392586164 Quiz in Partnership doc PDF

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DE LA SALLE LIPACollege of Business, Economics, Accountancy and Management Accountancy Department Second Semester – A. 2012- Accounting Review 2 Quiz II – Partnership Name:_________________________________________Date: _ Section:_______________________________________Score:Direction: Read and solve ...

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DE LA SALLE LIPA College of Business, Economics, Accountancy and Management Accountancy Department Second Semester – A.Y. 2012-2013 Accounting Review 2 Quiz II – Partnership Name:____________________________________________________________________Date:___________________________ _ Section:__________________________________________________________________Score:___________________________ Direction: 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 1,2010, the business assets of John and Paul appear below: John Paul Cash P 11,000 P 22,354 Accounts receivable 234,536 567,890 Inventories 120,035 260,102 Land 603,000 Building 428,267 Furniture & Fixtures 50,345 34,789 Other assets 2,000 3,600 Total P1,020,916 P1,317,002 Accounts payable 178,940 243,650 Notes payable 200,000 345,000 John, capital 641,976 Paul, capital 728,352 Total P1,020,916 P1,317,002 John and Paul agreed to form a partnership contributing their respective assets and equities subject to the following adjustments:  Accounts receivable of P20,000 in John’s books and P35,000 in Paul’s are uncollectible.  Inventories of P5,500 and P6,700 are worthless in John’s and Paul’s respective books.  Other assets of P2,000 and P3,600 in John’s and Paul’s respective books are to be written off. Peter offered to join for a 20% ownership in the firm. How much cash should he contribute? a. P330,870 c. P344,237 b. P337,487 d. P324,382 ___2. On April 30,2010, Alex, Ben and Cesar formed a partnership by combining their separate business proprietorships. Alex contributed cash of P500,000. Ben contributed property with a P360,000 carrying amount, a P400,000 original cost, and P800,000 fair market value. The partnership accepted responsibility for the P350,000 mortgage attached to the property. Cesar contributed equipment with a P300,000 carrying amount, a P750,000 original cost, and P550,000 fair value. The partnership agreement specifies that profits and losses are to be shared equally but is silent regarding capital contributions. What are the capital balances of the partners at April 30,2010? Alex Ben Cesar a. P500,000 P800,000 P550,000 b. P500,000 P450,000 P550,000 c. P500,000 P360,000 P300,000 d. P500,000 P400,000 P750,000 ___3. In the calendar year 2010, the partnership of A and B realized a net profit of P240,000. The capital accounts of the partners show the following postings: A, Capital B, Capital Debit Credit Debit Credit Jan. 1 120,000 80,000 May 1 20,000 10,000 July 1 20,000 Aug. 1 10,000 Oct. 1 10,000 5,000 If the profits are to be divided based on average capital, the share of A and B, respectively are: a. P129,600 and P110,400 c. P136,800 and P103,200 b. P144,000 and P96,000 d. P136,543 and P103,457 ___4. Using the same data in number 3, if 20% interest based on the capital at the of the year is allowed and given and the balance of the P240,000 profit is divided equally, the total share of A and B, respectively are:

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a. P121,500 and P118,500 c. P123,000 and P117,000 b. P124,000 and P116,000 d. P122,625 and P117,375 ___5. Mitz, Marc and Mart are partners sharing profits in the ratio of 5:3:2, respectively. As of December 31,2009, their capital balances were P95,000 for Mitz, P80,000 for Marc, and P60,000 for Mart. On January 1,2010, the partners admitted Vince as a new partner and according to their agreement, Vince will contribute P80,000 in cash to the partnership and also pay P10,000 for 15% of Marc’s share. Vince will be given a 20% share in profits, while the original partner’s share will be proportionately the same as before. After the admission of Vince, the total capital will be P330,000 and Vince’s capital will be P70,000. What is the balance of Marc’s capital after the admission of Vince? a. P72,600 c. P79,100 b. P74,600 d. P81,100 ___6. A, B and C are partners, who share profits and losses in the ratio of 5:3:2, respectively. They agree to sell D 25% of their respective capital and profits and losses ration for a total payment directly to the partners in the amount of P140,000. They agree that positive asset revaluation to other assets of P60,000 is to be recorded prior to the admission of D. The condensed Statement of Financial Position of the ABC Partnership is as follows: Cash P 60,000 Liabilities P100,000 Noncash assets 540,000 A, Capital 250,000 B, Capital 150,000 _ C, Capital 100,000 Total P600,000 Total P600,000 What is the capital of A, B and C, respectively after payment and admission of D? a. P187,500 – P112,500 – P75,000 c. P280,000 – P168,000 – P112,000 b. P210,000 – P126,000 – P84,000 d. P250,000 – P150,000 – P100,000 ___7. The condensed Statement of Financial Position of Alex, Jay and John, as of March 31,2010 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 P293,000 Total P293,000 The income and los ratio is 50:25:25, respectively. The partners voted to dissolve their partnership and liquidate by selling other assets in installments. P70,000 was realized on 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 cash was received by John? a. P10,500 b. P20,000

c. P21,250 d. P32,500

___8. As of December 31, the books of AME Partnership showed capital balances of A – P40,000; M – P25,000 and E – P5,000. The partner’s profit and loss ratio was 3:2:1 respectively. The partners decided to dissolve and liquidate. They sold all the non-cash assets for P37,000 cash. After settlement of all liabilities amounting to P12,000, they still have P28,000 cash left for distribution. What is the loss on realization of the non-cash assets? a. P40,000 c. P44,000 b. P42,000 d. P45,000 ___9. The statement of financial position of the partnership of Salve, Galo and Norma, who share in the profits and losses in the ratio of 5:3:2, respectively is as follows: Cash P 30,000 Liabilities P 50,000 Other assets 320,000 Salve, capital 80,000 Galo capital 115,000 __ Norma, capital 105,000 Total P 350,000 Total P350,000 The partnership is liquidated by installment, The first sale of non-cash assets with a book value of P150,000 realizes P100,000. How should the remaining cash be distributed? Salve Galo Norma a. P50,000 P30,000 P20,000

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b. P40,000 P24,000 P16,000 c. 0 P31,000 P49,000 d. 0 P48,000 P32,000 ___10. Roy and Gil are partners sharing profits and losses in the ratio of 1:2, respectively. On July 1,2010, they decided to form the R&G Corporation by transferring the assets and liabilities of the partnership to the corporation in exchange for the latter’s stock. The following is the post-closing trial balance of the partnership: Debit Credit Cash P 45,000 Accounts receivable(net) 60,000 Inventory 90,000 Fixed assets(net) 174,000 Liabilities P 60,000 Roy, capital 94,800 Gil, capital _ 214,200 P369,000 P369,000 It was agreed that adjustments be made to the following assets to be transferred to the corporation: Accounts receivable P 40,000 Inventory 68,000 Fixed assets 180,600 The R&G Corporation was authorized to issue P100 par preferred stock and P10 par common stock. Roy and Gil agreed to receive for their equity in the partnership 720 shares of the common stock each, plus even multiples of 10 shares of preferred stock for their remaining interests. What is the distribution of stocks to Roy and Gil? Roy Gil Preferred Common Preferred Common a. 785 shares 720 shares 1,384 shares 720 shares b. 773 shares 750 shares 1,843 shares 750 shares c. 758 shares 720 shares 1,834 shares 720 shares d. 738 shares 720 shares 1,758 shares 720 shares ___11. Aldo, Bert, and Chris formed a partnership on April 30, with the following assets, measured at their fair values, contributed by each partner: Aldo Bert Chris Cash P 10,000 P12,000 P30,000 Delivery trucks 150,000 28,000 Computers 8,500 5,100 Office furniture _ 3,500 2,500 Totals P168,500 P 48,600 P 32,500 Although Chris has contributed the most cash to the partnership, he did not have the full amount of P30,000 available and was forced to borrow P20,000. The delivery truck contributed by Aldo has a mortgage of P90,000 and the partnership is to assume responsibility for the loan. The partners agreed to equalize their interest. Cash settlement among the partners are to be made outside the partnership. Using the Bonus Method: a. Bert and Chris should pay Aldo, P4,600 and P20,700 respectively b. Aldo should pay Bert and Chris, P25,300 c. Bert should pay Aldo, P25,300 and Chris, P20,700 d. Chris should pay Aldo, P25,300 and Bert, P4,600 ___12. Details regarding the book values of May’s business assets and liabilities and their corresponding valuations are: Book Values Agreed Valuations Accounts receivable P 58,000 P 58,000 Allowance for bad debts 4,200 5,000 Merchandise inventory 98,400 107,000 Store equipment 32,000 32,000 Accumulated depreciation – store equipment 19,000 16,400 Office equipment 27,000 27,000 Accumulated depreciation – office equipment 14,200 8,600 Accounts payable 56,000 56,000 Nora agrees to invest cash of P42,000 and merchandise valued at current market price. The value of the merchandise to be invested by Nora and the cash to be invested by May, respectively are: a. P90,000 and P62,000 c. P48,000 and P138,000 b. P252,000 and P138,000 d. P48,000 and P62,000

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___13. A, B and C are partners who share profits and losses in the ratio of 5:3:2, respectively. They agree to sell D 25% of their respective capital and profits and losses ratio for a total payment directly to the partners in the amount of P140,000. They agree that positive asset revaluation of P60,000 is to be recorded prior to admission of D. The condensed balance sheet of the ABC Partnership is as follows: Cash P 60,000 Liabilities P100,000 Non-cash assets 540,000 A, Capital 250,000 B, Capital 150,000 C, Capital 100,000 Total P600,000 Total P600,000 What is the capital of A, B and C, respectively after the payment and admission of D? a. P187,500 – P112,500 – P75,000 c. P280,000 – P168,000 – P112,000 b. P210,000 – P126,000 – P84,000 d. P250,000 – P150,000 – P100,000 ___14. The following is the condensed balance sheet of the partnership of Jo, Li and Bi who share profits and losses in the ratio of 4:3:3. Cash P 180,000 Accounts payable P 420,000 Other assets 1,660,000 Bi, Loan 60,000 Jo, receivable 40,000 Jo, capital 620,000 Li, capital 400,000 Bi, capital 380,000 Total P1,880,000 Total P1,880,000 Assume 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 20% interest. No asset revaluation or bonus is to be recorded. How much Mac should contribute in cash or other assets? a. P350,000 c. P355,000 b. P280,000 d. P284,000 ___15. Carlos and Deo are partners who share profits and losses in the ratio of 7:3, respectively. On October 5, 2008, their respective capital accounts were as follows: Carlos – P35,000 and Deo – P30,000 On that date they agreed to admit Sotto as a partner with a one-third interest in the capital and profits and losses, and upon his investment of P25,000. The new partnership will begin with a total capital of P90,000. Immediately after Sotto’s admission, what are the capital balances of Carlos, Deo and Sotto, respectively? a. P30,000 – P30,000 – P30,000 c. P31,667 – P28,333 – P30,000 b. P31,500 – P28,500 – P30,000 d. P35,000 – P30,000 – P25,000 ___16. Mitz, Marc and Mart are partners sharing earnings in the ratio of 5:3:2 respectively. As of December 31,2007, their capital balance showed P95,000 for Mitz, P80,000 for Marc, and P60,000 for Mart. On January 1,2008 the partnership admitted Vince as a new partner and according to the partnership agreement, Vince will contribute P80,000 in cash to the partnership and will also pay P10,000 for 15% of Marc’s share. Vince will share 20% in the earnings while the ratio of the original partners will remain proportionately the same as before Vince admission. After Vince’s admission, the total capital of the partnership will be P330,000 while Vince’s capital account will be P70,000. What is the balance of Marc’s capital account after the admission of Vince? a. P81,100 c. P74,600 b. P79,100 d. P72,600 ___17. NN, OO and PP are partners with present capital balances of P50,000, P60,000 and P20,000 respectively. The partners share profits and losses according to the following percentages: 60% for NN, 20% for PP and 20% for PP. QQ is to join the partnership upon contributing P20,000 cash, plus a machine with a fair market value of P40,000 to the partnership in exchange for a 25% interest in the capital and 20% interest in the profits and losses. The existing assets of the partnership are undervalued by P22,000. The original partners will share the balance of profits and losses in their original ratios. What is the capital balance of NN, OO, PP and QQ, respectively in the new partnership assuming there is positive asset revaluation only? a. P67,400 – P65,800 – P25,800 – P53,000 b. P50,000 – P60,000 – P20,000 – P60,000 c. P80,000 – P70,000 – P20,000 – P20,000 d. P80,000 – P70,000 – P30,000 – P60,000

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___18. Ace, Boy and Cid are partners sharing profits in the ratio of 3:3:2. On July 31, their capital balances are as follows: Ace – P700,000 Boy – P500,000 Cid – P400,000 The partners agreed to admit Deo on the following terms: 1. Deo is to pay Ace P500,000 for ½ interest of Ace’s interest. 2. Deo is also to invest P400,000 in the partnership. 3. The total capital of the partnership is to be P2,400,000 of which Deo’s interest is to be 25%. What is the capital balance of Ace, Boy and Cid, respectively? a. P206,250 – P206,250 – P137,700 c. P556,250 – P706,250 – P537,500 b. P350,000 – P500,000 – P400,000 d. P500,000 – P400,000 – P350,000 ___19. A, B and C are partners in the accounting firm. Their capital account balances at year-end were: A – P90,000; B – P110,000; C – P50,000. They share profits and loses in a 4:4:2 ratio, after the following special terms: 1. Partner C is to receive a bonus of 10% of the net income after bonus. 2. Interest of 10% shall be paid on that portion of a partner’s capital in excess of P100,000. 3. Salaries of P10,000 and P12,000 shall be paid to partners A and C, respectively. What is the total profit share of partner C if the net income of the partnership is P44,000 for the year? a. P7,800 c. P19,400 b. P16,800 d. P19,800 ___20. A and B entered into a partnership as of March 1,2008 by investing P125,000 and P75,000, respectively, they agreed that A, as the managing partner, was to receive a salary, P30,000 per year and a bonus computed at 10% of the net profit after adjustment for the salary; the balance of the profit was to be distributed in the ratio of their original capital balances. On December 31,2008, account balances were as follows: Cash P70,000 Accounts payable P60,000 Accounts receivable 67,000 A, capital 125,000 Furniture & fixtures 45,000 B, capital 75,000 Sales return 5,000 A, drawing (20,000) Purchases 196,000 B, drawing (30,000) Operating expenses 60,000 Sales 233,000 Inventories on December 31,2008 were as follows: supplies – P2,500; merchandise – P73,000; prepaid insurance was P950 while accrued expenses were P1,550. Depreciation rate was 20% per year. What is the capital balances on December 31,2008 of A and B, respectively, after closing the net profit and drawing accounts? a. P135,940 and P47,960 c. P139,860 and P48,680 b. P139,540 and P49,860 d. P142,350 and P47,670 ___21. Garcia and Henson formed a partnership on January 2,2008 and agreed to share profits 90% and 10%, respectively. Garcia contributed capital of P25,000. Henson contributed no capital but has a specialized expertise and manages the firm full time. There were no withdrawals during the year. The partnership agreement provides for the following: Capital accounts are to be credited annually with interest at 5% of beginning capital. Henson is to be paid salary of P1,000 a month. Henson is to be received a bonus of 20% of income calculated before deducting his salary and interest on both capital accounts. Bonus, interest and Henson’s salary are to be considered partnership expenses. The partnership 2008 income statement follows: Revenues P96,450 Expenses(including salary, interest and bonus) 49,700 Net income P46,750 What is Henson’s bonus? a. P11,688 c. P15,000 b. P12,000 d. P15,738 ___22. On January 1,2008, A, B, C and D formed Bekha Trading Co., a partnership, with capital contributions as follows: A – P50,000; B – P25,000; C – P25,000; and D – P20,000. The partnership contract provided that each partner shall receive a 5% interest on contributed capital, and that A and B shall receive salaries of P5,000 and P3,000, respectively. The contract also provided that C shall receive a minimum of P2,500 per annum, and D a minimum of P6,000 per annum,

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which is inclusive of amounts representing interest and share of remaining profits. The balance of the profits shall be distributed to A, B, C and D in a 3:3:2:2 ratio. What amount should be earned by the partnership before any charge for interest and salaries, so that A mar receive an aggregate of P12,500 including interest, salary and share of profit? a. P16,667 c. P30,667 b. P30,000 d. P32,333 ___23. Herm, Mar and Ama formed a partnership on January 1,2008 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 for Herm in the amount of P24,000, for Mar – P18,000 and for Ama – P12,000. Interest of 12% on the average capital during 2008 of the three partners and the remainder in the ratio of 2:4:4 respectively. The operating income for the year ended December 31,2008 – P176,000. Herm contributed additional capital on July 1 – P30,000 and made a drawing on October 1 – P10,000. Mar contributed additional capital on August 1 – P20,000 and made a drawing on October 1 – P10,000 and Ama made a drawing of P30,000 on November 1. What is the capital balances of Herm, Mar and Ama, respectively on December 31,2008? a. P179,680 – P229,360 – P239,360 c. P189,680 – P239,360 – P269,360 b. P179,760 – P229,520 – P239,520 d. P223,180 – P272,060 – P280,760 ___24. The partnership of Gary, Jerome and Paul was formed on January 1,2008. The original investments were as follows: Gary – P80,000; Jerome – P120,000 and Paul – P180,000. According to the partnership agreement, net income or loss will be divided among the respective partners as follows: Salaries of P12,000 for Gary; P10,000 for Jerome; and P8,000 for Paul. Interest of 8% on the average capital balances during the year of Gary, Jerome and Paul. Remainder divided equally. The net income of the partnership for the year ended December 31,2008 was P70,000. Gary invested an additional P20,000 in the partnership on July 1,2008. Paul withdrew P30,000 from the partnership on October 1,2008. Gary, Jerome and Paul made regular drawings against their shares of net income during 2008 for P10,000 each. What is the capital balances of Gary, Jerome and Paul, respectively as of December 31,2008? a. P112,333 – P132,733 – P164,934 c. P92,000 – P102,000 – P134,934 b. P102,333 – P122,733 – P154,934 d. P122,333 – P132,733 – P164,934 ___25. KK, SS and WW formed a partnership on January 1,2008. Each contributed P144,000. The salaries were to be allowed as follows: KK – P36,000; SS – P36,000 and WW – P54,000. Drawings were equal to salaries and be taken out evenly throughout the year. With sufficient partnership net income, KK and SS split a bonus equal to 25% of partnership net income after salaries and bonus (in no event could bonus go below zero). Remaining profits were to be divided as follows: 30% for KK; 30% for SS and 40% for WW. For the year, partnership net income was P144,000. What are the capital balances of KK,...