011. Each partner receives 10% interest on his average capital balance.
After deducting salaries of P60,000 for Jose and P40,000 for Placido, the
residual profit or loss is divided equally. In 2011, the partnership sustained
a P66,000 loss before partners’ interests and salaries. By how much would
Placido’s capital account change?
a.
P20,000
increase
b.
P22,000
decrease
c.
P32,000
decrease
d.
P48,000
increase
[34]. On January 1, 2011, Zeep and Beep have
capital balances of P20,000 and P16,000,
respectively. On July 1, 2011, Zeep invested an additional P4,000 while Beep
withdrew P1,000. Profits and losses are divided as follows: Beep is the
managing partner and as such shall receive P16,000 as salary, with Zeep
receiving P7,200; both partners should receive interest of 10% based on their
beginning capital balances, to offset whatever difference in capital
investments they have; and, any remainder shall be divided equally. The net
income of the partnership for 2011 was P9,600. What was Zeep’s share in net
income for 2011?
a.
P9,200
b.
P4,800
c.
P 880
d.
P 600
[35]. Red and White formed a partnership in 2011. The partnership agreement provides for annual
salary allowances of P55,000 for Red and P45,000 for White. The partners share profits equally and
losses in a 60:40 ratio. The partnership
had earnings of P80,000 for 2011 before any allowance to partners. What amount of these earnings should be
credited to each partner’s capital account?
Red White
a. P40,000 P40,000
b. P43,000 P37,000
c. P44,000 P36,000
d. P45,000 P35,000
[36]. On January 2, 2011, Bueno and Perez
formed a partnership with capital distributions of P175,000 and P25,000,
respectively. They agreed to share profits and losses 80% and 20%,
respectively. Perez is the general manager and works in the partnership full
time. Perez is given salary of P5,000 a
month; an interest of 5% on starting capital; and a bonus of 15% of net profit
before the salary, interest, and bonus. The condensed profit and loss statement
of the partnership, for the year ended December 31, 2011, is as follows:
Net
sales P875,000
Cost
of sales 700,000
Gross
profit on sales P175,000
Expenses
(including salary, interest and bonus) 143,000
Net
profit P 32,000
The bonus in 2011 is
a.
P13,304.35
b.
P18,000.00
c.
P15,300.00
d.
P20,700.00
Questions 37 & 38 are based on the following
information:
Herm, Marc, and Alex formed a partnership on January
1, 2011, and contributed P150,000, P200,000, and P250,000, respectively. The
articles of co-partnership provides that the operating income be shared among
the partners as follows: as salary, P24,000 for Herm, P18,000 for Marc, and
P12,000 for Alex; interest of 12% on the average capital during 2011 of the
three partners; and, the remainder in the ratio of 2:4:4, respectively.
The
operating income for the year ending December 31, 2011 amounted to P176,000.
Herm contributed additional capital of P30,000 on July 1 and made a drawing of
P10,000 on October 1; Marc contributes additional capital of P20,000 on August
1 and made a drawing of P10,000 on October 1; and, Alex made a drawing of
P30,000 on November 1.
[37]. The division of the P176,000 operating
income is:
a.
Herm,
P53,760; Marc, P62,520; and, Alex, P59,720
b.
Herm,
P35,200; Marc, P70,400; and, Alex, P70,400
c.
Herm,
P48,400; Marc, P66,800; and, Alex, P60,800
d.
Herm,
P53,180; Marc, P62,060; and, Alex, P60,760
[38]. The partners’ capital balances on
December 31, 2011 are:
a.
Herm,
P179,680; Marc, P229,360; and, Alex, P239,360
b.
Herm,
P179,760; Marc, P229,520; and, Alex, P239,520
c.
Herm,
P189,680; Marc, P239,360; and, Alex, P269,360
d.
Herm,
P223,180; Marc, P272,060; and, Alex, P280,760
[39]. The partnership agreement of Bing and
Bong provides that Bing is to receive a 20% bonus on profits before the bonus.
Remaining profits and losses are divided in the respective ratio of 2:3. Which
partner has a greater advantage when the partnership realizes a profit or when
it sustains a loss?
Profit Loss
a.
Bing Bong
b.
Bing
Bing
c.
Bong Bing
d.
Bong
Bong
[40]. Michelle, an active partner in the
Michelle-Esme Partnership, receives an annual bonus of 25% of the partnership
income after deducting the bonus. For the year ended December 31, 2011, the
partnership income before bonus amounted to P240,000. The bonus of Michelle for
the year 2011 is
a.
P45,000
b.
P48,000
c.
P60,000
d.
P80,000
Partnership
Dissolution – Admission of Partner
[41]. Mark and Valerie are partners with
capitals P200,000 and P100,000 and sharing profits and losses at 3:1,
respectively. They decided to admit Nora
as a new partner with a 50% interest in the firm. Nora invested cash of P150,000, and Mark and
Valerie transferred portions of their capitals as a bonus to Nora. After Nora’s admission, Valerie’s capital
would be:
a.
P 37,500 c. P
81,250
b.
P 56,250 d. P100,000
[42]. Tito
and Vic, partners sharing profits and losses equally, have capital balances of
P90,000 each. Joey is admitted as a new
partner, making cash investment of P120,000, to a one-third interest in both
capital and earnings. If Joey is
credited in full for the amount of his investment, the new capital of the
partnership would be:
a. P240,000.
b. P300,000.
c. P360,000.
d. P420,000.
[43]. Moonbits Partnership had a net income of
P8,000 for the month ended September 30, 2011. Sunshine purchased an interest
in Moonbits Partnership of Liz and Dick by paying Liz P32,000 for half of her
capital and half of her 50% profit-sharing interest on October 1, 2011. At this
time, Liz’s capital balance was P24,000 and Dick’s capital was P56,000.
Sunshine should receive capital credit equal to:
a.
P12,000
b.
P16,000
c.
P20,000
d.
P26,667
[44]. Sarah is admitted into the firm of Joy, AA
and Pilar. The old partners agreed to
sell to Sarah one-fourth of their respective equities and profit share. Sarah paid a total price of P1,000,000. Before Sarah’s admission, Joy, AA and Pilar
have capital balances of P2,000,000, P1,000,000 and P500,000 and they share
profits at the ratio of 6:3:1.
Partnership assets are fairly stated and implied goodwill is to be
recognized prior to Sarah’s admission.
The new
capital of the partnership is:
a.
P3.5M
b.
P4M
c.
P5M
d.
P4.5M
Questions 45 & 46 are based on the following
information:
Mitz, Marc and Mert are partners sharing profit in a 5:3:2 ratio,
and with capital balances of P95,000, P80,000, and P60,000, respectively, on
December 31, 2011. The partners decided to admit Vince as a new partner on
January 1, 2011. Vince will contribute cash of P80,000 to the partnership and
also pay P15,000 for 15% of Marc’s share. Vince is to have a 20% share in
profits. After the admission of Vince, the total capital will be P330,000 and
Vince’s capital will be P70,000.
[45]. Upon the admission of Vince, the total
amount of “goodwill” for the old partners would be:
a.
P 7,000
b.
P15,000
c.
P22,000
d.
P37,000
[46]. After the admission of Vince, Marc’s
capital balance would be:
a.
P72,600
b.
P74,600
c.
P79,100
d.
P81,100
[47]. The admission of a new partner to a 20%
interest for an investment of P18,000, with a total agreed capital of P75,000,
will result in:
a.
Goodwill to the old partners.
b.
Goodwill to the new partner.
c.
Bonus to the old partners.
d.
Bonus to the new partner.
[48]. Black and White are partners who have
capital balances of P600,000 and P480,000, and sharing profits in the ratio of
3:2. Blue is admitted as a partner upon investing P220,000 for a 25% interest
in the firm, and profits are to be shared equally. Given the choice between
goodwill and bonus methods, Blue would:
a.
Prefer bonus method due to Blue’s gain of P105,000
b.
Prefer bonus method due to Blue’s gain of P140,000.
c.
Prefer goodwill method due to Blue’s gain of P140,000.
d.
Be indifferent for goodwill and bonus methods are the same.
Questions 49 and 50 are
based on the following information:
Terry
and Timmy entered into a partnership on May 31, 2011, contributing cash of
P48,000 and P32,000, respectively, and agreeing to divide earnings in the ratio
of their initial investments after allowing annual salary allowance of P12,000
each. On December 31, 2011, the income
summary account had a credit balance of P34,000, while drawing accounts showed
debit balances of P14,000 for Terry and P10,000 for Timmy.
At the
beginning of the next year, Tommy was admitted into the firm as a new partner
with a 33-1/3% interest for a capital credit equal to his cash investment of
P60,000. Terry and Timmy then effected a
private cash settlement between themselves in order to make the capital
balances conform to a new profit-sharing ratio of 4:2:3, respectively, with
salary allowances scrapped.
[49]. How much was the amount of goodwill, if
any, that was recognized in connection with the admission of the new partner?
a.
P20,000
b.
P24,000
c.
P30,000
d.
P36,000
[50]. How much was the amount of the private
cash settlement effected between the old partners?
a.
P5,000 c. P12,000
b.
P9,000 d. P15,000
Partnership Dissolution – Retirement of Partner
[51]. When
Nena retired from the partnership of Nena, Nina, and Nona, the final settlement
of Nena’s interest exceeded her capital balance. Under the bonus method, the excess is:
a. Recorded as goodwill.
b. Recorded as an expense.
c. Of no effect to the capital accounts of Nina
and Nona.
d. Deducted from the capital account balances of
Nina and Nona.
[52]. Luz,
Vi, and Minda are partners with capital balances, as of December 31, 2011, of
P300,000, P300,000 and P200,000, respectively, and who share profits and losses
equally. Minda wishes to withdraw, and
it is agreed that she is to take certain furniture items, with second hand
value of P50,000 and a note for the balance of her interest. The furniture items are carried in the books
at P65,000; brand new, however, they would cost P80,000. the value of the note that Minda would get
is:
a. P120,000. c. P145,000
b. P135,000. d. P150,000
[53]. Juan,
Pedro, and Pablo are partners who share profits and losses in a 5:3:2 ratio
and, on January 1, 2011, have capital balances of P90,000, P160,000, and
P200,000, respectively. Pablo withdrew
from the partnership on July 1, 2011 and the partners agreed that, as of this
date, certain inventory items would have to be revalued at P70,000 from their
recorded cost of P50,000. For the
six-month period ending June 30, 2011, the partnership realized a net income of
P130,000. The partners decided that
Pablo should be paid P245,000 for his interest and the remaining partners’
capital accounts should be adjusted for any goodwill resulting from the
settlement. The payment to Pablo
included goodwill of:
a. P15,000.
b. P25,000.
c. P42,500.
d. P50,000.
[54]. Paco, Quin, and Romy are partners with
capital balances on June 30, 2011 of P300,000, P300,000 and P200,000,
respectively, and sharing profits and losses equally. Romy is to retire, and it
is agreed that he is to take certain furniture (with second-hand value of
P50,000) and a note for his interest. The furniture is carried in the books at
P65,000, but brand new would cost P80,000. Romy’s acquisition of the furniture
would result in:
a.
Reduction
in capital of P5,000 each for Raco, Quin and Romy
b.
Reduction
in capital of P7,500 each for Paco and Quin
c.
Reduction
in capital of P15,000 for Romy
d.
Reduction
in capital of P55,000 for Romy.
[55]. Luz, Vi, and Minda are partners with
capital balances, as of December 31, 2011, of P300,000, P300,000, and P200,000,
respectively, and who share profits and losses equally. Minda wishes to
withdraw, and it is agreed that she is to take certain furniture items, with a
second-hand value of P50,000, and a note for the balance of her interest. The
furniture items are carried in the books at P65,000; brand new, however, they
would cost P80,000. The value of the note that Minda would get is:
a.
P120,000 c. P145,000
b.
P135,000 d. P150,000
[56]. The condensed balance sheet of the
partnership of Tic, Tac and Toe as
Net assets P 400,000
Tic, capital (50%) P 200,000
Tac, capital (30%) 120,000
Toe, capital (20%) 80,000
Total capital P 400,000
As of said date, Tic
retired from the partnership. Per agreement, Tic was paid P225,000 for his
interest and the goodwill implied from the settlement was recorded. After Tic’s
retirement, the partnership’s “net assets” was:
a.
P175,000
b.
P200,000
c.
P225,000
d.
P250,000
[57]. Juan, Pedro, and Pablo are partners who
share profits and losses in a 5:3:2 ratio and, on January 1, 2011, have capital
balances of P90,000, P160,000, and P200,000, respectively. Pablo withdrew from
the partnership on July 1, 2011 and the partners agreed that, as of this date,
certain inventory items would have to be revalued at P70,000 from their
recorded cost of P50,000. For the sixth month period ending June 30, 2011, the
partnership realized a net income of P130,000. The partners decided that Pablo
should be paid P145,000 for his interest and the remaining partners’ capital
accounts should be adjusted for any goodwill resulting from the settlement. The
payment to Pablo included goodwill of:
a.
P15,000 c. P42,500
b.
P25,000 d. P50,000
[58]. Hugo, Ivan, and Juni are partners
sharing profits and losses in the respective ratio of 3:3:4. Juni is given
permission to retire effective May 31, 2011, and it was agreed that settlement
is to be made by the remaining partners making payments from their personal
funds. The capital balances o this date are
P30,000, P25,000 and P45,000 for Hugo, Ivan, and Juni, respectively. If
Juni received P45,000, how much did Hugo pay Juni?
a.
P13,500
b.
P18,000
c.
P22,500
d.
P45,000
[59]. Karen, Karmi, and Kathy are partners sharing
profits in the respective ratio of 2:3:5. On May 31, 2011, Kathy opted to
retire. The capital account balances, at this time, are P95,000, P140,000, and
P135,000, respectively. Assuming that Kathy is paid P132,000, Karen would be
credited:
a.
P 600
b.
P 857
c.
P1,200
d.
P1,800
[60]. ANA, MAE, and RAE share partnership
profits and losses in the ratio of 2:3:5, respectively. On October 31, 2011, RAE was permitted to
withdraw from the partnership at which time their capital balances were:
Ana, capital P25,000
Mae, capital 40,000
Rae, capital 35,000
If RAE is paid P39,000 in full
payment of her interest, the capital of ANA immediately after RAE’s withdrawal
would be:
a.
P22,600
b.
P23,000
c.
P23,400
d.
P26,600
Incorporation
of Partnership
[61]. The condensed balance sheet of the
partnership of Ken Sy and Ben Ty as of December 31, 2011 showed the following:
Total assets P200,000
Total liabilities 40,000
Ken Sy, capital 80,000
Ben Ty, capital 80,000
On this
date, the partnership was dissolved and its net assets were transferred to a
newly-formed corporation. The fair value of the assets was P24,000 more than
the carrying value of the firm’s books. Each of the partners was issued 10,000
shares of the corporation’s P1 par common stock. Immediately after effecting
the transfer of the net assets, and the issuance of stock, the corporation’s
additional paid in capital account would be credited for:
a.
P136,000
b.
P140,000
c.
P154,000
d.
P164,000
[62]. Mac, Kuh, and Nat, partners sharing
profits and losses equally, decided to form a corporation. They have capital
balances, respectively, ofP100,000, P100,000, and P200,000, and all of their
assets and liabilities will be transferred to the corporation. Their net assets
will be revalued from P400,000 to P550,000, with the substantial revaluation
due to land which was originally contributed by Nat at P100,000. At P10 par
value, the partners are to receive shares of stock as follows:
a.
10,000,
10,000, and 35,000, respectively
b.
12,500,
12,500, and 30,000, respectively
c.
15,000,
15,000, and 25,000, respectively
d.
18,333,
18,333, and 18,334, respectively
[63]. Partners
Rob and Roy, who share equally in profits and loses, have the following balance
sheet as of December 31, 2011:
Cash P120,000 A/Payable P172,000
A/receivable 100,000 Accum. Dep’n. 8,000
M/Inventory
140,000 Rob, capital 140,000
Equipment 80,000 Roy
Total P440,000 Total
equities P440,000
They agreed to incorporate their
partnership, with the new corporation absorbing the net assets after the
following adjustments: provision of
allowance for bad debts of P10,000; statement of the inventory at its current
fair value of P160,000; and, recognition of further depreciation on the
equipment of P3,000. The corporation’s
capital stock is to have a par value of P100, and the partners are to be issued
corresponding total shares equivalent to their adjusted capital balances.
The total
par value of the shares of capital stock that were issued to partners Rob and
Roy was:
a. P260,000
b. P267,000
c. P273,000
d. P280,000
[64]. Mac,
Kuh, and Nat, partners sharing profits and losses equally, decided to form a
corporation. They have capital balances,
respectively, of P100,000, P100,000, and P200,000, and all of their assets and
liabilities will be transferred to the corporation. Their net assets will be revalued from
P400,000 to P550,000, with the substantial revaluation due to land which was
originally contributed by Nat at P100,000.
At P10 par value, the partners are to receive shares of stock as
follows:
a. 10,000, 10,000, and 35,000, respectively.
b. 12,500, 12,500, and 30,000, respectively.
c. 15,000, 15,000, and 25,000, respectively.
d. 18,333, 18,333, and 18,334, respectively.
Partnership
Liquidation (Lump-sum & Installment)
[65]. Gardo and Gordo formed a partnership on
July 1, 2011 to operate two stores to be managed by each of them. They invested
P30,000 and P20,000 and agreed to share earnings 60% and 40% respectively. All
their transactions were for cash, and all their subsequent transactions were
handled through their respective bank accounts as summarized below:
Gardo
Gordo
Cash receipts P79,100 P65,245
Cash disbursements
62,275 70,695
On October 31, 2011,
all remaining noncash assets in the two stores were sold for cash of P60,000.
The partnership was dissolved, and cash settlement was effected. In the
distribution of the P60,000 cash, Gardo received
a.
P24,000
b.
P26,000
c.
P34,000
d.
P36,000
[66]. The partner AA, Bida, Cita, and Dina,
who share profits and losses in the respective ratio of 3:3:2:2, decided to
liquidate their partnership. Just prior to liquidation, they prepared the
following summary balance sheet:
Cash P 100,000 Liabilities P
750,000
Other assets
1,800,000 Bida, loan
160,000
Dina,
loan 50,000
AA,
capital 420,000
Bida,
capital 215,000
Cita,
capital 205,000
Dina, capital 100,000
Total P1,900,000 Total P1,900,000
The noncash assets
realized P800,000. If all the partners are personally solvent,
deficiency/deficiencies, resulting from the liquidation process, will require
additional cash from:
a.
Bida
at P85,000 and Dina at P100,000
b.
Bida
at P85,000
c.
Dina
at P50,000
d.
None
of the above
[67]. The balance sheet of the partnership of
Salve, Gilda, and Nora, who share profits and losses in the respective ratio of
5:3:2, follows:
Assets Liabilities and Capital
Cash P 30,000 Liabilities P
50,000
Other assets 320,000 Salve,
capital 80,000
Gilda,
capital 115,000
Nora, capital 05,000
Total P350,000 P350,000
The partners agreed to liquidate the partnership by
installments. Immediately there was a realization of P100,000 cash from selling
other assets with a book value of P150,000. Of the cash available, the priority
is the payment of the liabilities and the balance is to be distributed to the
partners.
How should the
remaining cash be distributed.
a.
Salve,
P50,000; Gilda, P30,000; and, Nora, P20,000.
b.
Salve,
P40,000; Gilda, P24,000; and, Nora, P16,000.
c.
Salve,
P---0---; Gilda, P31,000; and, Nora, P49,000.
d.
Salve,
P---0---; Gilda, P48,000; and, Nora, P32,000.
Questions 68 through 70 are based on the following data from
the records of ABC Partnership:
ABC Partnership
Balance Sheet
December 31, 2010
Assets
Cash
P 2,000
Other
Noncash Assets 28,000
Total
P 30,000
Liabilities & Net Worth
Liabilities P 5,000
A,
loan 2,500
A,
capital 12,500
B,
capital 7,000
C,
capital 3,000
Total P 30,000
Profit and
loss ratio is 3:2:1 for A, B, and C, respectively. The other non-cash assets
were realized as follows:
Date Cash Received Book Value
Jan. , 2011
P 6,000 P 9,000
Feb., 2011
3,500 7,700
Mar., 2011
12,500 11,300
Cash is distributed
as assets are realized.
[68]. The total loss to A is
a.
P3,000
b.
P2,000
c.
P1,000
d.
P0
[69]. The total cash received by B is:
a.
P2,200
b.
P0
c.
P5,000
d.
P1,500
[70]. Cash received by C in January is:
a.
P 200
b.
P1,000
c.
P 500
d.
P0
[71]. X, Y and Z have capital balances of
P40,000, P50,000, and P18,000 and a profit-sharing ratio of 4:2:1, respectively.
If X received P8,000 upon liquidation of the partnership, the total amount
received by all the partners was:
a.
P108,000
b.
P 56,000
c.
P 52,000
d.
P 24,000
[72]. Assume the same facts above, except that
X received P26,000 as a result of the liquidation. Z received, as part of the
liquidation, the amount of:
a.
P26,000
b.
P14,500
c.
P18,000
d.
P14,000
[73]. Sanchez and Tan are partners sharing
profits equally and with capital balances, respectively, of P750,000 and
P500,000. The firm owes Tan P200,000, as evidenced by a promissory note. Upon
liquidation, cash of P300,000 becomes available for distribution to the
partners. In the final cash distribution, the respective shares of Sanchez and
Tan will be:
a.
P150,000 and P150,000
b.
P175,000
and P125,000
c.
P200,000
and P100,000
d.
P275,000
and P 25,000
[74]. After operating for five years, the
partnership of Remy and Martin, who share profits and loses equally, had
balances as follows:
Net assets P130,000
Remy, capital 85,000
Martin, capital 45,000
If liquidation takes
place at this time and the assets are realized at book value, Remy and Martin
would be entitled to receive:
a.
P65,000
and P65,000, respectively.
b.
P85,000
and P45,000, respectively.
c.
P90,000
and P40,000, respectively.
d.
P97,500
and P32,500, respectively.
[75]. The condensed balance sheet of Alex, Jay
and John, as of March 31, 2011 follows:
Cash P 28,000 Liabilities P
48,000
Other assets 265,000 Alex,
capital 95,000
Jay,
capital 80,000
John, capital 70,000
Total assets P293,000 Total equities P293,000
The income
and loss ratio is 50:25:25, respectively. The partners voted to dissolve their
partnership and liquidate by selling the other assets in installments. The
amount of P70,000 was realized to the first cash sale of other assets with a book
value of P150,000. After settlement with creditors all cash available was
distributed to the partners. How much was received by John in the cash
distribution?
a.
P30,000 c. P21,250
b.
P20,000 d. P31,250
[76]. Jo, Lee, and Vi are partners sharing
profits 30%, 20%, and 50%, and with capital balances of P350,000, P250,000, and
P350,000, respectively. The partners agreed to dissolve their partnership and,
upon liquidation, all of the partnership’s assets are sold and sufficient cash
is realized to pay all claims except one for P50,000. Vi is personally
insolvent, but the other two partners are capable of meeting any indebtedness
of the firm. Of the remaining claim against the firm, Jo is to absorb:
a.
P15,000
b.
P25,000
c.
P30,000
d.
P40,000
[77]. On October 31, 2011, Ivy, Irma, and
Irene, who share earnings 5:3:2 respectively, decided to liquidate their
partnership at which time their condensed balance sheet was as follows:
Cash P 50,000 Liabilities P
60,000
Other assets
250,000 Ivy, capital
80,000
Irma,
capital 90,000
Irene, capital 70,000
Total assets P300,000 Total equities P300,000
If the first
cash sale of assets booked at P150,000 resulted in net realization of P120,000,
the amount to be distributed to Irene would be:
a.
P15,000
b.
P44,000
c.
P51,000
d.
P60,000
[lxxviii]. Dan, Ely, and Fil decided to dissolve their
partnership on May 31, 2011. On this date, their capital balances and
profit-sharing per cents were as follows:
Dan P50,000 40%
Ely 60,000 30%
Fil 20,000 30%
The net
income from January 1 to May 31, 2011
was P44,000. Also on May 31, 2011, the partnership’s cash and liabilities,
respectively were P40,000 and P90,000. For Dan to receive P55,200 in full
settlement of his interest in the partnership, how much must be realized from
the sale of the partnership’s non-cash assets?
a.
P177,000
b.
P187,000
c.
P190,000
d.
P193,000
[lxxix]. Bach, Lizst, and Strauss, sharing profits
and losses 4:4:2, decided to liquidate their partnership. Just prior to
liquidation, the partnership’s condensed balance sheet was as follows:
Cash P100,000 Liabilities P140,000
Other assets
400,000 Bach, loan
10,000
Bach,
capital 45,000
Lizst,
capital 105,000
Strauss,
capital 200,000
Total P500,000 Total P500,000
The other assets were
sold for P247,500, and the partners agreed to make additional cash
contributions to answer for any capital deficiency. Identify the deficient
partner, and indicate his additional cash contribution to finally liquidate the
partnership:
a.
Bach,
P 6,000
b.
Bach,
P16,000
c.
Lizst,
P30,500
d.
Strauss,
P44,000
[lxxx]. Tom, Umi and Vic decided to dissolve
their partnership on May 31, 2011. On this date, their capital balances were as
follows:
Tom P50,000 40%
Umi 60,000 30%
Vic 20,000 30%
The net income from
January 1 to May 31, 2011 was P44,000. Also on May 31, 2011, the partnership’s
cash and liabilities, respectively were P40,000 and P90,000. What was the book
value of the partnership’s non-cash assets on May 31, 2011?
a.
P180,000
b.
P190,000
c.
P220,000
d.
P224,000
-END-
[1]. Letter
“B” is the correct answer.
The problem implies
that the contribution of Emil is already adequate to entitle him to a 60% share
in the total agreed capital of the partnership.
Hence, the total agreed capitalization shall be based on his
contribution of P300,000 or P500,000 (P300,000 ÷ 60%). The agreed capital of Pearl is 40% of
P500,000 or P200,000 and her cash contribution shall be equal to the difference
between this amount (P200,000) and the net fair value of the noncash assets she
invested. The net fair value of the other assets contributed by Pearl is equal
to P120,000, (P70,000 + P90,000 –
P40,000). Therefore, her cash contribution should be equal to P80,000 (P200,000
– P120,000).
[2]. Letter “D” is the correct answer.
Under the
goodwill method, the total agreed capital should be more than the total
contributed capital. Total agreed
capital will be more than the total contributed capital only if the
contribution of Green is used as the basis of the total agreed
capitalization. Since the fair value of
the contribution of Green amounts to P60,000, then the total agreed capital
must be P120,000 (P60,000 ¸ 50%). The initial capital of Red therefore amounted
to P60,000 or 50% of P120,000 as agreed by the partners.
[3]. Letter “B” is the correct answer.
The
amount to be recorded as capital of the partners should be based on the fair
value of the net asset (total assets – total liabilities) contributed by each
of them. Hence, the capital balances for
Pirante and Wilson should be P70,000 and P150,000, respectively. These amounts are computed as follows:
Pirante Wilson
Assets
contributed:
Cash P40,000 P
60,000
Inventory - 30,000
Building - 80,000
Furniture
and Equipment 30,000 -
Total P70,000 P170,000
Less
mortgage assumed -
20,000
Net
assets contributed P70,000 P150,000
[4]. Letter
“B” is the correct answer.
Under the bonus
method, a portion of the capital of one partner is transferred to another
partner. In this case, the total agreed
capital is assumed to be equal to the total contributed capital, P276,000
(P150,000 + P126,000), and each partner shall be credited one-half (according
to agreement) or P138,000. The partner
who contributed more than his agreed capital credit is the one who gave a bonus
while the one who contributed capital less than his agreed capital credit is
the one who received it. Belen
contributed P126,000 but received P138,000 (50% x P276,000) capital credit,
hence, he received bonus equal to P12,000 (P138,000-P126,000) from AA who
contributed P150,000 but received only P138,000 capital credit.
[5]. Letter “B” is the correct answer.
The partners’ capital balances upon
formation would be P100,000, P10,000, and P100,000, respectively.
[6]. Letter “C” is the correct answer.
Kathy’s
capital account should be credited for the 50% of the total agreed capital
which is assumed to be equal to the actual capital contributed by the partners
or P184,000 [50% x (P200,000 + P168,000)]
[7]. Letter
“C” is the correct answer.
The partner with the
biggest capital account balance as of May 31, 2011 is Cip, computed as follows:
Allen Belen Cenen
Cash P50,000 P
- P -
Non cash asset - 80,000 55,000
Mortgage - (35,000)
-
Capital account
balances P50,000 P45,000 P55,000
Each partner values his contribution
at is fair value, reduced by the amount of any liability assumed by the
partnership.
[8]. Letter
“D” is the correct answer.
Under the bonus method, goodwill is
not recognized; thus, there would be no unidentifiable asset to be recorded.
[9]. Letter
“C” is the correct answer.
The amount of cash contributed by
Carla, if initial balances are to conform to the profit-sharing ratio of 2:3,
respectively was P40,000, computed as follows:
Capital contributed by Clara:
Merchandise at fair
value P
25,000
Delivery truck at
fair value 50,000
Mortgage note payable
assumed ( 15,000)
Clara’s contribution P
60,000
Divided by profit
share of Clara 3/5
Total agreed capital
P100,000
Multiplied by Carla’s
profit share ratio 2/5
Carla’s cash
contribution
P40,000
[10]. Letter “B” is the correct answer.
Upon formation, the net assets of
the partnership is equal to the total fair value of the assets contributed less
any amount of liabilities assumed by the partnership, hence the net assets of
the partnership is equal to P, computed as follows:
Assets contributed
by:
AA P100,000
BB 10,000
CC 100,000
Total P210,000
Less
liabilities assumed
10,000
Net
assets contributed by the partners P200,000
[11]. Letter
“B” is the correct answer.
The capital balance of Mel and Garri
assuming they agree to share their capital equally would be P72,500, computed
as follows:
Unadjusted capital
(P78,500 + P70,000) P148,500
Inventory write-up 3,000
Allow. for bad debts (P1,000 + P1,500) ( 2,500)
Increase in accounts payable (4,000)
Adjusted capital P145,000
Divide by 2
Capital balance of
each partner P72,500
[12]. Letter
“C” is the correct answer.
If Chona is allowed goodwill credit
equal to 20% of her initial capital, Charo’s cash contribution was P25,000,
computed as follows:
Chona’s initial
capital (P60,000/80%) P 75,000
Divided by Chona’s
capital share
¾ or 75%
Total agreed capital
of the partners P100,000
Multiplied by
Chona’s capital share
¼ or 25%
Charo’s cash
contribution P 25,000
Chona’s initial
capital is equal to her net assets contribution which is 80% plus her goodwill
credit of 20%. Charo’s cash contribution is equal to one-fourth (¼) of total
partnership capital or 1/3 of Chona’s capital.
[13]. Letter
“B” is the correct answer.
The
capital balances of the partners upon formation are P180,000, P192,000, and
P204,000, respectively, computed as follows:
Investments: Flores Peralta Jose
Cash P120,000 P192,000 P 60,000
Equipment 60,000
Truck 144,000
Capital balances P180,000 P192,000 P204,000
[14]. Letter
“B” is the correct answer.
EJ’s adjusted capital balance is P80,000
computed as follows:
EJ’s capital before
adjustment (given) P78,500
Add (deduct)
adjustment for:
Allowance for doubtful
accounts P(1,500)
Inventory increase 3,000
Net adjustment 1,500
EJ’s adjusted capital
balance
P80,000
[15]. Letter
“A” is the correct answer.
Non-cash assets
contributed to an entity should be recorded at fair market value at the date of
contribution. The creation of a new entity creates a new accountability for
these assets.
[16]. Letter
“C” is the correct answer.
The capital account of Pula and Puti
immediately after the formation of the partnership would have balances equal to
P287,070 and P123,030, respectively. These amounts were computed as follows:
Capital of Pula before adjustments P300,000
Add (deduct) adjustments:
Increase in
depreciation (7,500)
Reduction in prepaid
expenses (2,400)
Adjusted capital of
Pula P290,100
Add cash contributed
by Puti 120,000
Total agreed capital P410,100
Share of Pula (70% x
P410,100) P287,070
Share of Puti (30% x
P410,100) P123,030
[17]. Letter
“D” is the correct answer.
The capital
contributed by Feb is P280,000 (P70,000 + P75,000 + P225,000 – P90,000), the
total agreed capital is therefore equal to P400,000 (P280,000/70%), 30% of
which or P120,000 should be credited to Jhan.
Since his initial capital contribution is P65,000 (P30,000 + P25,000 +
10,000) only, he needs to invest P55,000
more (P120,000-P65,000).
[18]. Letter
“A” is the correct answer.
Partners’ capital
balances upon formation are Bel, P75,000; Joy, P80,000, and Franco, P85,000,
respectively, computed as follows:
|
|
Bel
|
Joy
|
Franco
|
|
Cash
|
P50,000
|
P80,000
|
P25,000
|
|
Non-cash assets
|
25,000
|
- - - - - --
|
60,000
|
|
Initial capital
balances
|
P75,000
|
P80,000
|
P85,000
|
[19]. Letter
“B” is the correct answer.
If Jimenez is to
invest cash for a 2/5 interest in the partnership, it means that the adjusted
capital of Mark is 3/5 of the total agreed capital. The adjusted capital of Mark is computed as
follows:
Capital before
adjustments (Sub-computation a) P264,000
Add net adjustments
(Sub-computation b) 21,000
Adjusted Capital of
Mark P285,000
Sub-computation a:
Cash P
26,000
Accounts receivable 120,000
Inventory 180,000
Accounts payable (62,000)
Unadjusted Capital of
Mark P264,000
Sub-computation b:
Allowance for
doubtful accounts [3% x P120,000] (P
3,600)
Increase in
merchandise inventory 25,000
Recognition of
Prepaid expenses 3,600
Recording of accrued
expenses
(4,000)
Net
adjustment to capital of Mark
P21,000
Total agreed capital is therefore equal to
P475,000 (P285,000 ÷ 3/5), 2/5 of this or P190,000 (P475,000 x 2/5) belongs to Jimenez which he agreed to provide
for in cash.
[20]. Letter
“D” is the correct answer.
The total assets of
the partnership is equal to P74,000, computed as follows:
Cash (P2,500 +
P20,000) P22,500
Accounts receivable
(P10,000 – P500) 9,500
Merchandise Inventory:
(P15,000
– P3,000 + P10,000) 22,000
Fixtures
(fair market value) 20,000
Total
assets P74,000
[21]. Letter
“B” is the correct answer.
The adjusted capital
of Silvano is P116,250, computed as follows:
Total Assets
(computation a) P132,000
Less accounts payable
(given) 8,000
Capital before
adjustments P124,000
Less net adjustments
(computation b) 7,750
Adjusted capital of
Silvano P116,250
Computation a:
Cash P 30,000
Accounts receivable 25,000
Inventory 45,000
Furniture 32,000
Total assets P132,000
Computation b:
Provision for bad
debts (3% x P25,000) P 750
Reduction in the
value of furniture:
(P32,000 – 27,000) 5,000
Decrease in the value
of inventory:
(P5,000 – 3,000) 2,000
Net adjustments P7,750
[22]. Letter
“D” is the correct answer.
The total assets of the new partnership is
equal to P144,250, computed as follows:
Adjusted capital of
Silvano P116,250
Add accounts payable 8,000
Total adjusted assets P124,250
Add cash investment
of Pegasus 20,000
Total assets of the
new partnership P144,250
[23]. Letter
“A” is the correct answer.
Because gain is to
invest cash aside from P50,000 worth of merchandise it is assumed that the adjusted capital of Pain is equal to
his 2/3 capital share ( 1 less 1/3 agreed share of Gain). Hence, to compute the total agreed capital of
the partnership as well as the cash to be invested by Gain, Pain’s adjusted
capital should be computed first. The
adjusted capital of Pain is equal to P165,900, computed as follows:
Capital before
adjustments (given) P158,400
Add net adjustment
(computation a) 7,500
Adjusted capital of
Pain P165,900
Computation a:
Increase in capital
due to rec. of prepaid exp. P17,500
Decrease in capital
due to rec. of accrual (5,000)
Decrease in capital
due to provisions for bad debts (5,000)
Net adjustment to
capital of Pain P 7,500
The total agreed
capital of the partnership is P248,850
(P165,900 ÷ 2/3), and the capital share of gain is P82,950 (P248,850 x 1/3),
hence, the cash to be invested by Gain is equal to P32,950 (P82,950 – P50,000).
[24]. Letter
“A” is the correct answer.
Non-cash assets
contributed to the partnership should be recorded at fair market value at the
date of contribution. The fact that the computer was sold for P55,000
immediately after the formation of the partnership indicates that it is its
fair market value on the date of the formation of the partnership.
[25]. Letter
“B” is the correct answer.
The amount of assets
to be contributed by Violet to have a one-third interest in capital and profit
should be equal to one-half of the combined contribution of Yellow and
Orange. The total contribution of Yellow
and Orange is P120,000 (P40,000 + P80,000), therefore, to have one-third
interest in the partnership, Violet should contribute P60,000 or one-third of a total capitalization of P180,000
(P120,000 + P60,000).
[26]. Letter
“B” is the correct answer.
The capital balance
of each partner shall be equal to P, computed as follows:
Wilder Nest
Capital before
adjustments P78,500 P70,000
Add (deduct)
adjustments:
Increase in inventory 3,000
Receivables written
off (1,000) (1,500)
Accrued expenses
recorded (4,000)
Adjusted capital
balance P76,500 P68,500
Total capital (P76,500 + P68,500) P145,000
Divided by 2
Capital balance of
each partner P 72,500
[27]. Letter
“C” is the correct answer.
The amount of cash to
be contributed by Clara is equivalent to 2/5 of the total agreed capital of the
partnership which is to be based on the contribution of Maria. The capital contributed by Maria is P60,000
(P25,000 + P50,000 – P15,000), the total agreed capital is P100,000 (P60,000 ÷
3/5), hence Clara should contribute cash equal to P40,000 (2/5 x P100,000).
[28]. Letter
“A” is the correct answer.
If Aga invests
P20,000 for a 20% interest, then total partnership capital must be based on
Aga’s investment or P100,000 (P20,000/20%) and the capital to be credited to Mata
is P80,000 (P100,000 – P20,000). If Mata
contributes an equipment worth P50,000, then he should invest additional cash
amounting to P30,000 (P80,000 – P50,000).
[29]. Letter
“B” is the correct answer.
The cash invested by
the partners is equal to P20,000 contributed by Aga and the P30,000 invested by
Mata or a total of P50,000.
[30]. Letter
“A” is the correct answer.
The capital of Al and
Macmod shall be equal to P, and P, respectively. These amounts are computed as follows:
Al Macmod Total
Cash P120,000 P
80,000 P 200,000
Office equipment 84,000
84,000
Land 1,000,000 1,000,000
Building 600,000 600,000
Mortgage on building (400,000) (
400,000)
Capital P204,000 P1,280,000 P1,484,000
[31]. Letter
“B” is the correct answer.
The average capital
balance of Mr. Boom during 2011, is P8,800, computed as follows:
January 1 Investment: P8,000 x 12/12 P8,000
April
1 Investment 1,600 x 9/12 1,200
June
1 Investment 1,600 x
7/12 933
Sept.
1 Investment (4,000)
x 4/12
(1,333)
Mr. Boom’s average capital balance during 2011 P 8,800
[32]. Letter
“B” is the correct answer.
The net income of the
partnership for 2011 was P120,000, computed as follows:
Withdrawal P104,000
Additional investment ( 20,000)
Net decrease in capital ( 48,000)
Dulce’s share in net income P 36,000
Divide by Dulce’s P&L ratio 30%
Partnership’s net income for the year 2011 P120,000
[33]. Letter
“B” is the correct answer.
Placido’s capital account balance
would decrease in the amount of P22,000, computed as follows:
Total
Placido
Interests:
P440,000 x 10% ;
P80,000 x 10% P 44,000 P 8,000
Salaries 100,000 40,000
Balance (deficiency),
equally ( 210,000)
(70,000)
Net profit (loss) P(66,000) P(22,000)
[34]. Letter
“D” is the correct answer.
Zeep’s share in net income for 2011 is P600,
computed as follows:
|
|
Beep
|
Zeep
|
Total
|
|
Salary
|
P16,000
|
P7,200
|
P23,200
|
|
10%
interest on beg. cap.
|
1,600
|
2,000
|
3,600
|
|
Remainder:
equally
|
(8,600)
|
(8,600)
|
(17,200)
|
|
Net
income
|
P 9,000
|
P 600
|
P 9,600
|
[35]. Letter
“B” is the correct answer.
The amount of earnings that should
be credited to each partner’s account are P43,000 and P37,000, for Red and
White, respectively, computed as follows:
Red
White Total
Salary allowances P55,000 P45,000 P100,000
Loss after allowances (60:40) ( 12,000)
( 8,000) ( 20,000)
Earnings credited to partners P43,000 P37,000 P 80,000
[36]. Letter
“B” is the correct answer.
The bonus to Perez in
2011 is P18,000, computed as follows:
Net profit after salary, interest, and bonus P
32,000
Salary of Perez (P5,000 x 12) 60,000
Interest on starting capitals (P200,000 x 5%) 10,000
Net profit before salary and interest,
but before bonus P102,000
Divide by 85%
Net profit before salary, interest, and bonus P120,000
Bonus of Perez in 2011 (P120,000 x 15%) P 18,000
[37]. Letter
“D” is the correct answer.
The P176,000
operating income is divided as Herm, P53,180; Marc, P62,060; and Alex, P60,760,
respectively, computed as follows:
Herm: P150,000 x 12/12 P150,000
30,000 x 6/12
15,000
(10,000) x
3/12 (2,500)
Average Capital P162,500
Marc: P200,000 x 12/12 P200,000
20,000 x 5/12 8,333
(10,000) x
3/12 (2,500)
Average capital P205,833
Alex: P250,000 x 12/12 P250,000
(30,000) x 2/12 (5,500)
Average capital P245,000
|
|
Herm
|
Marc
|
Alex
|
Total
|
|
Salary allowances
|
P24,000
|
P18,000
|
P12,000
|
P54,000
|
|
12% interest on
average capital
|
19,500
|
24,700
|
29,400
|
73,600
|
|
Remainder, 2:4:4
|
9,680
|
19,360
|
19,360
|
48,400
|
|
Division of ope.
inc.
|
P53,180
|
62,060
|
P60,670
|
P176,000
|
[38]. Letter
“D” is the correct answer.
The partners’ capital balances on
December 31, 2011 are Herm, P223,180; Marc, P272,060; and Alex, P280,760, respectively,
computed as follows:
|
|
Herm
|
Marc
|
Alex
|
|
Capital balances,
Jan. 1
|
P150,000
|
P200,000
|
P250,000
|
|
Additional
contributions
|
30,000
|
20,000
|
-
|
|
Drawings
|
(10,000)
|
(10,000)
|
(30,000)
|
|
Share in operating
income (6)
|
53,180
|
62,060
|
60,760
|
|
Capital balances,
Dec. 31, 2011
|
P223,180
|
P272,060
|
P280,760
|
[39]. Letter
“B” is the correct answer.
In case of a profit,
Bing’s share will be 20% plus 40% of the remaining 80%, or a total of 52%; in
case of a loss, Bing’s share will only be 40%.
[40]. Letter
“B” is the correct answer.
The bonus of Michelle for the year 2011
is P48,000, computed as follows:
Michelle’s bonus (P240,000 ¸
125%) x 25% P48,000
[41]. Letter
“C” is the correct answer.
Mark Valerie Nora Total
Contributed capital P200,000 P100,000 P150,000 P450,000
Bonus (3:1)
Nora’s AC
P225,000
Nora’s CC
150,000
P 75,000
From Mark x ¾ (56,250) 56,250
From Valerie x ¼ ( 18,750)
18,750
Agreed capital P143,750 P 81,250 P225,000 P450,000
[42]. Letter “C” is the correct answer.
Contribution
of Joey P120,000
Agreed
capital ratio 1/3
Total
agreed capital P360,000
[43]. Letter
“A” is the correct answer.
Capital
of Liz P24,000
Interest purchased 1/2
Capital credit of Sunshine P12,000
[44]. Letter
“A” is the correct answer.
Sarah’s contribution P1,000,000
Divided by interest bought one-fourth
Total agreed capital P4,000,000
[45]. Letter
“B” is the correct answer.
The total amount of
“goodwill” for the old partners is P15,000, computed as follows:
Total agreed capital
upon Vince’s admission P330,000
Less: Net Assets after Vince’s
investment:
Total old partners capital P235,000
Vince’s cash investment 80,000
Total net assets 315,000
Total “goodwill” for the old partners P 15,000
[46]. Letter
“C” is the correct answer.
Marc’s capital balance, after Vince
admission is P79,100, computed as follows:
*Marc’s interest purchased
by Vince (P80,000 x 15%) P 12,000
Vince’s cash investment 80,000
Vince capital credit (
70,000)
Bonus to old partners P 22,000
Marc’s capital (before Vince admission) P80,000
Interest purchased by Vince (
12,000)
Share in goodwill (P15,000 x 30%) 4,500
Share in bonus (*P22,000 x 30%) 6,600
Marc’s capital (after Vince admission) P79,100
[47]. Letter
“C” is the correct answer.
The admission of a new partner to a
20% interest in a partnership for an investment of P18,000, with total agreed
capital to be P75,000 resulted to a bonus to old partners of P3,000 computed as
follows:
New partner’s investment P18,000
Less: New partner’s capital credit (P75,000 x
20%) 15,000
Bonus to old partners P 3,000
[48]. Letter
“A” is the correct answer.
Given the choice between goodwill
and bonus methods, Blue will prefer bonus method due to Blue’s gain of
P105,000, computed as follows:
G-Method B-Method
Blue’s capital credit:
(P1,080,000¸75%) x 25% P360,000
(P1,080,000¸P220,000) x 25% P325,000
Less: Blue’s investment 220,000 220,000
Goodwill/Bonus for Blue P140,000 P105,000
Less: Share in subsequent GW
write-off (1/3) 46,667 -
Blue’s gain P 93,333 P105,000
Note that if the only
immediate effect is considered, the “goodwill” method would be preferable; but
since goodwill, by itself, is non-realizable, the over-all effect would favor
the “bonus” method.
[49]. Letter
“C” is the correct answer.
The amount of
goodwill that was recognized in connection with the admission of the new
partner was P30,000, computed as follows:
New capital implied
from new partner’s investment:
P60,000/ 33 1/3% P180,000
Less: Resulting
assets after new partner’s investment:
Original partners’ investment P80,000
Net income 34,000
Drawings (
24,000)
New partner’s investment 60,000 150,000
Implied goodwill (for
original partners) P 30,000
[50]. Letter
“B” is the correct answer.
The amount of the private cash
settlement effected between the old partners was P9,000, computed as follows:
Total
Terry Timmy Tommy
May 31 investments P
80,000 P48,000 P32,000 P
-
Net income:
Salaries 14,000 7,000 7,000
-
Balance at 3:2 20,000
12,000 8,000 -
Drawings ( 24,000) (
14,000) (10,000)
-
December 31 balances P 90,000 P53,000 P37,000 P -
Investment 60,000 - -
60,000
Implied goodwill 30,000 18,000
12,000 -
Balances after
admission of new
partner P180,000 P71,000 P49,000 P60,000
Desired balances,
4:3:2 180,000 80,000 40,000 60,000
Private settlement P 9,000 P( 9,000)
Timmy will transfer
P9,000 of his capital to Terry.
[52]. Letter “C” is the correct answer.
Capital
of Minda P200,000
Loss on
furniture impairment:
Book
value P65,000
Fair
value 50,000
Minda’s
share (1/3) P15,000
5,000
Adjusted
capital P195,000
Less
fair value of furniture 50,000
Value
of note issued to Minda P145,000
[53]. Letter “A” is the correct answer.
Capital
of Pablo P200,000
Add
share on revaluation of inventory:
Book value P50,000
Fair
value 70,000
P20,000
x 20% 4,000
Total P204,000
Add
share in net income:
P130,000 x 20% 26,000
Adjusted
capital P230,000
Payment
made to Pablo 245,000
Goodwill
included in the payment P 15,000
[54]. Letter
“D” is the correct answer.
Romy’s acquisition of
the furniture would result in Romy’s reduction in capital of P55,000, computed
as follows:
Paco
Quin Romy
Charge for furniture
taken,
at second-hand value P P P50,000
Share in realization
loss,
P65,000 – P50,000 5,000
5,000 5,000
Reduction in capital
incident to
Romy’s acquisition of the
Furniture P5,000 P5,000 P55,000
[55]. Letter “C”
is the correct answer.
The value of the note
that Minda would get is P145,000, computed as follows:
Minda’s capital P200,000
Less: Charges for:
Second-hand value of asset taken P50,000
Share of loss on asset taken:
(P65,000 – P50,000) x 1/3 5,000
Total charges against Minda’s capital 55,000
Value of the note to
be issued to Minda P145,000
[56]. Letter
“C” is the correct answer.
After Tic’s
retirement, the partnership’s “net assets” was P225,000, computed as follows:
Net assets, before
Tic’s retirement P400,000
Implied goodwill:
(P225,000 – P200,000) / 50% 50,000
Adjusted net assets P450,000
Less: Payment to Tic 225,000
Net assets, after
Tic’s retirement P225,000
[57]. Letter
“A” is the correct answer.
The payment to Pablo included a goodwill
of P15,000, computed as follows:
Payment for Pablo’s
interest P245,000
Less: Pablo’s
interest just his withdrawal:
January 1 Capital P200,000
Add: Share in:
Inventory write-up: P20,000 x
20% 4,000
Net income to 6/30: 130,000 x 20%
26,000
July 1 capital just before withdrawal 230,000
Goodwill included in
payment to Pablo P 15,000
[58]. Letter
“C” is the correct answer.
If Juni received P45,000, Hugo pay
Juni the amount of P22,500, computed as follows:
(P45,000 x ½) P22,500
[59]. Letter
“C” is the correct answer.
Assuming the Kathy is paid P132,000,
Karen would be credited in the amount of P1,200, computed as follows:
(P135,000 –P132,000) x 2/5 P1,200
[60]. Letter
“C” is the correct answer.
If Rae is paid P39,000 in full
payment of her interest, the capital of Ana immediately after Rae’s withdrawal
would be P23,400, computed as follows:
Amount paid to Rae P39,000
Less: Rae’s capital
balance 35,000
Bonus to Rae from Ana
and Mae P 4,000
Ana’s capital balance
before Rae’s retirement P25,000
Less: Share in bonus
to Rae (P4,000 x2/5) 1,600
Ana’s capital balance
after Rae’s retirement P23,400
[61]. Letter
“D” is the correct answer.
Immediately after effecting the
transfer of the net assets, and the issuance of stock, the corporation’s
additional paid-in capital account would be credited for P164,000, computed as
follows:
Fair value of
partnership’s net assets:
P224,000 – P40,000 P184,000
Less: Par value of
stock issued to partners:
(10,000 x P1) x 2 20,000
Additional paid-in
capital in excess of par P164,000
[62]. Letter
“C” is the correct answer.
The partners are to
receive shares of stock, at P10 par value, equal to 15,000, 15,000, and 25,000,
respectively, computed as follows:
Mac Kuh Nat
Reported capital
balances P100,000 P100,000
P200,000
Share in assets
write-up, P150,000, equally 50,000 50,000 50,000
Total par value of
shares to be
received by each partner P150,000
P150,000 P250,000
Shares to be received
by each
partner, at P10 par value/share 15,000
15,000 25,000
[63]. Letter “B” is the correct answer.
Capital
of partnership before adjustment P260,000
Add
(deduct) adjustments:
Bad debts provision (
10,000)
Increase in inventory
20,000
Depreciation ( 3,000)
Adjusted
capital equal to shares’ par value P267,000
[64]. Letter “A” is the correct answer.
Mac Kuh Nat Total
Capital before adjustment P100,000 P100,000 P200,000 P400,000
Add adjustment for increase in net
assets (P550,00-P400,000)/3 50,000 50,000 50,000 150,000
Capital after adjustment P150,000 P150,000 P250,000 P550,000
Divided by peso par value per share 10 10 10 10
Number of shares received 15,000 15,000 25,000 55,000
[65]. Letter “B”
is the correct answer.
In the distribution of the P60,000
cash, Gardo received P26,000, computed as follows:
Total
Gardo Gordo
Initial contributions P 50,000 P30,000 P20,000
Equiv. Investments
(payments) 132,970
62,275 70,695
Equiv. Withdrawals
(receipts) (144,345) (79,100) (65,245)
Balances before
profit share P
38,625 P13,175 P25,450
Profit
(P60,000-P38,625), 6:4 21,375 12,825 8,550
Distribution of
P60,000 cash P 60,000 P26,000 P34,000
[66]. Letter “C
is the correct answer.
If all the partners are personally solvent,
deficiency/deficiencies resulting from the liquidation process, will require
additional cash from Dina in the amount of P50,000, computed as follows:
AA Bida Cita Dina
Capital balances P420,000 P215,000 P205,000 P100,000
Loan balances -
160,000 -
50,000
Total interests P420,000 P375,000 P205,000 P150,000
Less: share in
realization
Loss of P1,000,000 at
3:3:2:2 300,000
300,000
200,000 200,000
Balance (deficiency) P120,000 P P 75,000 P 5,000
P(50,000)
[67]. Letter
“C” is the correct answer.
The remaining cash is distributed as Salve,
P0; Gilda, P31,000; and, Nora, P49,000, respectively, computed as follows:
Salve Gilda Nora
Capital balances P 80,000 P115,000 P105,000
Realization loss ( 5:3:2)
(P150,000–P100,000)
(25,000) ( 15,000)
( 10,000)
Theoretical loss on other
asset(P320,000-P150,000) (85,000) ( 51,000) (
34,000)
Balances before distribution P(30,000) P 49,000 P 61,000
Salve’s deficiency at 3:2 30,000 ( 18,000) ( 12,000)
Cash distribution P - 0 - P 31,000 P 49,000
[68]. Letter
“A” is the correct answer.
The total loss to A is, P3,000,
computed as follows:
Total book value of non-cash assets
realized:
(P9,000 + P7,700 + P11,300) P28,000
Less: Total cash received:
(P6,000 + P3,500 + P12,500) 22,000
Total realization loss P 6,000
Total loss to A:
(3/6 of P6,000) P 3,000
[69]. Letter
“C” is the correct answer.
Total cash received by B is P5,000,
computed as follows:
B, capital P7,000
Less: Share in total realization
loss:
(2/6 x P6,000) 2,000
Total cash received by B P5,000
[70]. Letter
“D” is the correct answer.
The cash received by C in January is
P0, computed as follows:
C, capital P3,000
Less: Share in:
Realization loss in January:
(P9,000 – P6,000) x 1/6 P
500
Theoretical loss on
remaining non-cash assets:
(P19,000 x 1/6)
3,167
Total P3,667
Cash received by C in January P – 0 –
[71]. Letter
“C” is the correct answer.
The total amount received by all of
the partners, if X received P8,000 upon liquidation of the partnership was
P52,000, computed as follows:
X, capital P40,000
Less: Amount rec’d in liquidation
8,000
X’s share in liquidation loss P32,000
Total capital of the three partners P108,000
Less: Total liquidation loss (P32,000 ¸
4 x 7) 56,000
Total amount received by all of the partners P 52,000
[72]. Letter
“B” is the correct answer.
Assuming the facts given in No. 17,
except that X received P26,000 as a result of the liquidation, as part of the
liquidation Z received the amount of P14,500, computed as follows:
X, capital P40,000
Less: Amount rec’d in liquidation
26,000
X’s share in liquidation loss P14,000
Z, capital P18,000
Less: Share in liquidation loss (P14,000¸4
x 1) 3,500
Amount received by Z in liquidation P14,500
[73]. Letter
“B” is the correct answer.
The respective shares of Sanchez and
Tan in the final cash distribution will be P175,000 and P125,000, respectively,
computed as follows:
Total
Sanchez Tan
Capital balances P1,250,000 P750,000 P500,000
Note payable to Tan 200,000 - 200,000
Total interest P1,450,000 P750,000 P700,000
Realization loss,
equally:
P1,450,000 – P300,000 (P1,150,000)
(575,000) (575,000)
Share in final
distribution P 300,000 P175,000 P125,000
[74]. Letter
“B” is the correct answer.
If liquidation takes place and
assets are realized at book value, the partners would receive cash
distributions equal to their recorded capital balances in final liquidation.
[75]. Letter
“B” is the correct answer.
John received total
cash distribution of P20,000, computed as follows:
Alex Jay John
Capital balances P95,000 P80,000 P70,000
Loss on realization of other
assets at 2:1:1
(P150,000 – P 70,000) (40,000) (20,000) (20,000)
Theoretical loss on
remaining other assets
(P265,000-P150,000) (57,500)
(28,750) (28,750)
Adjusted capital balances P( 2,500) P31,250 P21,250
Deficiency of Alex 2,500 ( 1,250) ( 1,250)
Cash distribution basis P
- 0 - P30,000 P20,000
[76]. Letter
“D” is the correct answer.
Jo should absorb P40,000 of the
remaining claim against the firm computed as follows:
Total Jo Lee
Vi
Capital balances P
950,000 P350,000 P250,000
P350,000
Realization loss (1,000,000) (300,000) (200,000) (500,000)
P( 50,000) P 50,000 P
50,000P (150,000)
Vi’s deficiency, 3:2
- (
90,000) (60,000) 150,000
Liability for unpaid
Claim P(
50,000) P( 40,000) P( 10,000) P –0-
[77]. Letter
“B” is the correct answer.
If the first cash sale of assets
booked at P150,000 resulted in net realization of P120,000, the amount to be
distributed to Irene would be P44,000, computed as follows:
Irene’s
capital P70,000
Less:
Share in:
Realization loss:
(P150,000 – P120,000) x 20% P 6,000
Possible loss on remaining other assets:
(P250,000 – P150,000) x 20% 20,000 26,000
Irene’s share in
first cash distribution P 44,000
[lxxviii]. Letter
“D” is the correct answer.
For Dan to receive P55,200 in full
settlement of his interest in the partnership, P193,000 must be realized from
the sale of the partnership’s non-cash assets, computed as follows:
Partners’ capital P130,000
Liabilities 90,000
Cash
( 40,000)
Non-cash assets P180,000
Dan’s desired share
in settlement P55,200
Less: Dan’s capital
balance 50,000
Dan’s share in
estimated realization gain P 5,200
Non-cash assets P180,000
Estimated realization
gain (P5,200 ¸ 40%) 13,000
Estimated realization
from sale of non-cash asset P193,000
[lxxix]. Letter
“A” is the correct answer.
The deficient partner is Bach and his
additional cash contribution to finally liquidate the partnership is P6,000,
computes as follows:
Bach
Lizst Strauss
Total interest
(capital and
loan balances) P55,000 P105,000 P200,000
Realization loss, at
4:4:2
P400,000 – P247,500 ( 61,000)
( 61,000) ( 30,500)
Balance (deficiency) P( 6,000) P 44,000 P169,500
[lxxx]. Letter
“A” is the correct answer.
The book value of the partnership’s non-cash
assets on May 31, 2011, was P180,000, computed as follows:
Partners’ capital
(assumed to be after
considering the net income) P130,000
Liabilities 90,000
Total assets
P220,000
Less: Cash 40,000
Book value of
non-cash assets on May 31, 2011 P180,000
-end of quizzer-
