DE LA SALLE LIPA College of Business, Economics, Accountancy and Management Accountancy Accountancy Department Second Semester Sem ester – A.Y. A.Y. 202!20" 202!2 0" Accounting #e$ie% 2 &ui' (( – )artners*ip +ame-----------------------------------------------------+ame-------------------------------------------------------------------Date--------------------------Date--------------------------- -------------- - Section-----------------------------------------------------Section-----------------------------------------------------------------Score-------------------Score--------------------------- ------------------- Directi Direction on Read and solve the following problems. Write the letter of your best answer on the space provided before each number. Erasures are not allowed and considered wrong. ___1. On May 1,!1!, 1,!1!, the business assets of "ohn and #aul appear below$ "ohn #aul %ash # 11,!!! # ,&'( )ccounts receivable &(,'&* '*+,-! nventories 1!,!&' *!,1! /and *!&,!!! 0uilding (,*+ urniture 2 i3tures '!,&(' &(,+Other assets ,!!! &,*!! 4otal #1,!!,-1* #1,&1+,!! )ccounts payable 1+,-(! (&,*'! 5otes payable !!,!!! &(',!!! "ohn, capital *(1,-+* #aul, capital +,&' 4otal #1,!!,-1* #1,&1+,!! "ohn and #aul agreed to form a partnership contributing their respective assets and e6uities sub7ect to the following ad7ustments$ )ccounts receivable of #!,!!! in "ohn8s "ohn8s boo9s and #&',!!! #&',!!! in #aul8s #aul8s are uncollectible. uncollectible. nventories of #','!! and #*,+!! are worthless in "ohn8s and #aul8s respective boo9s. Other assets of #,!!! and #&,*!! in "ohn8s and #aul8s respective boo9s are to be written off. #eter offered to 7oin for a !: ownership in the firm. ;ow much cash should he contribute< a. #&&!,+! c. #&((,&+ b. #&&+,(+ d. #&(,& ___. On )pril &!,!1!, )le3, )le3, 0en and %esar formed a partnership by combining their separate business proprietorships. )le3 contributed cash of #'!!,!!!. 0en contributed property with a #&*!,!!! carrying amount, a #(!!,!!! original cost, and #!!,!!! fair mar9et value. 4he partnership accepted responsibility for the #&'!,!!! mortgage attached to the property. %esar contributed e6uipment with a #&!!,!!! carrying amount, a #+'!,!!! original cost, and #''!,!!! fair value. 4he partnership agreement specifies that profits and losses are to be shared e6ually but is silent regarding capital contributions. What are the capital balances of the partners at )pril &!,!1!< )le3 0en %esar a. #'!!,!!! #!!,!!! #''!,!!! b. #'!!,!!! #('!,!!! #''!,!!! c. #'!!,!!! #&*!,!!! #&!!,!!! d. #'!!,!!! #(!!,!!! #+'!,!!! ___&. n the calendar year !1!, the partnership of ) and 0 reali=ed a net profit of #(!,!!!. 4he capital accounts of the partners show the following postings$ ), %apital 0, %apital >ebit %redit >ebit %redit "an. 1 1!,!!! !,!!! May 1 !,!!! 1!,!!! "uly 1 !,!!! )ug. 1 1!,!!! Oct. 1 1!,!!! ',!!! f the profits are to be divided based on average capital, the share of ) and 0, respectively are$ a. #1-,*!! and #11!,(!! c. #1&*,!! and #1!&,!! b. #1((,!!! and #-*,!!! d. #1&*,'(& and #1!&,('+ ___(. ?sing the same data in number &, if !: interest based on the capital at the of the year is allowed a nd given and the balance of the #(!,!!! profit is divided e6ually, e6ually, the total share of ) and 0, respectively are$
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a. #11,'!! and #11,'!! c. #1&,!!! and #11+,!!! b. #1(,!!! and #11*,!!! d. #1,*' and #11+,&+' ___'. Mit=, Marc and Mart are partners sharing profits in the ratio of '$&$, respectively. )s of >ecember &1,!!-, their capital balances were #-',!!! for Mit=, #!,!!! for Marc, and #*!,!!! for Mart. On "anuary 1,!1!, the partners admitted @ince as a new partner and according to their agreement, @ince will contribute #!,!!! in cash to the partnership and also pay #1!,!!! for 1': of Marc8s share. @ince will be given a !: share in profits, while the original partner8s share will be proportionately the same as before. )fter the admission of @ince, the total capital will be #&&!,!!! and @ince8s capital will be #+!,!!!. What is the balance of Marc8s capital after the admission of @ince< a. #+,*!! c. #+-,1!! b. #+(,*!! d. #1,1!! ___*. ), 0 and % are partners, who share profits and losses in the ratio of '$&$, respectively. 4hey agree to sell > ': of their respective capital and profits and losses ration for a total payment directly to the partners in the a mount of #1(!,!!!. 4hey agree that positive asset revaluation to other assets of #*!,!!! is to be recorded prior to the admission of >. 4he condensed Atatement of inancial #osition of the )0% #artnership is as follows$ %ash # *!,!!! /iabilities #1!!,!!! 5oncash assets '(!,!!! ), %apital '!,!!! 0, %apital 1'!,!!! _ %, %apital 1!!,!!! 4otal #*!!,!!! 4otal #*!!,!!! What is the capital of ), 0 and %, respectively after payment and admission of >< a. #1+,'!! B #11,'!! B #+',!!! c. #!,!!! B #1*,!!! B #11,!!! b. #1!,!!! B #1*,!!! B #(,!!! d. #'!,!!! B #1'!,!!! B #1!!,!!! ___+. 4he condensed Atatement of inancial #osition of )le3, "ay and "ohn, as of March &1,!1! follows$ %ash # ,!!! /iabilities # (,!!! Other assets *',!!! )le3, capital -',!!! "ay, capital !,!!! _ "ohn, capital +!,!!! 4otal #-&,!!! 4otal #-&,!!! 4he income and los ratio is '!$'$', respectively. 4he partners voted to dissolve their partnership and li6uidate by selling other assets in installments. #+!,!!! was reali=ed on the first cash sale of other assets with a boo9 value of #1'!,!!!. )fter settlement with creditors, all cash available was distributed to the partners. ;ow much cash was received by "ohn< a. #1!,'!! b. #!,!!!
c. #1,'! d. #&,'!!
___. )s of >ecember &1, the boo9s of )ME #artnership showed capital balances of ) B #(!,!!!C M B #',!!! and E B #',!!!. 4he partner8s profit and loss ratio was &$$1 respectively. 4he partners decided to dissolve and li6uidate. 4hey sold all the nonDcash assets for #&+,!!! cash. )fter settlement of all liabilities amounting to #1,!!!, they still have #,!!! cash left for distribution. What is the loss on reali=ation of the n onDcash assets< a. #(!,!!! c. #((,!!! b. #(,!!! d. #(',!!! ___-. 4he statement of financial position of the partnership of Aalve, alo and 5orma, who share in the profits and losses in the ratio of '$&$, respectively is as follows$ %ash # &!,!!! /iabilities # '!,!!! Other assets &!,!!! Aalve, capital !,!!! alo capital 11',!!! __ 5orma, capital 1!',!!! 4otal # &'!,!!! 4otal #&'!,!!! 4he partnership is li6uidated by installment, 4he first sale of nonDcash assets with a boo9 value of #1'!,!!! reali=es #1!!,!!!. ;ow should the remaining cash be distributed< Aalve alo 5orma a. #'!,!!! #&!,!!! #!,!!!
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b. #(!,!!! #(,!!! #1*,!!! c. ! #&1,!!! #(-,!!! d. ! #(,!!! #&,!!! ___1!. Roy and il are partners sharing profits and losses in the ratio of 1$, respectively. On "uly 1,!1!, they decided to form the R2 %orporation by transferring the assets and liabilities of the partnership to the corporation in e3change for the latter8s stoc9. 4he following is the postDclosing trial balance of the partnership$ >ebit %redit %ash # (',!!! )ccounts receivableFnetG *!,!!! nventory -!,!!! i3ed assetsFnetG 1+(,!!! /iabilities # *!,!!! Roy, capital -(,!! il, capital _ 1(,!! #&*-,!!! #&*-,!!! t was agreed that ad7ustments be made to the following assets to be transferred to the corporation$ )ccounts receivable # (!,!!! nventory *,!!! i3ed assets 1!,*!! 4he R2 %orporation was authori=ed to issue #1!! par preferred stoc9 and #1! par common stoc9. Roy and il agreed to receive for their e6uity in the partnership +! shares of the common stoc9 each, plus even multiples of 1! shares of preferred stoc9 for their remaining interests. What is the d istribution of stoc9s to Roy and il< Roy il #referred %ommon #referred %ommon a. +' shares +! shares 1,&( shares +! shares b. ++& shares +'! shares 1,(& shares +'! shares c. +' shares +! shares 1,&( shares +! shares d. +& shares +! shares 1,+' shares +! shares ___11. )ldo, 0ert, and %hris formed a partnership on )pril &!, with the following assets, measured at their fair values, contributed by each partner$ )ldo 0ert %hris %ash # 1!,!!! #1,!!! #&!,!!! >elivery truc9s 1'!,!!! ,!!! D %omputers ,'!! ',1!! D Office furniture _ &,'!! ,'!! 4otals #1*,'!! # (,*!! # &,'!! )lthough %hris has contributed the most cash to the partnership, he did not have the full amount of #&!,!!! available and was forced to borrow #!,!!!. 4he delivery truc9 contributed by )ldo has a mortgage of #-!,!!! and the partnership is to assume responsibility for the loan. 4he partners agreed to e6uali=e their interest. %ash settlement among the partners are to be made outside the partnership. ?sing the 0onus Method$ a. 0ert and %hris should p ay )ldo, #(,*!! and #!,+!! respectively b. )ldo should pay 0ert and %hris, #',&!! c. 0ert should pay )ldo, #',&!! and %hris, #!,+!! d. %hris should pay )ldo, #',&!! and 0ert, #(,*!! ___1. >etails regarding the boo9 values of May8s business assets and liabilities and their corresponding valuations are$ 0oo9 @alues )greed @aluations )ccounts receivable # ',!!! # ',!!! )llowance for bad debts (,!! ',!!! Merchandise inventory -,(!! 1!+,!!! Atore e6uipment &,!!! &,!!! )ccumulated depreciation B store e6uipment 1-,!!! 1*,(!! Office e6uipment +,!!! +,!!! )ccumulated depreciation B office e6uipment 1(,!! ,*!! )ccounts payable '*,!!! '*,!!! 5ora agrees to invest cash of #(,!!! and merchandise valued at current mar9et price. 4he value of the merchandise to be invested by 5ora and the cash to be invested by May, respectively are$ a. #-!,!!! and #*,!!! c. #(,!!! and #1&,!!! b. #',!!! and #1&,!!! d. #(,!!! and #*,!!!
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___1&. ), 0 and % are partners who share profits and losses in the ratio of '$&$, respectively. 4hey agree to sell > ': of their respective capital and profits and losses ratio for a total payment directly to the partners in the amount of #1(!,!!!. 4hey agree that positive asset revaluation of #*!,!!! is to be recorded prior to admission of >. 4he condensed balance sheet of the )0% #artnership is as follows$ %ash # *!,!!! /iabilities #1!!,!!! 5onDcash assets '(!,!!! ), %apital '!,!!! 0, %apital 1'!,!!! %, %apital 1!!,!!! 4otal #*!!,!!! 4otal #*!!,!!! What is the capital of ), 0 and %, respectively after the payment and admission of >< a. #1+,'!! B #11,'!! B #+',!!! c. #!,!!! B #1*,!!! B #11,!!! b. #1!,!!! B #1*,!!! B #(,!!! d. #'!,!!! B #1'!,!!! B #1!!,!!! ___1(. 4he following is the condensed balance the ratio of ($&$&. %ash # 1!,!!! Other assets 1,**!,!!! "o, receivable (!,!!!
sheet of the partnership of "o, /i and 0i who share profits and losses in
)ccounts payable # (!,!!! 0i, /oan *!,!!! "o, capital *!,!!! /i, capital (!!,!!! 0i, capital &!,!!! 4otal #1,!,!!! 4otal #1,!,!!! )ssume that the asses and liabilities are fairly valued on the balance sheet and the partnership decides to admit Mac as a new partner, with a !: interest. 5o asset revaluation or bonus is to be recorded. ;ow much Mac should contribute in cash or other assets< a. #&'!,!!! c. #&'',!!! b. #!,!!! d. #(,!!! ___1'. %arlos and >eo are partners who share profits and losses in the ratio of +$&, respectively. On October ', !!, their respective capital accounts were as follows$ %arlos B #&',!!! and >eo B #&!,!!! On that date they agreed to admit Aotto as a partner with a oneDthird interest in the capital and profits and losses, and upon his investment of #',!!!. 4he new partnership will begin with a total capital of #-!,!!!. mmediately after Aotto8s admission, what are the capital balances of %arlos, >eo and Aotto, respectively< a. #&!,!!! B #&!,!!! B #&!,!!! c. #&1,**+ B #,&&& B #&!,!!! b. #&1,'!! B #,'!! B #&!,!!! d. #&',!!! B #&!,!!! B #',!!! ___1*. Mit=, Marc and Mart are partners sharing earnings in the ratio of '$&$ respectively. )s of >ecember &1,!!+, their capital balance showed #-',!!! for Mit=, #!,!!! for Marc, and #*!,!!! for Mart. On "anuary 1,!! the partnership admitted @ince as a new partner and according to the partnership agreement, @ince will contribute #!,!!! in cash to the partnership and will also pay #1!,!!! for 1': of Marc8s share. @ince will share !: in the earnings while the ratio of the original partners will remain proportionately the same as before @ince admission. )fter @ince8s admission, the total capital of the partnership will be #&&!,!!! while @ince8s capital account will be #+!,!!!. What is the balance of Marc8s capital account after the admission of @ince< a. #1,1!! c. #+(,*!! b. #+-,1!! d. #+,*!! ___1+. 55, OO and ## are partners with present capital balances of #'!,!!!, #*!,!!! and #!,!!! respectively. 4he partners share profits and losses according to the following percentages$ *!: for 55, !: for ## and !: for ##. HH is to 7oin the partnership upon contributing #!,!!! cash, plus a machine with a fair mar9et value of #(!,!!! to the partnership in e3change for a ': interest in the capital and !: interest in the profits and losses. 4he e3isting assets of the partnership are undervalued by #,!!!. 4he original partners will share the balance of profits and losses in their original ratios. What is the capital balance of 55, OO, ## and HH, respectively in the new partnership assuming there is positive asset revaluation only< a. #*+,(!! B #*',!! B #',!! B #'&,!!! b. #'!,!!! B #*!,!!! B #!,!!! B #*!,!!! c. #!,!!! B #+!,!!! B #!,!!! B #!,!!! d. #!,!!! B #+!,!!! B #&!,!!! B #*!,!!!
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___1. )ce, 0oy and %id are partners sharing profits in the ratio of &$&$. On "uly &1, their capital balances are as follows$ )ce B #+!!,!!! 0oy B #'!!,!!! %id B #(!!,!!! 4he partners agreed to admit >eo on the following terms$ 1. >eo is to pay )ce #'!!,!!! for I interest of )ce8s interest. . >eo is also to invest #(!!,!!! in the partnership. &. 4he total capital of the partnership is to be #,(!!,!!! of which >eo8s interest is to be ':. What is the capital balance of )ce, 0oy and %id, respectively< a. #!*,'! B #!*,'! B #1&+,+!! c. #''*,'! B #+!*,'! B #'&+,'!! b. #&'!,!!! B #'!!,!!! B #(!!,!!! d. #'!!,!!! B #(!!,!!! B #&'!,!!! ___1-. ), 0 and % are partners in the accounting firm. 4heir capital account balances at yearDend were$ ) B #-!,!!!C 0 B #11!,!!!C % B #'!,!!!. 4hey share profits and loses in a ($($ ratio, after the following special terms$ 1. #artner % is to receive a bonus of 1!: of the net income after bonus. . nterest of 1!: shall be paid on that portion of a partner8s capital in e3cess of #1!!,!!!. &. Aalaries of #1!,!!! and #1,!!! shall be paid to partners ) and %, respectively. What is the total profit share of partner % if the net income of the partnership is #((,!!! for the year< a. #+,!! c. #1-,(!! b. #1*,!! d. #1-,!! ___!. ) and 0 entered into a partnership as of March 1,!! by investing #1',!!! and #+',!!!, respectively, they agreed that ), as the managing partner, was to receive a salary, #&!,!!! per year and a bonus computed at 1!: of the net profit after ad7ustment for the salaryC the balance of the profit was to be distributed in the ratio of their original capital balances. On >ecember &1,!!, account balances were a s follows$ %ash #+!,!!! )ccounts payable #*!,!!! )ccounts receivable *+,!!! ), capital 1',!!! urniture 2 fi3tures (',!!! 0, capital +',!!! Aales return ',!!! ), drawing F!,!!!G #urchases 1-*,!!! 0, drawing F&!,!!!G Operating e3penses *!,!!! Aales &&,!!! nventories on >ecember &1,!! were as follows$ supplies B #,'!!C merchandise B #+&,!!!C prepaid insurance was #-'! while accrued e3penses were #1,''!. >epreciation rate was !: per year. What is the capital balances on >ecember &1,!! of ) and 0, respectively, after closing the net profit and drawing accounts< a. #1&',-(! and #(+,-*! c. #1&-,*! and #(,*! b. #1&-,'(! and #(-,*! d. #1(,&'! and #(+,*+! ___1. arcia and ;enson formed a partnership on "anuary ,!! and agreed to share profits -!: and 1!:, respectively. arcia contributed capital of #',!!!. ;enson contributed no capital but has a speciali=ed e3pertise and manages the firm full time. 4here were no withdrawals during the year. 4he partnership agreement provides for the following$ %apital accounts are to be credited annually with interest at ': of beginning capital. ;enson is to be paid salary of #1,!!! a month. ;enson is to be received a bonus of !: of income calculated before deducting his salary and interest on both capital accounts. 0onus, interest and ;enson8s salary are to be considered partnership e3penses. 4he partnership !! income statement follows$ Revenues #-*,('! E3pensesFincluding salary, interest and bonusG (-,+!! 5et income #(*,+'! What is ;enson8s bonus< a. #11,* c. #1',!!! b. #1,!!! d. #1',+& ___. On "anuary 1,!!, ), 0, % and > formed 0e9ha 4rading %o., a partnership, with capital contributions as follows$ ) B #'!,!!!C 0 B #',!!!C % B #',!!!C and > B #!,!!!. 4he partnership contract provided that each partner shall receive a ': interest on contributed capital, and that ) and 0 shall receive salaries of #',!!! and #&,!!!, respectively. 4he contract also provided that % shall receive a minimum of #,'!! per annum, and > a minimum of #*,!!! per annum,
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which is inclusive of amounts representing interest and share of remaining profits. 4he balance of the profits shall be distributed to ), 0, % and > in a &$&$$ ratio. What amount should be earned by the partnership before any charge for interest and salaries, so that ) mar receive an aggregate of #1,'!! including interest, salary and share of profit< a. #1*,**+ c. #&!,**+ b. #&!,!!! d. #&,&&& ___&. ;erm, Mar and )ma formed a partnership on "anuary 1,!! and contributed #1'!,!!!, #!!,!!! and #'!,!!!, respectively. 4he )rticles of %oDpartnership provides that the operating income be shared among the partners as follows$ )s salary for ;erm in the amount of #(,!!!, for Mar B #1,!!! and for )ma B #1,!!!. nterest of 1: on the average capital during !! of the three partners and the remainder in the ratio of $($( respectively. 4he operating income for the year ended >ecember &1,!! B #1+*,!!!. ;erm contributed additional capital on "uly 1 B #&!,!!! and made a drawing on October 1 B #1!,!!!. Mar contributed additional capital on )ugust 1 B #!,!!! and made a drawing on October 1 B #1!,!!! and )ma made a drawing of #&!,!!! on 5ovember 1. What is the capital balances of ;erm, Mar and )ma, respectively on >ecember &1,!!< a. #1+-,*! B #-,&*! B #&-,&*! c. #1-,*! B #&-,&*! B #*-,&*! b. #1+-,+*! B #-,'! B #&-,'! d. #&,1! B #+,!*! B #!,+*! ___(. 4he partnership of ary, "erome and #aul was formed on "anuary 1,!!. 4he original investments were as follows$ ary B #!,!!!C "erome B #1!,!!! and #aul B #1!,!!!. )ccording to the partnership agreement, net income or loss will be divided among the respective partners as follows$ Aalaries of #1,!!! for aryC #1!,!!! for "eromeC and #,!!! for #aul. nterest of : on the average capital balances during the year of ary, "erome and #aul. Remainder divided e6ually. 4he net income of the partnership for the year ended >ecember &1,!! was #+!,!!!. ary invested an additional #!,!!! in the partnership on "uly 1,!!. #aul withdrew #&!,!!! from the partnership on October 1,!!. ary, "erome and #aul made regular drawings against their shares of net income during !! for #1!,!!! each. What is the capital balances of ary, "erome and #aul, respectively as of >ecember &1,!!< a. #11,&&& B #1&,+&& B #1*(,-&( c. #-,!!! B #1!,!!! B #1&(,-&( b. #1!,&&& B #1,+&& B #1'(,-&( d. #1,&&& B #1&,+&& B #1*(,-&( ___'. JJ, AA and WW formed a partnership on "anuary 1,!!. Each contributed #1((,!!!. 4he salaries were to be allowed as follows$ JJ B #&*,!!!C AA B #&*,!!! and WW B #'(,!!!. >rawings were e6ual to salaries and be ta9en out evenly throughout the year. With sufficient partnership net income, JJ and AA split a bonus e6ual to ': of partnership net income after salaries and bonus Fin no event could bonus go below =eroG. Remaining profits were to be divided as follows$ &!: for JJC &!: for AA and (!: for WW. or the year, partnership net income was #1((,!!!. What are the capital balances of JJ, AA, and WW, respectively on >ecember &1,!!< a. #1*,1! B #1*,1! B #!&,+*! c. #1'!,1! B #1'!,1! B #1(-,+*! b. #1'1,!! B #1'1,!! B #1(-,(!! d. #1'!,*!! B #1'!,*!! B #1(,!! ___*. 4M partnership begins its first year of operations with the following capital b alances$ 4an, capital B #!!,!!! and May,capital B #1!!,!!!. )ccording to the partnership agreement, all profits will be distributed as follows$ aG 4an will be allowed a monthly salary of #!,!!! with #1!,!!! assigned to May. bG 4he partners will be allowed with interest e6ual to 1!: of the capital balance as of the first day of the year. cG 4an will be allowed a bonus of 1!: of the net profit after bonus. dG 4he remainder will be divided on the basis of the beginning capital for the first year and e6ually for the second year. eG Each partner is allowed to withdraw up to #1!,!!! a year. )ssume that the net loss for the first year o f operations is #1',!!! with net income of #'',!!! in the subse6uent year. )ssume further that each partner withdraws the ma3imum amount from the business each period. What is the balance of 4an8s capital account at the end of the second year< a. #*(,+'! c. #1!,!!! b. #(,+'! d. #1(,+'! ___+. On "une &!,!!, the account balances of the partnership of %ru=, Merced and #rieto, together with their respective profit and los ratio, were as follows$ )ssets at cost B #1!,!!!C %ru=,loan B #-,!!!C %ru=, capital F!:G B #(,!!!C Merced,capitalF!:G B #&-,!!!C and #rieto,capital B #-!,!!!. %ru= decided to retire from the partnership. 0y mutual agreement, the assets are to be ad7usted to their fair value of #1*,!!! at "une &!,!!. t was agreed that the partnership would pay %ru= #*1,!! cash for %ru=8s partnership interest, including %ru=8s loan which is to be repaid in full. 5o goodwill is to be recorded. )fter %ru=8s retirement, what is the balance of Merced capital account< a. #&*,('! c. #(',('! b. #&-,!!! d. #(*,!! ___. %en, >eng and /ala are partners with capital balances on >ecember &1,!! of #&!!,!!!, #&!!,!!! and #!!,!!! respectively. #rofit are share e6ually. /ala wishes to withdraw and it is agreed that she is to ta9e certain furniture and fi3tures with second hand value of #'!,!!! and note for the balance of her interest. 4he furniture and
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fi3tures are carried in the boo9s at #*',!!!. 0rand new, the furniture and fi3tures may cost #!,!!!. /ala8s ac6uisition for the secondDhand furniture will result to$ a. Reduction in capital of #1',!!! each for %en and >eng b. Reduction in capital of #1!,!!! for /ala c. Reduction in capital of #',!!! each for %en, >eng and /ala d. Reduction in capital of #+,'!! each for %en and >eng
___-. #astor, Ramon and Aendong were partners with capital balances as of "anuary 1,!! of #1!!,!!!, #1'!,!!! and #!!,!!! respectively, sharing profit and losses on a '$&$ ratio. On "uly 1,!!, #astor withdraw from the partnership. #artners agreed that at the time of withdrawal, certain inventories had to be revalued at #+!,!!! from its cost of #'!,!!!. or the si3 month period ending "une &!,!!, the partnership generated a net income of #1(!,!!!. urther, partners agreed to pay #astor #1-',!!! for his interest and that the remaining partner8s capital accounts would be ad7usted for whatever asset revaluation the settlement would generate. 4he payment to #astor included a positive asset revaluation aside from the inventory revaluation in the amount of$ a. #1',!!! c. #'!,!!! b. #',!!! d. #(,'!! ___&!. On "uly 1!,!!, /olo wants to retire from "J/ partnership. 4he balance sheet for the "J/ #artnership before closing on that date shows the following$ %ash #1(,!!! /iabilities # -!,!!! Receivables, net +,!!! "ose, capital !!,!!! E6uipment, net +!,!!! Ji9o, capital -*,!!! ntangible asset, net *!,!!! /olo, capital (,!!! _ ncome summary !,!!! 4otal #''!,!!! 4otal #''!,!!! "ose, Ji9o and /olo share profits and losses in the ratio of '$&$, respectively. 4he partners agreed to write off the goodwill and to the ad7ust the e6uipment to their fair mar9et values of #&!,!!!. /olo is paid #11!,!!! cash for his total interest. )ssuming the use of the total positive asset revaluation, what is the total assets of the new partnership after the retirement of /olo< a. #''(,!!! c. #(+(,!!! b. #(-!,!!! d. #''!,!!! ___&1. ), 0 and % are partners in a te3tile distribution business, sharing profits and losses e6ually. On >ecember &1,!!, partnership capital and the partner8s drawing were as follows$ ) 0 % 4otal %apital #1!!,!!! #!,!!! #&!!,!!! #(!,!!! >rawing *!,!!! (!,!!! !,!!! 1!,!!! 4he partnership was unable to collect on its trade receivables, and it as forced to li6uidate. 4he operating profits for !! amounted to #+,!!!, and was all e3hausted including the partnership assets. ?nsettled creditor8s clams at >ecember &1,!! amounted to #(,!!!. 0 and % have substantial private resources, but ) has no available free assets. What is the final cash contribution to %< a. #1*,!!! c. #(,!!! b. #1!,!!! d. #+,!!! ___&. 4he partners )i9o, 0ren, %inia and >ior who share profits and losses at &!:, &!:, !: and !: respectively decided to li6uidate. )ll partnership assets are to be converted into cash. #rior to the li6uidation, the condensed balance sheet is as follows$ %ash # 1!!,!!! /iabilities # +'!,!!! Other assets 1,!!,!!! 0ren,loan *!,!!! >ior, loan '!,!!! )i9o, capital (!,!!! 0ren, capital &1',!!! %inia, capital !',!!! >ior, capital 1!!,!!! 4otal #1,-!!,!!! 4otal #1,-!!,!!! 4he nonDcash assets reali=e #!!,!!!. )ll the partners are solvent, and can contribute any additional cash to cover any deficiency. n the process of li6uidation, deficiency will occur and will re6uire additional investment as follows$ a. %inia at #+',!!! c. >ior at #'!,!!! b. >ior and %inia for #'!,!!! and #+,'!! respectively d. 5one
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___&&. 4he partnership pf "avier, Jarim and /aurel share profits and losses in the ratio of '$&$, respectively. 4he partners voted to dissolve the partnership when its assets, liabilities and capital were as follows$ %ash # (!,!!! /iabilities # *!,!!! Other assets 1!,!!! "avier, capital (,!!! Jarim, capital +,!!! /aurel, capital +!,!!! 4otal #'!,!!! 4otal #'!,!!! 4he partnership will be li6uidated over a prolonged period of time, )s cash is available it will be distributed to the partners. 4he first sale of nonDcash assets having a boo9 value of #1!,!!! reali=ed #-!,!!!. What is the cash to be distributed to "avier, Jarim and /aurel, respectively after the first sale< a. #! B #,!! B #(1,!! c. #&',!!! B #1,!!! B #1(,!!! b. #! B #&!,!!! B #(!,!!! d. #(',!!! B #+,!!! B #1,!!! ___&(. 4he following balance sheet is for the partnership of >, E and $ %ash # !,!!! /iabilities # '!,!!! Other assets 1!,!!! >, capital F(!:G &+,!!! E, capital F(!:G *',!!! , capital F!:G (,!!! 4otal #!!,!!! 4otal #!!,!!! f the firm as shown on the o riginal balance sheet is dissolved and li6uidated by selling assets in installments, the first sale of nonDcash assets having a boo9 value of #-!,!!! reali=es #'!,!!! and cash of #1+,!!! after settlement with creditors is distributed. What is the cash to be received by partner >, E and on the first installment< a. #,!!! B #,!!! B #(,!!! c. #! B #1&,&&& B #*,**+ b. #*,**+ B #*,**+ B #*,*** d. #! B #1,!!! B #1*,!!! ___&'. On 5ovember &!,!!, 0EE, %EE and >EE decided to li6uidate 0%> partnership. 4heir capital balances and profit and loss on this date are as follows$ 0EE F(!:G B #'!,!!!C %EE F&!:G B #*!,!!!C and >EE F&!:G B #!,!!!. 4he net income from "anuary 1 to 5ovember &!,!! is #((,!!!. On 5ovember &!,!!, cash and liabilities are #(!,!!! and #-!,!!!, respectively. or 0ee to receive #'',!! in full settlement of h is interest in the firm, how much must be reali=ed from the sale of the firm8s nonDcash assets< a. #&&,!!! c. #1(-,!!! b. #'',!!! d. #1-&,!!! ___&*. On "uly 1,!!, the %hess #artnership has the following balance sheet$ %ash # !,(!! )ccounts payable #1,(!! Other assets 1-,*!! Roo9, loan 1(,(!! Roo9, capitalF'!:G ,!! _ Jing, capital F'!:G +(,(!! 4otal #(!,!!! 4otal #(!,!!! )s of "uly 1,!!, the partners have personal net worth as follows$ Roo9 Jing )ssets #*,(!! #-1,!! /iabilities '*,(!! 1,(!! 4he personal net worth of each partner does not include any amounts due to or from the partnership. )ssume the other assets are sold for #1&,*!! after incurring li6uidation e3penses of #(,!!. ;ow much should Jing receive< a. #1,!!! c. #(,!!! b. #,!! d. #1*,!! ___&+. 0el, %ol and >el, partners of the 0%> partnership, share profits and losses in the ratio of '$&$ respectively. On >ecember &1,!!, the end of an unprofitable year, they decided to li6uidate the partnership. 4he partner8s capitalC account balances on the date were as follows$ 0el B #,!!!C %ol B #(,-!!C and >el B #1',!!!. 4he liabilities in the balance sheet amounted to #&!,!!! including a loan of #1!,!!! payable to 0el. 4he cash balance was #*,!!!. 4he partners planned to reali=e the nonDcash assets in installment and to distribute as it becomes available. )ll three partners are solvent. f 0el received a total of #!,!!! as a result of li6uidation, what was the total amount reali=ed by the partnership on the nonDcash assets< a. #',-!! c. #*+,-!! b. #-1,-!! d. #*1,-!! ___&. On >ecember &1,!!, the accounting records of the A4? #artnership included the following ledger account balances$ F>rG %r Ay, drawing F(,!!!G
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?y, drawing F-,!!!G 4y, loan &!,!!! Ay, capital 1&,!!! 4y, capital 1!!,'!! ?y, capital 1!,!!! 4otal assets of the partnership amounted to #(+,'!!, including #','!! cash. 4he partnership was li6uidated on >ecember &1,!! and ?y received #&,'! cash pursuant to the li6uidated. Ay, 4y and ?y share profits and losses in a '$&$ ratio, respectively. What is the loss on reali=ation of assets and cash received by Ay, respectively< a. #1+,+'! and #&',*' c. #&,+'! and #&+,1' b. #+,+'! B #'-,*' d. #1&,+'! and #1&,1' ___&-. #epe and #ilar started a partnership some years ago and managed to operate profitably for several years. Recently however, they lost a substantial legal suit and incurred une3pected losses on accounts receivable and inventories. )s a result, they decided to li6uidate. 4hey sold all assets and only #1*,!!! was available to pay liabilities, which amounted to #-+,!!!. 4heir capital account balances before the li6uidation and their profit and loss sharing ratios are shown below$ %apital balances #K/ ratios #epe #!+,!!! *!: #ilar 11,'!! (!: #epe is personally insolvent after investing cash to pay the unpaid creditors, but #ilar has personal assets in e3cess of #-!!,!!!. n the settlement to partners, how much cash should #epe receive< a. #*&,-!! c. #1',&!! b. #! d. #*&,!!! ___(!. #artners 0ee, %ee, >ee and ee who share profits '$&$1$1, respectively, decide to li6uidate their partnership. %apital balances before li6uidation are$ 0ee B #*!,!!!C %ee B #(!,!!!C >ee B #&!,!!! and ee B #1!,!!!. 4he partners agree to the following$ aG #artnership8s computer e6uipment with a boo9 value of #1,!!! is to be ta9en over by partner 0ee at a price of #1',!!!. bG #artnership8s liabilities are to be paid off and the balance of cash on hand, #&!,!!! is to be divided in a manner that will avoid the need for any possible recovery of cash from a partner. ;ow much of the #&!,!!! cash to be distributed to partner %ee< a. #1!,!!! c. #!,!!! b. #',!!! d. #1',!!! ___(1. ardo and ordo formed a partnership on "uly 1,!11 to operate two stores to be managed by each of them. 4hey invested #&!,!!! and #!,!!! and agreed to share earnings *!: and (!: respectively. )ll their transactions were for cash, and all their subse6uent transactions were handled through their respective ban9 accounts as summari=ed below$ ardo ordo %ash receipts #+-,1!! #*',(' %ash disbursements *,+' +!,*-' On October &1,!11, all remaining noncash assets in the two stores were sold for cash of #*!,!!!. 4he partnership was dissolved, and cash settlement was affected. n the distribution of the #*!,!!! cash, ardo received$ a. #(,!!! c. #&(,!!! b. #*,!!! d. #&*,!!! ___(. )), 00 and %% are partners with average capital balances during !11 of #(+,'!!, #&,*'! and #1*,&'!, respectively. 4he partners receive 1!: interest on their average capital balances after deducting salaries of #1,&' to )) and #,*' to %%, the residual profits or loss is divided e6ually. n !11, the partnership had a net loss of #1',*( before the interest and salaries to partners. 0y what amount should ))8s and %%8s capital account change B increase FdecreaseG )) %% )) %% a. #&!,*+ F#(!,((G c. F#(!,((G #&1,&' b. #-,(+* #1+,'&* d. #,&' #&,(' ___(&. ), 0 and % are partners in an accounting firm. 4heir capital balances at yearDend were ) B #-!,!!!C 0 B #11!,!!! and % B #'!,!!!. 4hey share profits and losses on a ($($ ratio, after the following special terms$ aG #artner % is to receive a bonus of 1!: of net income after the bonus. bG nterests of 1!: shall be paid on that portion of a partner8s capital in e3cess of #1!!,!!!. cG Aalaries of #1!,!!! and #1,!!! shall be paid to partners ) 2 %, respectively. What is the total profit share of partner % if the net income for the year was #((,!!!< a. #+,!! c. #1-,(!! b. #1*,!! d. #1-,!! ___((. L, and N, a partnership formed on "anuary 1,!11 had the following initial investments$ L B #1!!,!!!C B #1'!,!!! and N B #',!!!. 4he partnership agreement states that profits and losses are to be shared e6ually by the
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partners after consideration is made for the following$ aG Aalaries allowed to partners B #*!,!!! for L and #(,!!! for and #&*,!!! for N. )verage partner8s capital balances during the year shall be allowed 1!:. 4he following are the additional data$ aG On "une &!,!11, L invested an additional #*!,!!!. bG N withdrew #+!,!!! from the partnership on Aeptember &!,!11. cG Ahare in the remaining partnership profit was #',!!! for each partner. What is the total partnership capital on >ecember &1,!11< a. #(!',!!! c. #(!,!!! b. #*+1,'!! d. #*+,+'!
___('. A, >, R and # are partners sharing earnings in the ratio of &K1. (K1, *K1 and K1, respectively. 4he balances of their capital accounts on >ecember &1,!11 are as follows$ A B #1,!!!C > B #',!!!C R B #',!!! and # B #-,!!!. 4he partners decide to li6uidate and they accordingly convert the noncash assets into #&,!! cash. )fter paying the liabilities amounting to #&,!!!, they have #,!! to divide. )ssume that a debit balance in any partner8s capital is uncollectible. )fter the #,!! was divided, what is the capital balance of >< a. #&,!! c. #(,'!! b. #&,-! d. #1+,!! ___(*. 4he #HR partnership is being dissolved. )ll liabilities have been paid and the remaining assets are being reali=ed gradually. 4he e6uity of the partners is as follows$ #artner8s )ccounts /oans to FfromG partnership #K/ Ratio # #(,!!! #*,!!! & H &*,!!! D & R *!,!!! F#1!,!!!G ( 4he second cash payment to any partner under a program of priorities shall be made thus$ a. 4o R #,!!! c. 4o R #,!!! b. 4o H #*,!!! d. 4o H #*,!!! and R, #,!!! ___(+. )fter operating for five years, the boo9s of the partnership of 0o and 0y showed the following balances$ 5et assets B #1*-,!!!C 0o, capital B #11!,'!! and 0y, capital B #','!!. f li6uidation ta9es place at this point and the net assets are reali=ed at boo9 value, the partners are entitled to receive$ a. 0o B #11+,!!! 2 0y B ',!!! c. 0o B #(,'!! 2 0y B #(,'!! b. 0o B #1*,+'! 2 0y B #(,'! d. 0o B #11!,'!! 2 0y B #','!! ___(. 4he partners of the M 2 5 partnership started li6uidating their business on "uly 1,!11 at which time the partners were sharing profits and losses (!: to M and *!: to 5. 4he balance sheet of the partnership appeared as follows$ %ash # ,!! )ccounts payable # &,(!! Receivable ,(!! M, capital #&1,!!! nventory &-,(!! M, drawing F',(!!G ',*!! E6uipment #*',!! 5, capital #&&,!! )cc. >ep. F&!,!!G &(,(!! 5, drawing F!!G &&,!!! 4otal #1!',!!! 5, loan 1(,!!! 4otal #1!',!!! >uring the month of "uly, the partners collected #*!! of the receivables with no loss. 4he partners also sold during the month the entire inventory on which they reali=ed a total of #&,(!!. What is the cash paid to M on "uly &1,!11< a. #',*!! c. #&! b. #',(!! d. #! ___(-. #artners )rt and 4one who share e6ually in profits and losses have the following balance sheet as of 1K&1K!11$ %ash #1!,!!! )ccounts payable #1+,!!! )ccounts receivable 1!!,!!! )cc. depreciation ,!!! nventory 1(!,!!! )rt, capital 1(!,!!! E6uipment !,!!! 4ony, capitalC 1!,!!! 4otal #((!,!!! 4otal # ((!,!!! 4hey agreed to incorporate their partnership with the new corporation absorbing the net assets after the following ad7ustments$ provision for bad debts of #1!,!!!C restatement of the inventory at its fair value of #1*!,!!!C and recognition of further depreciation on the e6uipment of #&,!!!. 4he corporation8s capital stoc9 is to have a par value of #1!!, and the partners are to be issued corresponding total shares e6uivalent to their ad7usted capital balances. What is the total par value of the shares issued to partners )rt and 4ony< a. #*!,!!! c. #+&,!!! b. #*+,!!! d. #!,!!!
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___'!. /ancelot is trying to decide whether to accept a salary of #(!,!!! or a salary of #',!!! plus a bonus of 1!: of net income after salary and bonus as a means of allocating profit among the partners. Aalaries traceable to the other partners are estimated to be #1!!,!!!. What amount of income would be necessary so that /ancelot would consider the choices to be e6ual< a. #1*',!!! c. #*',!!! b. #-!,!!! d. #&!',!!!
Solution in Quiz in Partnership 1. D 2. B 3. D 4. A 5. C 6. B 7. B 8. B 9. C 1. C 11. A 12. D 13. B 14. A 15. B 16. B 17. D 18. C 19. C 2. B 21. C 22. D 23. D 24. A 25. C 26. A 27. C 28. C 29. A 3. B 31. D 32. C 33. A 34. D 35. D 36. B 37. D 38. B 39. A 4. A 41. B 42. A
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43. C 44. D 45. B 46. D 47. D 48. C 49. B 5. B
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