Partnership Problems PDF

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Summary

On March 1, 2013, Santos and Pablo formed a partnership with each contributing the following assets Santos PabloCash P30,000 P70, Machinery and equipment 25,000 75, Building - 225, Furniture and fixtures 10,000 -The building is subject to a mortgage loan of P80, 000which is to be assumed by fee part...

Description

1. On March 1, 2013, Santos and Pablo formed a partnership with each contributing the following assets

Cash Machinery and equipment Building Furniture and fixtures

Santos

Pablo

P30,000 25,000 10,000

P70,000 75,000 225,000 -

The building is subject to a mortgage loan of P80, 000which is to be assumed by fee partnership. The partnership provides that Santos and Pablo share profits and losses 30%and 70%, respectively. On March l, 2013 the balance in Pablo's capital account should be: a. b. c. d.

P290, 000 P305,000 P314,000 P370,000

2. On March 1, 2013, Eva and Helen decides to combine their businesses and form a partnership. Statement of financial position on March 1 , before adjustments, showed following: Eva Cash Accounts receivable Inventories Furniture and fixtures (net) Office equipment (net) Prepaid expenses Total

P 9,000 18,500 30,000 30,000 11,500 6,375 P105, 375

Helen P 3,750 13,500 19,500 9,000 2,750 3,000 P51,500

No. 2 — Continued They agreed to provide 3% for doubtful accounts receivable, and also agree that Helen's furniture and fixture are underdepreciated by P900. If each partner's share in equity is to be equal to the net assets invested, the capital accounts of Eva and Helen would be: a. P104,820 and P50,195, respectively b. P59,070 and P32,195, respectively c. P58,320 and P32,945, respectively

d. P58,170 and P33,095, respectively 3. On July l, 2013, Monuz and Pardo form a partnership, agreeing to share profits and losses in the ratio of 4:6, respectively. Monuz contributed a parcel of land that cost him P25, 000. Pardo contributed P50, 000 cash. The land was sold for P50, 000 on July 1, 2013 four hours after formation of the partnership. How much should be recorded in Monuz capital account on formation of the partnership? a. P10,000 b. P20,000 c. P25,000 d. P50,000 4. The business assets and liabilities of John and Paul appear below: Cash Accounts receivable Inventories Land Building Furniture and fixtures Other Assets Total

John P11,000 234,536 120,035 603,000 50,345 2,000 P1,020,916

Paul P22,354 567,890 260,102 428,267 34,789 3,600 P1,317,002

Accounts payable Notes payable John, capital Paul, capital Total

178,940 200,000 641,976 P1,020,916

243,650 345,000 728,352 P1,317,002

No. 4 — Continued John and Paul agreed to form a partnership contributing their respective assets and equities subject to the following adjustments: a. Accounts receivable of P20,000 in John’s books and P35,000 in Paul’s are uncollectible. b. Inventories of P5,500 and P6,700 are worthless in John’s and Paul’s respective books. c. Other assets of P2,000 and P3,600 in John’s and Paul’s respective books are to be written off. The capital account of the partners after the adjustments will be: a. John’s Paul’s b. John’s

P614,476 683,052 P615,942

Paul’s c. John’s Paul’s d. John’s Paul’s

717,894 P649,876 712,345 P613,576 683,350

5. Red, White, and Blue form a partnership on May l, 2013. They agree that Red will contribute office equipment with a total fair value of P40,000; White will contribute delivery equipment with a fair value of P80,000; and Blue will contribute cash. If Blue wants a one third interest in the capital and profits, he should contribute cash of: a. b. c. d.

P 40,000 P120,000 P60,000 P180,000

6. The partnership of Perez and Reyes was formed on March 31, 2013. On this date, Perez invested P50,000 cash and office equipment valued at P30,000. Reyes invested P70,000 cash, merchandise valued at P110,000, and furniture valued at P100,000, subject to a notes payable of P50,000 (which the partnership assumes). The partnership provides that Perez and Reyes share profits and losses 25: 75, respectively. The agreement further provides that the partners should initially have, an equal interest in the partnership capital. Under the the bonus method, what is the total capital of the partners after the formation? No. 6 — Continued a. b. c. d.

Bonus P310,000 P360,000 P300,000 P350,000

7. Aldo, Bert, and Chris formed a partnership on April 30, with the following assets, measured at their fair values, contributed by each partner: Cash Delivery trucks Computers Office furniture Totals

Aldo P10,000 150,000 8,500 P168,500

Bert P12,000 28,000 5,100 3,500 P48,600

Chris P30,000 2,500 P32,500

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. b. c. d.

Bert and Chris should pay Aldo, P4,600 and P20,700 respectively. Aldo should pay Bert and Chris, P25,300. Bert should pay Aldo, P25,300 and Chris, P20,700. Chris should pay Aldo, P25,300 and Bert, P4,600.

8. Cong and Dong have just formed a partnership. Cong contributed cash of P126,000 and computer equipment that cost P54,000. The computer had been used in his sole proprietorship and had been depreciated to P24,000. The fair value of the equipment is P36,000. Cong also contributed a note payable of P12,000 to be assumed by the partnership. Cong is to have 60% interest in the partnership. Dong contributed only P90,000 cash. Cong should make an additional investment (withdrawal) of: a. b. c. d.

P96,000 84,000 (P76,800) (P15,000)

9. On March l, 2013, Jose and Kiko decides to combine their businesses to form a partnership. Statement of financial position on March I before the formation, showed the following:

Cash Accounts receivable Inventories Furniture and fixture (net) Office equipment (net) Prepaid expenses Total Accounts payable Capital Total

Jose

Kiko

P9,000 18,500 30,000 30,000 11,500 6,375

P3,750 13,500 19,500 9,000 2,750 3,000

P105, 375

P51,500

P45,750 59,625

P18,000 33,500

P105,375

P51,500

They agreed to following adjustments before the formation: a. Provide 2% allowance for doubtful accounts, b. Jose’s furniture should be valued at P31,000, while Kiko's office equipment is underdepreciated by P250.

c. Rent expense incurred previously by Jose was not yet recorded amounting to P 1,000, while salary expense incurred by Kiko was not also recorded amounting to P800. d. The fair value of inventories amounted to P29,500 for Jose and P21,000 for Kiko. The net (debit) credit adjustment to partner's capital accounts are: Jose Kiko a. (P2,870) (P2,820) b. P1,870 P2,820 c. P 870 (P 180) d. (P 870) P 180 10. On June l, 2013, May and Nora formed a partnership. May is to invest assets at fair value which are yet to be agreed upon. She is to transfer her liabilities and is to contribute sufficient cash to bring her total capital to P210,000 which is 70% of the total capital of the partnership. 11 — Continued Details regarding the book values of May’s business assets and liabilities and their corresponding valuations are:

Accounts receivable Allowance for doubtful accounts Merchandise inventory Store equipment Accumulated Depreciation – Store equipment Office equipment Accumulated depreciation – Office equipment Accounts payable

Book values P58,000 4,200 98,400 32,000 19,000 27,000 14,200 56,000

Agreed valuations P58,000 5,000 107,000 32,000 16,400 27,000 8,600 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 are: a. b. c. d.

P 90,000 and P 62,000 respectively P252,000 and P138,000 respectively P 48,000 and P138,000 respectively P 48,000 and P 62,000 respectively

11. The capital accounts of the partnership of Nakpil, Ortiz, and Perez on June l, 2013 are presented below with their respective profit and loss ratios: Nakpil Ortiz Perez

P139,200 208,800 96,000

1/2 1/3 1/6

On June l, 2013, Quizon is admitted to the partnership when he purchased, for P 132,000, a proportionate interest from Nakpil and Ortiz in the net assets and profits of the partnership. As a result of a transaction, Quizon acquired a one-fifth interest in the net assets and profits of the firm. Assuming that implied goodwill is not to be recorded, what is the combined gain realized by Nakpil and Ortiz upon the sale of a portion of their interest in the partnership to Quizon? a. P 0 b. P43,200 c. 62,400 d. P82,000 12. Moonbits partnership had a net income of P8,000.00 for the month ended September 30, 2013. Sunshine purchased an interest in the Moonbits partnership of Liz and Dick by paying Liz P32,000 for half of her capital and half of her 50% percent profit sharing interest on October l, 2013. At this time Liz capital balance was P24,000 and Dick capital balance was P56,000. Liz should receive a debit to her capital account of: a. P12,000 b. P20,000 c. 350,000 d. 200,000 13. Partners Andy, Boy and Ken sharing profit and loss based on 4:3:2 ratio have the following condensed statement of financial position: Total assets P1,880,000 Liabilities Andy, capital Boy, capital Ken, capital

P 480,000 620,000 400,000 380,000

Total liabilities and capital

P1,880,000

Dondon will be admitted as a new partner for 20% interest after he pays the three partners with a minimum of 10%. Thus, the old partner will have to transfer to Dondon 20% of their interest. How much should old partners transfer to Dondon? a. P376,000 b. P280,000 c. P350,000 d. P200,000 14. Partners Alba, Basco, and Castro share profits and losses 50:30:20, respectively. The statement of financial position at April 30, 2013 follows: Cash Other assets

P40,000 360,000

Accounts payable Alba, capital

P100,000 74,000

Total

Baspo, capital Castro, capital Total

P400,000

130,000 96,000 P400,000

The assets and liabilities are recorded and presented at their respective fair values, Jocson is to be admitted as a new partner with a 20% capital interest and a 20% share of profits and losses in exchange for a cash contribution. No goodwill or bonus is to be recorded. How much cash should Jocson contribute? a. P60,000 b. P72,000 c. P75,000 d. P80,000 15. The following is the condensed statement of financial position of the partnership Jo, Li and Bi who share profits and losses in the ratio of 4:3:3. Cash Other assets Jo, receivable

P 180,000 1,660,000 40,000

Total

P1,880,000

Accounts payable Bi, Loan Jo, Capital Li, Capital Bi, capital Total

P 420,000 60,000 620,000 400,000 380,000 P1,880,000

No. 17 — Continued Assume that the assets 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 goodwill or bonus is to be recorded. How much Mac should contribute in cash or other assets? a. P350,000 b. P280,000 c. P355,000 d. P284,000 16. Carlos and Deo are partners who share profits and losses in the ratio of 7:3, respectively. On October 5, 2013, their respective capital accounts were as follows: Carlos Deo

P35,000 30,000

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;

b. P31,500; P28,500; P30,000; c. P31,667; P28,333; P30,000; d. P35,000; P30,000 P25,000; 17. The capital account for the partnership of Lucas and Mateo at October 31, 2013 are as follows: Lucas, capital Mateo, capital

P 80,000 40,000

The partners share profits and losses in the ratio of 6:4 respectively. The partnership is in desperate need of cash, and the partners agree to admit Naron as a partner with one-third in the capital and profits and losses upon his investment of P30,000. Immediately after Naron’s admission, what should be the capital balance of Lucas, Mateo and Naron respectively, assuming goodwill is not to be recognized? a. P50,000; P50,000; P50,000. b. P60,000; P60,000; P50,000. c. P66,667; P33,333; P50,000. d. P68,000; P32,000; P50,000. 18. Ell and Emm are partners sharing profits 60% and 40%, respectively. On January l, Ell and Emm decided to admit Enn as a new partner upon his investment of P8,000. On this date, their interests in the partnership are as follows: Ell, P11,500; Emm, P9,300. Assuming that the new partner is given a 1/3 interest in the firm, with bonus being allowed the new partner, the new capital balances of Ell, Emm and Enn, respectively, would be: a. P11,500, P9,300, and P8,000 b. P12,480, P8,320, and P8,000 c. P11,520, P7,680, and P9,600 d. P10,540, P8,660, and P9,600. 19. Partners Chito and Ditas share profits in the ratio of 6:4 respectively. On December 31, 2013 their respective capital balances were Chito, P120,000 and Ditas, P100,000. On that date Meng was admitted as partner with a one-third interest in capital and profits for an investment of P80,000. The new partnership began in 2011 with total capital of P300,000. Immediately after Meng’s admission, Chito’s capital should be: a. P120,000 b. P108,000 c. P100,000 d. P160,000 20. Pal and Mall are partners with capitals of P200,000 and P 100,000 and sharing profits and losses 3:1 respectively. They agree to admit Kent as partner, Kent invests P150,000 for a 50% interest in the firm. Pal and Mall transfer part of their capitals to Kent as a bonus. The capital balances of the partners after Kent’s admission are:

a. Pal, P168,750; Mall, P56,250; and Kent, P225,000. b. Pal, P112,500; Mall, P37,500; and Kent, P150,000. c. Pal, P200,000; Mall, P100,000; and Kent, P150,000. d. Pal, P143,750; Mall, P 81,250; and Kent, P225,000 21. Pol and Loc are partners with capitals of P200,000 and P100,000 and sharing profits and losses 3:1 respectively. They agree to admit Chic as partner. Chic invests P 125,000 for a 25% interest in the firm. Parties agree that the total firm capital after Chic’s admission is to be P425,000. The capital balance of the partners after Chic’s admission are: a. Poi, P214,062.50; Loc, P104,687.50; and Chic, P106,250.00 b. Poi, P200,000.00; Loc, P100,000.00; and Chic, P125,000.00 c. Poi, P239,062.50; Loc, P 79,687.50; and Chic, P125,000.00 d. Poi, P250,000.00; Loc, P125,000.00; and Chic, P100,000.00Ben, 22. Joe and Fortune are new CPA’s and are to form a partnership. Ben is to contribute cash of P50,000 and his computer originally costing P60,000 but has a second hand value of P25,000. Joe is to contribute cash of P80,000. Fortune, whose family is selling computers, is to contribute cash of P25,000 and a brand new computer plus printer with regular price at P60,000 but which cost their family’s computer dealership, P50,000. Partners agree to share profits equally. The capital balances upon formation are: a. Ben, P 75,000; Joe, P80,000; and Fortune, P85,000. b. Ben, P110,000; Joe, P80,000; and Fortune, P75,000. c. Ben, P 80,000; Joe, P80,000; and Fortune, P80,000. d. Ben, P 88,333; Joe, P88,333; and Fortune, P88,335. 23. Mitz, Marc and Mart are partners sharing earnings in the ratio of 5:3:2 respectively. As of December 3 1, 2010, their capital balance showed P95,000 for Mitz, P80,000 for Marc, and P60,000 for Mart. On January 1, 2013 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 P10,000.00 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’ capital account will be P70,000. The balance of Marc’s capital account after the admission of Vince would be: a. b. c. d.

P81,100 P79,100 P74,600 P72,600

24. The partnership of Cat and Dog provides for 3:2 sharing in profits and losses. Prior to the admission of a third partner Elf, the capital accounts are Cat, P120,000 and Dog, P80,000. Elf invests P50,000 for a P75,000 interest and partners agreed that the net assets of the new partnership would be P300,000. How much is Dog’s capital in the new partnership? a. P105,000 b. P90,000 c. P70,000 d. P136,000 25. 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 Boy Cid

P700,000 500,000 400,000

The partners agree to admit Deo on the following agreement: 1. Deo is to pay Ace P500,000 for 1/2 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 are the capital balances of the partners after the admission of Deo? Ace Boy Cid a. P206,250 P206,250 P137,500 b. 350,000 500,000 400,000 c. 556,250 706,250 537,500 d. 500,000 400,000 350,000 26. In its first year of operations, Alba and Company, a partnership, made a net income of P20,000 before providing for salaries of P5,000 and P3,000 per annum for Alba and Bana, respectively, as stipulated in the partnership agreement. Capital contributions are as follows: Alba P30,000 Bana 20,000 Cada 10,000 Assuming that no profit-and-loss ratios are provided in the partnership agreement and that there has been no change in the capital contributions during the year, how much profit share would Alba be entitled to received? a. P10,000 b. P 5,000 c. P11,000

d. P15,000 27. On January l, 2013, Zeep and Beep have capital balances of P20,000 and P16,000 respectively. On July l, 2013 Zeep invests an additional P4,000 and Beep withdraws P 1,600. Profits and losses are divided as follows: Beep is the managing partner and as such shall receive P 16,000 salary and Zeep shall receive P7,200; both partners shall receive interest of 10% on their beginning capital balances to offset whatever difference in capital investments they have and any remainder shall be divided equally. Income of the Zeep-Beep partnership for the year 2013 is P9,600. Zeep’s share in the net income is: a. P9,200 b. P 880 c. P4,800 d. P 600 28. Dexter and Joliver are partners agreeing to allow monthly salaries (P6,000 and P5,000 respectively), 6% interest on the capital investment at the beginning of the year (P300,000 and P230,000 respectively) and on the remaining balance, to be equally shared. The first year registered a net income of P 100,000 Profit share of the partners are: a. Dexter, P58,100 and Joliver, P41,900. b. Dexter, P50,000 and Joliver, P50,000. c. Dexter, P54,500 and Joliver, P45,500. d. Dexter, P56,600 and Joliver, P43,400. 29. Mr. Zoom and his very close friend Mr. Boom formed a partnership on January 1, 2013 with Zoom contributing P16,000 cash and Boom contributing equipment with a book value ofP6,400 and a fair value of P8,000. During 2013 Boom made additional investments of P1,600 on April 1 and P1,600 on June l, and on September 1, he withdrew P4,000. Zoom had no additional investments nor withdrawals during the year. The average capital balance at the end of 2013 for Mr. Boom is: a. P9,600 b. P8,000 c. P8,800 d. P7,200 30. On January l, 2013, David and Enrile decided to forn a partnership. At the end of the year, the partnership made a net income of P120,000. The capital accounts of the partnership show the following transactions.

January 1 April 1 June 1

D...