Sample/practice exam 29 March 2019, answers PDF

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QUIZZER

11. A-40,000

1. D-P18,000

12. A-P290,000

2. D-P870/ P(180) 3. D- P65,550

13. A-P370,000 14. C-P50,000.

4. A- 157,985

15. B-Retada.

5. B-P35,000;P75,000

16. A-100,000

6. B-P500,000

17. C-P250,000; P350,000 18. A-

P240,000;P360,000 7. C-Yacapin 8. C-lsada, P65,000; U. Reyes, P81,000

19. D- P240,000

9. A-P330,000

20. D-P120,000

10. B-Pedernal P150,000; Pating P160,000; and Liggayu P170,000

Questions with Solutions and answers 1. On May 1, 201B, Gonzaga and Balance farmed a partnership and agreed to share profits and losses in the ratio of 3:7, respectively. Gonzaga contributed a parcel of land that cost P10,000. Balance contributed P40,000 cash. The land was sold for P18,000 on May 1, 2018 immediately after formation of the partnership. What amount should be recorded in Gonzaga’s capital account on formation of the partnership? A.P15,000 B.P17,400

C.P10,000 D.P18,000

2. On Mar. 1, 2018, Sarabia and Abad decided to combine their businesses and form a partnership. Their statement of financial position on Mar. 1. before adjustments, showed the following: Sarabia Cash P 9,000 Accounts receivable 18,500 Inventories 30,000 Furniture and Fixtures (net) 30,000 Office Equipment (net) 11,500 Prepaid Expenses 6,375 Total P 105,375 Accounts Payable Capital Total

45,750 59,625 P 105,375

Abad P 3,750 13,500 19,500 9,000 2,750 3,000 P 51,500 18,000 33,500 P 51,500

They agreed to have the following items recorded in their books: a. Provide 2% allowance for doubtful accounts. b. Sarabia's furniture and fixtures should be P31,000, while Abad's office equipment is under-depreciated by P250. c. Rent expense incurred previously by Sarabia was not yet recorded amounting to P1.000, while salary expense incurred by Abad was not also recorded amounting to P800. d. The fair market values of inventory amounted to: For Sarabia P 29,500 For Abad 21,000 Compute the net (debit) credit adjustment for Sarabia and Abad respectively: A. P2,870/ P2,820 B. P(2,870)/ P(2,820)

C. P(870)/ P180 D. P870/ P(180) Pig

Allowance for doubtful accounts: Pig: 2% × ₱18,500 Quail: 2% × ₱13,500 Furniture and Fixtures (₱31,000-₱30,000) Office equipment Accrued Rent expenses Accrued salary expense Inventory adjustments: Pig (₱29,500-₱30,000) Quail (₱21,000-₱19,500) Net adjustments (debit) credit

Quail ₱ 370 ₱ 270 (1,000) 250 1,000 800

500 (1,500) ₱ 870

₱ (180)

3. Using the same information in the previous number, what is amount of total liabilities after the formation? A. P63,750 B. P61,950 Unadjusted total liabilities (₱45,750+₱18,000) Add (deduct): adjustments: Accrued rent expenses Accrued salary expenses Adjusted total liabilities

C. P63,950 D. P65,550 ₱ 63,750 1,000 800 ₱ 65,550

4. Using the same information is #2, what is the amount of total assets after the formation? A. P157,985 B. P156,875

C. P160,765 D. P152,985

Unadjusted total assets (₱105,375+₱51,500) ₱ 156,875 Add (deduct): adjustments: Allowance for doubtful accounts (₱370+₱270) (640) Furniture and fixtures 1,000 Office equipment (250) Inventory (₱1,500-₱500) 1,000 Adjusted total assets after formation ₱ 157,985

5. Ables and Galang executed a partnership agreement that lists the following assets contributed at the partnership's formation: Ables Cash P20,000 Inventory Building Furniture and Equipment 15,000

Galang P30,000 15,000 40,000

The building is subject to a mortgage of P10,000, which the partnership has assumed. The partnership agreement also specified that profits and losses are to be distributed equally. What amounts should be recorded as capital for Ables and Galang at the formation of the partnership?

A. B. C. D.

Ables

Galang

P35,000 P35,000 P55,000 P60,000

P85,000 P75,000 P55,000 P60,000

6. Orcajada invested in a partnership a parcel of land which cost his father P200,000. The land had a market value of P300,000 when Orcajada inherited it three years ago. Currently, the land is independently appraised at P500,000 even though Orcajada insisted that he "wouldn't take P900,000 for it." The land should be recorded in the accounts of the partnership at A. P300,000 B. P500,000

C. P900,000 D. P200,000

7. On Apr. 30, 2018, Lacson, Yacapin, and Bernal formed a partnership by combining their separate business proprietorships. Lacson contributed cash of P50,000. Yacapin contributed property with a P36, 000 carrying amount, a P40,000 original cost, and P80,000 fair value. The partnership accepted responsibility for the P35,000 mortgage attached to the property. Bernal contributed equipment with a P30,000 carrying amount, a P 75,000 original cost and a P55.000 fair value. The partnership agreement specifies that profits and losses are to be shared equally but is silent regarding capital contributions. Which partner has the largest Apr. 30, 2018, capital balance?

A. Bernal B. Lacson

C. Yacapin D. All capital account balances are equal

8. On Aug. I, lsada and Ureta-Reyes pooled their assets to form a partnership, with the firm to take over their business assets and assume the liabilities. Partnership capital are to be based on net assets transferred after the following adjustments. Profits and losses are allocated equally. The inventory of Ureta-Reyes is to be increased by P4,000; an allowance for doubtful accounts of P1,000 and P1,500 are to be set up in the books of Isada and Ureta-Reyes, respectively; and accounts payable of P4,000 is to be recognized in Isada’s books. The individual trial balances on August, before adjustments, follow: ISADA Assets Liabilities

P75,000 5,000

URETA-REYES P113,000 34,500

What is the capital of lsada and Ureta-Reyes after the above adjustments? A. B. C. D.

lsada, P68,750; U. Reyes, P77,250 lsada. P65.000; U. Reyes, P76,000 lsada, P65,000; U. Reyes, P81,000 lsada, P75,000; U. Reyes, P81,000

Isada Ureta Net assets ₱ 70,000 ₱ 78,500 Increase in inventory 4,000 Allowance for doubtful account (1,000) (1,500) Increase in accounts payable (4,000) -----------Capital ₱ 65,000 ₱ 81,000

9. Calma and Abello formed a partnership on April 1 and contributed the following assets: Calma Abello Cash P150,000 P50,000 Land 310,000 The land was subject to a mortgage of P30,000, which was assumed by the partnership. Under the partnership agreement, Calma and Abello will share profit and loss in the ratio of one-third and two-thirds, respectively. Abello's capital account at April 1 should be A. P330,000. B. P360,000.

C. P300,000. D. P340,000.

10. Pedernal, Pating and Liggayu are forming a new partnership. Pedernal is to invest cash of P100,000 and stapling equipment originally costing P120,000 but has

a second hand market value of P50,000 Pating is to invest cash of P160,000. Liggayu whose family is engaged in selling stapling equipment, is to contribute cash of P50,000 and a brand new stapling equipment to be used by the partnership with a regular price of 120,000 but which cost their family's business P100,000. Partners agreed to share profits equally. The capital balances upon formation are ' A. B. C. D.

Pedernal, P220,000; Pating, P160,000; and Liggayu, P150,000. Pedernal, P150,000; Pating, P160,000; and Liggayu, P170,000. Pedernal, P160,000; Pating, P160,000; and Liggayu, P160,000. Pedernal, P176,666; Pating, P176,666; and Liggayu, P176,668.

Pedernal Cash ₱ 100,000 Stapling equipment 50,000 Capital balances ₱ 150,000

Pating ₱ 160,000

Liggayu ₱ 50,000 120,000 ₱ 160,000 ₱ 170,000

11. Estrada and Molina formed a partnership on Mar. 1, 2018 and contributed the following assets: Cash Equipment

Estrada P80,000

Molina P50,000

The equipment was subject to a chattel mortgage of P10,000 that was assumed by the partnership. The partners agreed to share profits and losses equally, Molina's capital account at Mar. 1, 2018 should be A. P40,000. B. P50,000.

C. P60,000. D. P45.000.

Equipment ₱ 50,000 Mortgage payable (10,000) Molina’s, capital ₱ 40,000

12. On Mar 1 2018 Kalaw and Borromeo formed a partnership with each contributing the following assets: Kalaw Cash P30,000 Machinery and Equipment 25,000 Building Furniture and Fixtures 10,000

Borromeo P70,000 75,000 225,000

The building is subject to mortgage loan of P80,000, which is to be assumed by the partnership. Agreement provides that Kalaw and Borromeo share profits and lasses 30% and 70%, respectively. On Mar 1, 2018 the balance in Borromeo's capital account should be A. P290,000.

B. P370,000.

C. P314,000

D. P305,000

13. The same information in the previous number except that the mortgage loan is not assumed by the partnership. On Mar. 1, 2018 the balance in Borromeo's capital account should be A. P370,000. B. P305,000.

C. P290,000. D. P314,000.

14. On July 1, Faminial and Feltavero formed a partnership, agreeing to share profits and losses in the ratio of 4:6 respectively. Faminial contributed a parcel of land that cost P25,000. Fetalvero contributed P50,000 cash. The land was sold for P50,000 on Julv 1, three hours after formation of the partnership. How much should be recorded in Faminial's capital account on the formation of the partnership: A. P25,000. B. P10,000.

C. P50,000. D. P20,000.

15. On April 30, 2018, Foja, Lupian and Retada formed a partnership by combining their separate business proprietor. Foja contributed cash of P50,000. Lupian contributed property with a P36,000 carrying amount, a P40,000 original cost, and an P80,000 fair value. The partnership assumed the P35,000 mortgage attached to the property. Retada contributed equipment with a P30,000 carrying amount, a P75,000 original cost, and P55,000 fair value. The partnership agreement specified that profits and losses are to be shared equally. Which partner has the largest Apr. 30, 2018, capital account balance? A. Foja. B. Retada.

Foja 50,000 50,000

Lupian 80,000 (35,000) 45,000

C. Lupian. D. All capital account balances are equal. Retada 55,000 55,000

16. Lacson and Solis started a partnership. Lacson contributed a building that she purchased 10 years ago for P100,000. The accumulated depreciation on the building on the date of formation of the partnership is P25,000 and the fair value is P110,000. For what amount will Lacson's capital account be credited on the books of the partnership? A. P100,000 B. P75,000

C. P110,000 D. P25,000

Fair value ₱ 100,000

Use the following information to answer the next two questions

Helena and Indiana formed by contributing P250,000 and P350,000 cash. They agreed to share profits equally but to share capital 40:60, respectively. 17. Using bonus method, compute the capital balances of Helena and Indiana? A. P200,000; P300,000 B. P240,000; P360,000

C. P250,000; P350,000 D. P300,000; P300,000

18. Using goodwill method, compute the capital balances of Helena and Indiana? A. P240,000; P360,000 B. P250,000; P375,000

C. P250,000; P250,000 D. P350,000; P350,000

19. A, Q and W contributed a total of P600,000 cash to form WAQ Partnership. Only W posses the technical expertise required by the business so A and Q agreed to provide 10% of their contributed capital as bonus to W. A and W contributed P240,000 and P120,000, respectively. How much is Q’s adjusted capital balance after formation? A. P120,000 B. P168,000

C. P200,000 D. P240,000

20. A, B and C formed a partnership and contributed P100,000, P50,000 and P80,000 cash, respectively. A and C further contributed non-cash assets with agreed values of P50,000 and P20,000, respectively. Owing to the business expertise of B and C, A concurred that they will be credited with 20% goodwill based on their contributed capital. How much is the adjusted capital of C after formation? A. P80,000 B. P96,000 Cash Non-Cash Goodwill

A 100,000 50,000 (30,000) 20,000

(100,000*20%=20,000)

C. P100,000 D. P120,000 B 50,000 10,000 60,000

C 80,000 20,000 20,000 120,000...