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There and Craig are partners. Their current profit and loss ratios (70/30) are being changed to (60/40). The partners decide to adjust their capital accounts at the date of the change in the profit and loss ratios to reflect the difference between market value and book value of assets and liabilitie...

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54. There and Craig are partners. Their current profit and loss ratios (70/30) are being changed to (60/40). The partners decide to adjust their capital accounts at the date of the change in the profit and loss ratios to reflect the difference between market value and book value of assets and liabilities. At the date of the change, land has a market value of P250,000 and a book value of P120,000. how much will Craig’s capital account be adjusted at the date of the change in the profit and loss ratios?

Answer: d.

P13,000 decrease

55. James and Bruce are partners. They have both shared profits and losses 70/30 for several years. the partnership profit allocation agreement is currently being modified to 60/40. At the date of the change, the partners choose to revalue assets with market value different from book value. One asset revalued is a building with a book value of P370,000 and a market value of P520,000. One year after the profit and the loss ratio is changed the building is sold for P650,000. What is the amount of change to Bruce’s Capital account at the date the building is revalued?

Answer: c.

P45,000

56. Using the same information in No. 55, What is the amount of change to Bruce’s capital account at the date the building is sold?

Answer: d.

P52,000

57. Johnson and Pritchard are partners. They are changing the profit and loss ratios from the current 60/40 to 70/30. at the date of the change. vacant land owned by the partnership has a book value of P50,000 and a market value of P60,000. the partners choose to prepare an itemized list of assets wit market values different from book values. If the land is sold in the future for P80,000, how much of the gain will be assigned to Johnson?

Answer: b.

P20,000

58.

If the land is sold in the future for P80,000, how much of the gain will be assigned to Pritchard?

Answer: b.

P10,000

59. Karen and Andrea are currently changing their partnership profit and loss ratios from 75/25 to 60/40. they have created a list of assets that have the market and book value differences. One of the assets is a building with a P300,000 market value and P200,000 book value. Two years after changing the profit and loss ratios, the building is sold for P380,000. How much of the profit is allocated to Karen?

Answer: b.

P123,000

60. Eric and Philip have been partners for several years. During the time they have shared profits and losses (60/40). They are currently revising the profit and loss ratios to (70/30). Eric and Philip decide to adjust the capital accounts at the date of the change to reflect the difference between market value and book value of assets and liabilities. At the date of the change, the partnership owns a building with a book value of P350,000 and a market value of P600,000. How much will Eric’s capital account be adjusted at the date of change in the profit and loss ratios?

Answer: c.

P25,000 decrease

61. Capital balances and profit and loss sharing ratios of the partners in the BIG Entertainment Gallery are as follows: Betty, capital (50%) ……………………………………………. P140,000 Iggy, capital (30%) …………………………………………….. 160,000 Grabby, capital (20%) ………………………………………….. 100,000 Total …………………………………………………………… P400,000 Betty needs money and agrees to assign half of her interest in the partnership to yessir for P90,000 cash. Yessir pays directly to betty. Yessir does not become a partner. What is the total capital of the BIG Partnership immediately after the assignment of the interest to Yessir?

Answer: d.

P400,000

62. Jenna is about to purchase same of Cynthia’s partnership interest. Cynthia currently has partnership equity of P84,500. If Jenna pays Cynthia P30,000 for 30 percent of her capital, what amount will be recorded in the partnership accounting records?

Answer: b.

Jenna Cynthia P25,350 credit P25,350 debit

63. Presented below is the condensed balance sheet of the partnership of KK, LL and MM who share profits and losses in the ratio of 6:3:1, respectively:

Cash………………. P85,000

Liabilities……….. P80,000

Other assets……….

KK, capital……... 252,000

415,000

LL, capital……… 126,000 _________ Total ……………… P500,000

MM, capital……..

42,000

Total …………… P500,000

The partner agree to sell NN 20% of their respective capital and profit and loss interests for a total payment of P90,000. The payment by NN is to be made directly to the individual partners. The capital balances of KK, LL and MM, respectively after admission of NN are:

Answer: b.

P201,600

P100,800

P33,600

64. Using the same information in No. 58, assuming that implied goodwill for revolution of asset is to be recorded prior to the acquisition by NN. The capitals of KK, LL, MM, respectively after admission of NN are:

Answer: c.

P216,000

P108,000

P36,000

65. XX, YY and ZZ are partners who share profits and losses in the ratio of 5:3:2, respectively. They agree to sell a 25% of their respective capital and profits and losses ratio for a total payment directly to the partners in the amount of P140,000.00. They agree that goodwill or revaluation of assets of P60,000 is to be recorded prior to admission of AA. The condensed balance sheet of the XYZ partnership is as follows:

Cash………………. P60,000 Non-cash assets……

Liabilities……….. P100,000 540,000

XX, capital……...

250,000

YY, capital……… _________ Total ………………

P600,000

ZZ, capital……..

150,000 100,000

Total …………… P600,000

The capital of XX, YY and ZZ respectively after the payment and admission of AA are:

Answer: b.

P210,000

P126,000

P84,000

66. On June 30, 20x5, the balance sheet of western Marketing, a partnership, is summarized as follows: Sundry assets………………………………………………………….. P150,000 West, capital…………………………………………………………...

90,000

Tern, capital…………………………………………………………....

60,000

West and Tern share profit and losses at a 60:40 ratio, respectively. They agreed to take in Cuba as a new partner, who purchases 1/8 interest of West and Tern for P25,000. What is the amount of Cuba’s capital to be taken up in the partnership books if book value method is used?

Answer: b.

P18,750

67. PP contributed P24,000 and CC contributed P48,000 to form a partnership, and they agreed to share profits in the ratio of their original capital contributions. During the first year of operations, they made a profit of P16,290; PP withdrew P5,050 and CC P8,000. At the start of the following year, they agreed to admit GG into the partnership. He was to receive a one-fourth interest in the capital and profits upon payment of P30,000 to PP and CC, whose capital accounts were to be reduced by transfers to GG’s capital account of amounts sufficient to bring them back to their original capital ratio. How should the P30,000 paid by GG be divided between PP and CC.

Answer: d.

PP, P9,300

CC, P20,700

68. The capital accounts of the partnership of NN, VV, and JJ on June 1, 20x5 are presented below with their respective profit and loss ratios: NN………………………………………….. P139,200 1/2 VV…………………………………………..

208,800 1/3

JJ…………………………………………….

96,000 1/6

On June 1, 20x5 LL is admitted to the partnership when LL purchased, for P132,000, a proportionate interest from NN and JJ in the net assets and profits of the partnership. As a result of a transaction LL acquired a one-Fifth interest in the net assets and profits of the firm. What is the combined gain realized by NN and JJ upon the sale of a portion of their interest in the partnership to LL?

Answer: b.

P43,200

69. Sam and Ray are partners with capital accounts of P150,000 and P225,000, respectively. They are considering allowing Richard to purchase 30 percent of Ray’s equity. At the date of the proposed transaction, Sam and Ray want to revalue the partnership’s assets and allocate any differences based on their 40/60 profit sharing agreement. Assume that the net market versus book value differences is P100,000. What amount would Richard pay for the 30 percent interest?

Answer: d.

The amount cannot be determined from the information provided....