Beruflich Dokumente
Kultur Dokumente
Partnership Formation
[1]. Emil and Pearl form a new partnership. Emil invests P300,000 in cash for her 60 percent
interest in the capital and profits of the business. Pearl contributes land that has an
original cost of P40,000 and a fair market value of P70,000, and a building that has a tax
basis of P50,000 and a fair value of P90,000. The building is subject to a P40,000
mortgage that the partnership will assume. What amount of cash should Pearl contribute?
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:
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)
[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
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.
[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
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.
The capital account of Pula and Puti immediately after the formation of the
partnership are:
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 The building is subject to a
Machinery and Equipment 25,000 75,000 mortgage loan of P90,000,
Building - 225,000 which is to be assumed by the
Furniture and Fixtures 10,000 - 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:
a. 70,500
b. 48,000
c. 67,500
d. 74,000
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:
[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:
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 and Violet form a partnership on May 1, 2011. They agree
that Yellow will contribute office equipment with a total fair value of
P40,000; Orange will contribute delivery equipment with a fair value of P80,000;
and Violet will contribute cash. If Violet wants a one-third interest in the capital
and profits, how much should she invest?
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:
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
a. P24,000
b. P30,000
c. P40,000
d. P50,000
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.
a. P30,000
b. P50,000
c. P60,000
d. P80,000
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.
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?
[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:
a. P13,304.35
b. P18,000.00
c. P15,300.00
d. P20,700.00
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.
[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
a. P45,000
b. P48,000
c. P60,000
d. P80,000
[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.
a. P3.5M
b. P4M
c. P5M
d. P4.5M
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
[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.
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
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:
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:
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:
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.
[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:
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:
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
Profit and loss ratio is 3:2:1 for A, B, and C, respectively. The other non-cash assets were
realized as follows:
[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:
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:
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:
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:
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:
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:
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-
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
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.
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.
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
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.
Computation a:
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).
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)
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
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.
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)
Total loss to A:
(3/6 of P6,000) P 3,000
Z, capital P18,000
Less: Share in liquidation loss (P14,000¸4 x 1) 3,500
Amount received by Z in liquidation P14,500