TRUE or FALSE
1. Salary and Interest Allowances in a partnership
agreement do not affect the measurement of total
partnership income.
2. Partnership drawings are withdrawals of the partners
that are closed to the capital accounts at the end of
the period.
3. When non-cash property is contributed to a
partnership, it is recorded in the books of the
partnership at its fair market value.
4. All property brought into the partnership or acquired
by the partnership is partnership property.
5. If an asset is contributed to the partnership subject to
the liability, the amount credited to the contributing
partner’s capital account is still equal to the full fair
market value of the asset.
6. It is possible to admit a new partner into the
partnership without said partner investing any assets
into the partnership.
7. If salary and interest allocation methods are being
used to allocate partnership profits, such methods
would not be applied in accounting periods when there
is a partnership loss.
9. It is illegal for a partnership to pay a partner’s personal
expenses out of partnership assets.
10. When an incoming partner purchases a partnership
interest by making a payment directly to the current
partner, no entry will be needed on the partnership
books.
11. A partnership interest is considered a personal asset of
the partner and may be sold or gifted or conveyed to
others in any manner that is legal and acceptable to
the other partners.
12. Drawing accounts are debited for partners’ withdrawal
in anticipation of profits and for the partners’ personal
expenses paid by the partnership.
13. The amount of partnership profits and losses that are
allocated to the partners using salary and interest
allocation procedures also produce deductions to the
partnership for salary and interest expense.
14. It is highly unusual to find profit and loss sharing
agreements that would include salary allocations, and
bonus payments all in the same agreement.
15. If Partner A invested twice as much as Partner B, and
there are only two partners, the income must be
divided in a ratio of 2:1, respectively.
8. All dissolutions are liquidations but not all liquidations
are dissolutions.
PARTNERSHIP FORMATION
Xerox, Yves, and Zeus formed the XYZ Partnership on June
1, 2020, with the following assets and liabilities, measured
at book values in their respective records, contributed by
each partner:
Xerox
Cash
Accounts
receivable
Inventory
Plant, Property, &
Equipment (PPE)
Accounts payable
Long-term debt
Net assets
P160,000
28,180
108,000
360,000
(32,000)
( 80,000)
P544,180
Yves
Zeus
P120,000
P120,000
30,800
95,400
55,120
53,600
288,000
(40,000)
(96,000)
P398,200
304,000
48,000
104,000
P380,720
Except for the plant assets and the long term debts, the
partners have agreed that the proprietorship net assets
are fairly valued.
The agreed fair valuation of net asset items where the
book value is not the fair value follows:
PPE
Long-term-debt
Xerox
Yves
P404,000 P277,920
92,000
100,000
1. How much is the contribution
Calculate their contribution ratio.
Zeus
P260,100
120.720
of each
partner?
2. What is the capital balance for each partner at the
opening of business on June 1 as per above
information?
3. Prepare the journal entry in the partnership books for
the above assumption.
4. What is the capital balance for each partner at June 1,
instead, if the interest ratio is agreed at 4:3:3 to
Xerox, Yves. and Zeus, respectively?
5. Prepare the journal entry for the revised assumption.
6. Explain why Partner Braulio was unaffected by the
bonus feature in the ownership agreement among the
partners.
MULTIPLE CHOICE.
Amer and Balgan have just formed a partnership. Amer
contributed cash of P736,000 and office equipment that
costs P337,600. The equipment had been used in his sole
proprietorship and had been 70% depreciated. The current
value of the equipment is P236,000. Amer also contributed
a note payable of P69,600 to be assumed by the
partnership. The partners agreed on a profit and loss ratio
of 50% each. Amer is to have a 70% interest in the
partnership. Justine contributed only the merchandise
inventory from her sole proprietorship carried at P440,000
on a first-in- first-out basis. The current fair value of the
merchandise is P420,000.
1. To consummate the formation of the partnership Amer
should
make
additional
cash
investment
or
(withdrawal) of:
a. P179,200
b. P(24,000)
c. P 77,600
d. P(64,000)
EXCEL PROFESSIONAL SERVICES, INC.
In 2020, Sonia
and Carla agreed to form a new
partnership under the following general agreements:
(1) Partners’ CONTRIBUTIONS will be on a 5:4 ratio; (2)
PROFIT & LOSS, 5:5, and (3) CAPITAL CREDITS, 6:4
ratio, respectively to Sonia and Carla. Their respective
contributions will come from old proprietorships they
owned.
Sonia contributed the following items and amounts:
Cash
P599,040
Equipment (at book value per her
proprietorship records)
409,600
Carla contributed the following items at their carrying
amounts in the proprietorship records:
Accounts receivable
76,800
Inventory
215,040
Furniture and fixtures
411,648
Intangibles
176,640
All the non-cash contributions are not properly valued. The
two partners have agreed that (a) P6,144 of the accounts
receivable are uncollectible; (b) the inventories are
overstated by P15,360; (c) the furniture and fixtures are
understated by P9,216; and the intangibles include a
patent with a carrying value of P10,752, which must now
be derecognized upon a court order. The rest of the
intangible items are fairly valued.
2. How much is the total depreciable fixed asset recorded
by the partnership?
a. P
848,640
c. P
893,184
b. P
322,560
d. P
833,184
3. What is the capital balance of Carla after
formation of the partnership?
a. P 717,937
c. P 737,179
b. P 797,173
d. P 771,379
the
PARTNERSHIP OPERATIONS
On January 1, 2020, Chris and Nikki formed a partnership
by initially contributing cash of P 280,000 and P176,000,
respectively. The changes in their capital balances during
2020 are summarized as follows:
CHRIS
Balances, January 1
P280,000
Investment, April 1
25,600
Withdrawal July, 1
Investment, September 1
Withdrawal, October 1
(3,200)
Investment, December 31
Balances, December 31
P 302,400
NIKKI
P 176,000
(40,000)
74,400
6,400
P 216,800
The partnership reported a net income of P324,960 in
2020 and the profit and loss agreement are as follows:
a. Interest at 5% is allowed on average capital
balances;
b. Salaries of P2,000 per month to each partner;
c. Bonus to Chris of 10% of net income after interest,
salaries, and bonus; and
d. Balance to be divided in the ratio of 6:4 to Chris and
Nikki, respectively.
Both partners withdrew
allowances in 2020.
one-fourth
of
their
salary
Required:
1. Prepare a schedule for the division of net profit for
2020 with supporting computations when appropriate.
2. Prepare a statement of the partners’ capital balances
for 2020.
MULTIPLE CHOICE
CARA and JEREMY
created a partnership to own and
operate a health-food store. The partnership agreement
provided that CARA receives an annual salary of P8,000
and JEREMY a salary of P4,000 to recognize their relative
time spent in operating the store. Remaining profits and
losses were divided 60:40 to CARA and JEREMY,
respectively. Income of P10,400 for 2019, the first year of
operations, was allocated P7,040 to CARA and P3,360 to
JEREMY. On January 1, 2020, the partnership agreement
was changed to reflect the fact that JEREMY could no
longer devote any time to the store’s operations. The new
agreement allows CARA a salary of P14,400, and the
remaining profits and losses are divided equally. In 2020
an error was discovered such that the 2019 reported
income was understated by P3.200. The partnership
income of P20,000 for 2020 included this P3,200 related to
2019.
1. In the reported net income of P20,000 for the year
2020, CARA would have
a. P17,520
b. P0
c. P13,680
d. P10,000
DERHA, a senior partner in a law firm, has a 30%
participation in the firm’s profit and losses. During 2020,
DERHA withdrew P104,000 against her capital but
contributed property with a fair value of P20,000. DERHA’s
capital increased by P12,000 during 2020.
2. The net income of the partnership for 2020 is
a. P120,000
b. P320,000
c. P280,000
d. P440,000
ERROL FLOR, and GAB invest P32,000, P24,000 and
P20,000 respectively, in a partnership on June 30, 2020.
They agree to divide net income or loss as follows:
a. Interest at 10% on beginning capital account
balances
b. Salaries of P8,000, P6,400 and P4,800, respectively
to ERROL, FLOR, and GAB, respectively.
c. Remaining net income or loss is divided equally
d. A minimum of P14,400 of income is guaranteed to
GAB regardless of the results of operation.
3. If the net income for the year ended June 30,2020
before interest and salary allowances to partners was
P35,200, the amount of the net income credited to
ERROL is:
a. P17,500
b. P16,000
c. P14,667.20
d. P11,600
Abner, Blanche and Donna are partners with average
capital balances during 2020 of P96,000, P48,000, and
P32,000, respectively. Partners receive 10% interest on
their average capital balances. After deducting salaries of
P24,000 to X and P16,000 to Y, the residual profit or loss
is divided equally. In 2020 the partnership sustained a
P26,400 loss before interest and salaries to partners.
4. By what amount should X’s capital account change?
a. P5,600 increase
c. P 8,800 decrease
b. P28,000 decrease
d. P33,600 increase
Partners JOYCE and MARIE share profits 3:1 after annual
salary allowances of P3,200 and P4,800 respectively;
however, if profits are not adequate to meet the salary
allowances, the entire profit is to be divided in the salary
ratio. Profits of P7,200 were reported for the year 2019. In
2020, it is ascertained that in calculating net income for
the year ended December 31, 2019, depreciation was
EXCEL PROFESSIONAL SERVICES, INC.
overstated by P2,880 and the ending inventory was
understated by P640.
5. The amount of the net adjustments in the books of
JOYCE and MARIE are:
JOYCE
MARIE
a. P(2,959)
P(14,505)
b. P 2,360
P 1,160
c. P 6,550
P 6,850
d. P 1,840
P 2,780
2. Assume Tina is admitted by investing the P80,000 into
the partnership for a 40% interest, how much is the
ending capital balance of Opel after admission and the
bonus (given)/received to/from Tina?
a. P55,000; (P 5,000)
b. P63,250.40; (P10,500)
c. P71,250.40; P 4,250.40
d. P47,300; (P 6,200)
Albert, Berto, Carlo, and Dindo have become partners in
the ABCD Partnership under the following circumstances:
PARTNERSHIP DISSOLUTION
A. ADMISSION OF A NEW PARTNER
Elmo and Lito are partners sharing profits and losses in
the ratio of 60% and 40%, respectively. The partnership
balance sheet at April 30, 2020 follows:
Cash
Inventory
Land
Buildings
Lito, Loan
Total
P
40,000
60,000
64,000
404,000
12,000
P 580,000
Accounts Payable
Elmo, Loan
Elmo, capital
Lito, capital
Total
P 90,800
4,400
380,000
104,800
P580,000
The partners agreed to admit Romy for a one-tenth
interest for a P56,000 consideration. At the time of
admission, the fair market value of the land is appraised at
P144,000 and the market value of the inventory is
P120,000.
1. Assume Romy is admitted by purchase of each of the
original partners’ interest and paid the partners :
A. Prepare the journal entries on the revaluation of
assets and the admission of Romy
B. Calculate the capital balances of the partners after
the admission of Romy.
C. Calculate the amounts received by Elmo and by
Lito for their respective partnership interest
transferred to Romy
D. Explain why no amount of bonus was recognized
despite the difference between Romy’s investment
and his acquired partnership interest.
2. Now assume Romy is admitted by investing the
P56,000 to the partnership for a 10% interest
A. Calculate the partners’ capital balances after the
admission of Romy.
B. Prepare the journal entry for the admission of
Romy.
MULTIPLE CHOICE
The capital accounts of the Sarah and Opel partnership on
January 1, 2020, were:
Sarah, capital (75% profit percentage) P 112,000
Opel, capital (25% profit percentage)
48,000
Total capital
P 160,000
On October 1, Tina was admitted for a 40 percent interest
in the partnership when she purchased 40 percent of each
existing partner’s capital for P80,000, paid directly to
Sarah and Opel. The partnership’s net income for the year
is P66,000 and 2/3 of it was earned in the last quarter of
the year.
1. What are the capital balances of Sarah, Opel and Tina
after Tina’s admission to the partnership?
a. P 84,000; P36,000;
P 80,000
b. P108,700; P44,250.40; P102,000
c. P 77,100; P32,100;
P 72,800
d. P 90,000; P 40,000;
P 70,000
On August 1, 2020 Partners Albert and Berto had the
following ownership balances in the AB Partnership:
ALBERT
BERTO
Capital
P250,000
P200,000
Loan
(30,000)
10,000
Total
P220,000
P210,000
In the morning of this date, Carlo was admitted as a
partner with an investment of P150,000 for 20% interest
in capital and in profits or losses.
In the afternoon of the same day, over snacks, Dindo
learned about the nature and objectives of the ABC
Partnership and insisted that he became a partner and was
willing to contribute P120,000 under acceptable terms
determined by the old partners.
The old partners, in a caucus, have agreed to allocate 15%
of existing total capital, as well as 15% of profits or losses
to Dindo. Over dinner, Dindo accepted the admission
arrangement without any change. On the other hand, the
old partners will each transfer 15% of their respective
interest to Dindo. Under the old AB Partnership, profit or
loss was 60% and 40% to Albert and Berto, respectively.
3. Determine the capital balance of Carlo upon
admission to the AB Partnership on August 1.
a. P116,000
c. P120,000
b.P122,000
d. P118,000
his
4. Determine the capital balance of Blanche under the
ABCD Partnership in the late evening of August 1, 2020.
a. P 27,800
c. P108,000
b.P180,200
d. P 90,000
The following are the capital balances of ABC Partnership
at August 30, 2020:
Alfie
(40% P&L)
P 176,000
Bar
(40% P&L)
128,000
Carl
(20% P&L)
88,000
Dick invests P216,000 in cash for a 30% partnership
interest. The payment goes to the original partners.
Revaluation in asset is to be recognized upon Dick’s
admission.
5. How much adjustment in net assets is to be recorded
and what is the new partner’s beginning capital?
a. P328,000 & P216,000
c. P112,000 & P151,200
b. P112,000 & P216,000
d. P 328,000 & P151,200
The following is the condensed balance sheet of G & N
partnership at August 30, 2020, at which date Ella is to be
admitted with a 30% interest in capital and in profits for
an investment of P44,000.
Book Value Fair Value
Cash
P 16,000
P 16,000
Other assets
402,400
333,600
Current liabilities
(43,200)
(43,200)
Non current liabilities
(215,200) (220,000)
EXCEL PROFESSIONAL SERVICES, INC.
Greg, capital
( 96,000)
Nick, capital
( 64,000)
Greg and Nick share profits and losses 60% and 40%,
respectively.
6. What will be the capital balances of Greg and Nick after
Ella’s admission?
a. P54,768 and P36,512
c. P36,512 and P54,768
b. P39,120 and P52,512
d. P51,888 and P39,392
2. Determine the capital balances of A and B, respectively, as
of December 31, 2019.
a. P 94,000 & P194,000 c. P 194,000 & P115,000
b. P 115,000 & P215,000 d. P 165,000 & P215,000
B. RETIREMENT OF A PARTNER
On June 30, 2020, the balance sheet for the partnership of
D, E and F, together with their respective profit and loss
ratios, is summarized as follows:
Assets, at cost P300,000 D, loan
P 15,000
D, capital (20%)
70,000
E, capital (20%)
65,000
F, capital (60%) 150,000
P300,000
D has decided to retire from the partnership, and by
mutual agreement the assets are to be adjusted to their
fair value of P360,000 at June 30, 2020. It is agreed that
the partnership will pay D P102,000 cash for his
partnership interest exclusive of his loan, which is to be
repaid in full.
4. After D’s retirement, what are the capital account
balances of partners E and F, respectively?
a. P65,000 and P150,000 c. P 97,000 and P246,000
b. P72,000 and P171,000 d. P 77,000 and P186,000
The following balances as at October 31, 2020 for the
Partnership of Tony, Liza, and Cory were as follows:
Cash
P 66,000 Liabilities
P 65,000
Liza, Loan
19,000 Tony, loan
20,500
Other Assets
500,000 Tony, capital
167,000
Liza, capital
107,500
Cory, capital
225,000
Totals
P585,000 Totals
P585,000
Tony has decided to retire from the partnership on October
31. Partners agreed to adjust the non-cash assets to their
fair market value of P620,000. The estimated profit to
October 31 is P120 ,000. Tony will be paid P252,500 for
his partnership interest exclusive of his loan which is
repaid in full. Their profit and loss ratio is 4:2:4 to Tony,
Liza and Cory, respectively.
1. Prepare entries for the retirement of Tony from the
partnership.
2. What will be the balance of Liza’s capital account after
the retirement of Tony?
MULTIPLE CHOICE
The balance sheet at December 31, 2020, for the Beth, Daisy,
and Maya partnership is summarized as follows:
Assets
P 800,,000
Loan to Daisy
100,000
Liabilities
P200,000
Beth capital (50%) 300,000
Daisy capital (40%) 300,000
Maya capital (10% 100,000
P 900,000
P900,000
Daisy is retiring from the partnership. The partners agree that
partnership assets, excluding Daisy’s loan, should be adjusted
to their fair value of P1,000,000 and that Daisy should receive
P304,000 for her capital balance net of the P100,000 loan.
1. How much are the capital balances of Beth and Maya
immediately after Daisy’s retirement.
a. P380,000; P116,000
b. P400,000; P120,000
c. P385,000 P117,000
d. P308,333 P101,667
A, B, and C formed a partnership on January 2, 2019 with the
following contributions:
A
P100,000
B
200,000
C
300,000
The partners agreed on a capital ratio of 1:2:3 upon formation
and P&L ratio of 3:3:4, respectively. The partnership reported
a net loss of P20,000 for 2019. Also, at the end of 2019, C has
decided to withdraw from the firm and was paid P250,000
from partnership cash.
On April 1, 2020, D was admitted as a partner with an
investment of P160,000. He is given a share in capital of
40%and in profits, 30% the old partners have agreed to retain
their old ratio over the remaining profit and loss share of
70%. The partnership reported a net profit of P21,000 for
2020, one-third of which is deemed earned as of the end of
the year’s first quarter’s operation.
3. Determine the capital balances of A, B, and D, respectively
on December 31, 2020.
a. P 98,500, P 75,720 & P 113,840
b. P 93,640, P 70,820 & P 109,640
c. P100,990.40 78,170.40 & P 120,140
d. P104,000, P204,000
& P 203,000
B. INCORPORATION
Partners Boba and Tess, who share profits and losses equally,
have decided to incorporate the partnership at December 31,
2020. The partnership net assets after the following
adjustments will be contributed in exchange for shares of
stocks from the corporation.
i. provision of allowance for doubtful accounts, P6,250.
ii. adjustment of overstated equipment by 2,500
iii. adjustment of understated inventory by P20,000 and
iv. recognition of additional depreciation of P5,000.
The corporation’s ordinary shares is to have a par value of
P312.50 each and the partners are to be issued corresponding
shares equivalent to 70% of their adjusted capital balances.
The partnership balance sheet at December 31, 2020
follows:
Cash
P 112,500 Liabilities
P 107,500
Accts rec
62,500 Acc. Dep
5,000
Inventory
87,500 Boba, cap.
106,250
Equipment
50,000 Tess, cap.
93,750
Total
P 312,500 Total
P 312,500
1. Determine the total credit to APIC upon incorporation of
the partnership
a. P 61,875
c. P 60,000
b. P 144,375
d. P 140,000
2.
The number of ordinary shares issued to Partner Tess is
a. 210
c. 238
b. 245
d. 217
Lexy and ACE partnership’s balance sheet at December 31,
2019 reported the following balances.
Total assets
P187,500
Total liabilities
37,500
Lexy, capital
75,000
Ace, capital
75,000
On January 2, 2020, LEXY and ACE dissolved their
partnership and transferred all assets and liabilities to a
newly formed corporation. At the date of incorporation, the
fair value of the net assets was P22,500 more than the
carrying amount on the partnership’s books. Of which
P12,500 was assigned to tangible assets and P10,000 was
assigned to patent. LEXY and ACE were each issued 5,000
shares of the corporation’s P12.50 par common stock.
EXCEL PROFESSIONAL SERVICES, INC.
3. Immediately following incorporation, additional paid-in
capital in excess of par should be credited fo
3
a. P160,000
c. P 25,000
b. P 47,500
d. P137,500
PARTNERSHIP LIQUIDATION.
1. LUMP-SUM
DONNA, JANICE and ELLERY plan to liquidate their
partnership. They have always shared losses and gains in a
2:3:5 ratio, and on the day of the liquidation their balance
sheet appeared as follows:
DONNA, JANICE, and ELLERY
Balance Sheet
December 31, 2020
Assets
Liabilities and Capital
Cash
P68,750 Accounts payable
P130,370
ELLERY, loan
5,000
Other assets
451,250 DONNA, Capital
76,250
JANICE, loan
50,000 JANICE, capital
250,880
_______ ELLERY, capital
107,500
Total assets
P570,000 Total equities
P570,000
The other assets are sold for P212,500, and assume the
following information on partners’ net assets, exclusive of
their respective partnership interests at that point.
Assets
Liabilities
DONNA
P687,500
562,500
JANICE
P375,000
350,000
ELLERY
P 167,000
161,875
Required: Prepare general journal entries to record the sale
of the other assets and the distribution of the cash to the
proper parties. Show supporting computations in good form.
MULTIPLE CHOICE
Partners EDMAN, SALLY and ZARAH decided to liquidate their
partnership on November 30, 2020. Their capital balances
and profit and loss ratio are as follows:
Capitals
P & L Ratio
Edman
P 480,000
40%
Sally
627,200
40%
Zarah
192,000
20%
The net income from January 1, 2020 to November 30, 2020
is P524,800. On November 30, 2020, the cash balance is
P416,000, and that of liabilities is P928,000..
Edman is to receive P565,248 in the settlement of his interest.
1. Calculate: (1) The loss on realization, and (2) the amount
to be realized from the sale of non-cash assets?
a. (1) P311,680; (2) P2,024,320
b. (1) 248,000; (2) 5,100,000
c. (1) 620,000; (2) 3,860,000
d. (1) 552,000; (2) 3,860,000
The partnership of MIKEE and ROSA is in the process of
liquidation. On January 1, 2020, the ledger shows account
balances as follows:
Cash
P 6,400 Accounts payable
Accounts receivable 16,000 MIKEE capital
Lumber inventory
25,600 ROSA capital
P 9,600
25,600
12,800
On January 10, 2020, the lumber inventory is sold for
P16,000, and during January, accounts receivable of
P13,440 are collected. No further collections on the
receivables are expected and the partners have incurred
P2,560 of liquidation expenses. Profits are shared 60
percent to Mikee and 40 percent to Rosa.
2. How much cash will partner Mikee and Rosa receive
upon liquidation?
a. P18,304; P7,936
c. P20,960; P 8,640
b. P37,600; P18,400
d. P20,500; P20,500
The accounts of the Partnership of R, S, and T at the end of its
fiscal year on November 30, 2020 are as follows:
Cash
P 106,240 Loan from S
P 20,480
Other non-cash
R, capital (30%)
272,640
assets
724,480
Loan to R
15,360 S, Capital (50%)
139,520
Liabilities
268,800 T, capital (20%)
144,640
3. If in the first cash distribution, S received P51,200, which
of the following statements is incorrect?
a. Total amount distributed to partners is P344,320.
b. Total amount paid to creditors is P268,800.
c. Total amount realized from the non-cash assets is
P613,120
d. R received an amount equal to 192,000.
The partnership ABC is currently liquidating and on
February 15, 2020, their balances in capital and their
profit and loss (P&L) ratios are shown below:
Apple, capital (P&L 40%)
P17,600
Bryan, capital (P&L 20%)
11,200
Cecile, capital (P&L 40%)
( 9,600)
Assume non-cash assets have been all disposed and Cecile
has promised to pay his deficiency in a week’s time,
4, Calculate the amount to be received by one of the partners
if cash is paid immediately on February 15, 2020.
a. Apple, P22,000
c. Bryan, P 8,000
b. Bryan, P12,000
d. Apple, 12,000
2. BY INSTALLMENT
On December 31, 2020, the balance sheet of CDO Partnership
is as follows:
Assets
Liabilities
Cash
P 15,360 Account Payable
P51,200
SlryPyble, Celia
10,240
Noncash assets
271,360 Dave, Loan
20,480
Loan to Oleg
10,240 Celia, Capital
38,912
Dave, Capital
73,728
_______ Oleg, Capital
102,400
P296,960
P 296,960
Profit and losses were shared as follows; Celia, 30%; Dave,
30%; Oleg, 40%. It was decided to liquidate the business.
The following is a summary of the realization and liquidation
activities.
Book
Value
Cash Paid
of Asset
Cash
Expense
Liabiliti
to
Realized
Collected
s
es
Partners
Paid
Paid
1st
Period
133,120 81,920
4,100
40,000
41,980
2nd
Period
76,800
51,200
4,800
11,200
40,000
3rd
Period
61,440
35,840
3,600
38,640
Total
271,360 168,960
12,500
51,200
120,620
Required:
1. Prepare a statement of liquidation for each period.
2. Prepare a program to show how cash is to be distributed
to partners.
MULTIPLE CHOICE
The balance sheet for CHESTER, JOANA and JOHN
Partnership, who share profits and losses in the ratio of
50%, 25%, and 25%, respectively, shows the following
balances just before liquidation.
Cash
P 19,200
Other assets
95,200
Liabilities
32,000
Chester, capital
35,200
Joana, capital
24,800
John, capital
22,400
EXCEL PROFESSIONAL SERVICES, INC.
On the first month of liquidation, certain assets are sold for
P51,200. Liquidation expenses of P1,600 are paid, and
additional liquidation expenses are anticipated. Liabilities
are paid amounting to P8,640 and sufficient cash is
retained to insure the payment to creditors before making
payments to partners. On the first payment to partners,
Chester receives P10,000.
1. Determine the amount of cash withheld for anticipated
liquidation expenses.
a. P35,200
c. P33,200
b. P29,200
d. P 4,800
4. Determine the amount payable to Partner A if cash is
paid just before the start of liquidation on December
31, 2020.
a. P 22,628.80
c. P 28,285.60
b. P 28,240
d. P 28,096
A condensed balance sheet with profit sharing percentages
for the E, F, and G partnership on January 1, 2020, shows
the following:
Cash
P 80,000
Other assets 400,000
Liabilities
P 64,000
E, capital (40%) 80,000
F, capital (40%) 200,000
G, capital (20%) 136,000
P480,000
The following balance sheet for the partnership of A, B,
and C was taken from the books on December 31, 2020.
Assets
Liabilities and Capital
P480,000
Cash
P 32,000 Liabilities
P 80,000
Other Assets
288,000 A, Capital (40%)
59,200
B, Capital (40%)
104,000 On January 2, 2020, the partners decide to liquidate the
C, Capital (20%)
76,800 business, and during January they sell assets with a book
Total Assets P 320,000 Total Liab & Cap
P 320,000 value of P240,000 for P136,000.
2. If the firm is dissolved and liquidates by installment,
the first sale of the other assets having book value of
P144,000 realized P64,000 and all cash available are
distributed, the amount to be received by A, B, and C
respectively would be
A
B
C
a. P 0
P18,000
P40,000
b.P 0
P80,000
P20,000
c. P20,000
P 0
P 0
d.P 0
P 0
P16,000
3. If the firm is dissolved and liquidates and A receives a
total of P2,400 in full settlement of his interest, then C
would have received a total of
a. P56,000
c. P 48,400
b. P 31,000
d. P 59,000
The accounts of the partnership
are as follows:
Cash
P 105,600
Non-cash assets
932,800
Loan to P
19,200
Total
P1,057,600
of PBA at December 31, 2020
Liabilities
Loan from B
P, capital
B, capital
A, capital
Total
P 80,000
25,600
264,000
468,800
219,200
P1,057,600
They divide profits and losses 3:5:2 to P, B, and A
respectively. They have decided to liquidate the
partnership at this date.
5. How much cash will the partners receive if all available
cash, except for a P8,000 contingency fund, is
distributed immediately after the sale.
a. All partners will receive P60,000
b. Partners F and G will both receive P72,000
c.
d.
Partner F will receive P96,667 and partner G will
receive P93,333
Partner F will receive P190,000
Claudia, Petra, Mona, and Hilda are partners who share
profits and losses at 40%, 30%, 20%, and 10%,
respectively. Since two of them have given intention to
withdraw, they have decided to liquidate the partnership
instead. At this point, the capital balances of the partners
are as follows:
Claudia
P40,800
Petra
17,280
Mona
27,520
Hilda
13,600
6. Which of the following statement is true?
a. The first available P1,920 will go to Claudia..
b. Hilda will be the last to receive cash
c. The first available P320 will go to Mona.
d. Petra will collect a portion of any available cash
before Hilda receives anything.