Special Qualifying Examination Review 2019

PUP Junior Philippine Institute of Accountants

Reviewee's Copy

PARTNERSHIP FORMATION

1. According to Article 1767, it is a contract by virtue of which, two or more persons bind
themselves to contribute money, property, or industry to a common fund, with the intention of
dividing the profits among themselves

A. Partnership

B. Cooperatives

C. Corporation

D. Sole Proprietorship

2. Kind of partner whose contribution is limited only to money

a. Capitalist

b. Industrial

c. Capitalist-Industrial

d. Limited

3. Which of the following is a characteristic of a general partnership?

a. All partners must agree to legal agreements or they are nonbinding

b. Each general partner is personally liable for all of the partnership obligations

c. Each partner is entitled to reasonable remuneration for conducting partnership business.

d. Parternship income is separately taxed

4. Hierarchy of valuation in Partnership

I. Agreed Values
II. Fair Values

III. Cost/ Book Value

5. For two previous sole propietsorhips forming a partnership, which of the following contra-
accounts should appear in its books?

a. Accumulated Depreciation

b. Allowance for Bad Debts

PROBLEMS:

1. On December 1, 20x5, Eugene and Marian formed a partnership, agreeing to share for profits
and losses in the ratio of 2:3, respectively. Eugene invested a parcel of land that cost him
25,000. Marian invested 30,000. The land was sold for 50,000 on the same date, three hours
after the formation of partnership. How much should be the balance of Eugene and Marian after
formation?

2. Emman admits Yanna as a partner in business. Accounts in the ledger of Emman on

November 30, 20x5, just before the admission of Yanna, show the following balances:

Cash 6,800

A/R 14,200

Inventory 20,000

A/P 8,000

Emman, Capital 33,000

It is agreed that for the purposes of establishing Emman's interest, the following adjustments
shall be made:

(a) An allowance for doubtful accounts of 3% of Accounts Receivable is to be established

(b) The merchandise inventory is to be valued at 23,000

(c) Prepaid Salary Expenses of 600 and accrued rent expenses are to be recognized
Yanna is to invest sufficient cash to obtain 1/3 interest in the partnership.

- [ ] (1) Compute for Emman's adjusted capital before the admission of Yanna and (2) the cash
investment by DD