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Practical

Accounti
ng 2

P2 01

JONATHAN M.
TIPAY, CPA

Partnership Accounting
Formation
1.) On April 1, 2015, A. Colomo and C. Paulino formed a partnership with each contributing the
following assets:
A. Colomo
C. Paulino
Cash
120,000
80,000
Machinery and Equipment
100,000
300,000
Building
900,000
Furniture and Fixtures
40,000
The building is subjecy to a mortgage loan of P320,000, which is to assumed by the
partnership. On April 1, 2015, the balance of Paulinos capital account should be
A.
B.
C.
D.

960,000
1,020,000
1,056,000
1,280,000

2.) M. David and N. Estrella are forming a partnership by combining their businesses.
books show the following:
M. David
N. Estrella
Cash
72,000
Accounts Receivable
150,000
Merchandise Inventory
240,000
Furniture and Fixtures
330,000
Prepaid Expenses
63,000
Accounts Payable
366,000
M. David, Capital
489,000
N. Estrella, Capital

Their

30,000
108,000
156,000
102,000
21,000
144,000
273,000

It has been agreed to provide for uncollectible accounts equal to 5% of the receivables of
each party and that the Furniture and Fixtures of Estrella are overdepreciated by P9,000. If
each partners share in equity is to be equal to the net assets invested the capital accounts of
David and Estrella would be
A.
B.
C.
D.

P489,000
P481,500
P481,500
P855,000

and
and
and
and

P273,000,
P276,600,
P258,600,
P417,000,

respectively
respectively
respectively
respectively

3.) A business owned by Francesca Garcia was short of cash and Garcia decided to form a
partnership with Isabel Jocson, who was able to contribute cash twice the interest of Garcia
in the new partnership. The assets contributed by Garcia appeared as follows in the
Statement of Financial Position of her business: Cash, P9,000; Accounts Receivable,
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Accounti
ng 2

P2 01

JONATHAN M.
TIPAY, CPA

P189,000 with allowanced for uncollectible accounts of P6,000; Merchandise Inventory,


P420,000; and Store Equipment, P150,000 with accumulated depreciation of P15,000.
Garcia and Jocson agreed that the allowanced for uncollectible accounts were inadequate
and should be P10,000. They also agreed that the fair value for the inventory is P460,000
and for the store equipment is P140,000. The cash contributed by Jocson into the
partnership was
A.
B.
C.
D.

424,000
620,000
808,000
1,576,000

4.) F. Nicolas and G. Lazam are combining their separate businesses to form a partnership.
Cash and noncash assets are to be contributed for a total capital of P600,000. The
noncash assets to be contributed and the liabilities to be assumed are as follows:
Nicolas
BV
Accounts
Receivable
Merchandise
Inventory
Equipment
Accounts Payable

Lazam

40,000

FMV
40,000

BV

FMV

60,000

100,000

40,000

50,000

120,000
30,000

90,000
30,000

80,000
20,000

100,000
20,000

The partners capital accounts are to be equal after all the contribution of assets and the
assumptions of liabilities. The amount of cash to be contributed by Nicolas is
A.
B.
C.
D.

300,000
210,000
200,000
100,000

5.) Using the information in number 4, the total assets of the partnership is
A. 650,000
B. 360,000
C. 340,000
D. 630,000
6.) R. Delton and S. Claret entered into a partnership on February 1, 2007 by investing the
following assets:
R. Delton
Cash
Merchandise Inventory
Land
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S. Claret
40,000

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90,000
130,000

Practical
Accounti
ng 2

P2 01

JONATHAN M.
TIPAY, CPA

Equipment
Furniture and Fixtures

A.
B.
C.
D.

30,000
200,000

The agreement between Delton and Claret provides that profits and losses are to be
divided 60% and 40% to Delton and Claret, respectively, and that the partnership is to
assume the P100,000 mortgage on the land. If claret is to receive capital credit equal to
his profit and loss ratio, how much cash must he invest?
10,000
150,000
160,000
400,000

7.) Using the information in number 7, and assuming that Claret invests P100,000 cash and
each partner is to be credited for the full amount of the net assets invested, the total
capital of the partnership is
A. 240,000
B. 250,000
C. 490,000
D. 590,000
8.) Using the information in number 7, and assuming that the capital of the partners is
proportionate to their profit and loss ratio, the capital of the Delton and Claret upon
formation are:
A. 245,000 and 245,000, respectively
B. 234,000 and 156,000, respectively
C. 156,000 and 234,000, respectively
D. 294,000 and 196,000, respectively
Operation
1.) Mr. Banayo and his very close friend, Mr. Buendia formed a partnership on January 1, 2007
with Banayo contributing P160,000 cash and Buendia contributing equipment with a book
value of P64,000 and a fair value of P48,000, and inventory with a book value of P24,000
and a fair value of P32,000. During 2007, Buendia made additional investment of P16,000
on April 1, and P16,000 on June 1. On September, he withdrew P40,000. Banayo had no
additional investment nor withdrawals during the year. The average capital balance at the
end of the fiscal year 2007 for Buendia is:
A.
B.
C.
D.

96,000
88,000
80,000
72,000

2.) On January 1, 2007, Bayani and Bonifacio decided to form a partnership. At the end of the
year, the partnership made a profit of P240,000. The capital accounts of the partnership
show the following transactions:
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Practical
Accounti
ng 2

P2 01

JONATHAN M.
TIPAY, CPA

Debit
January 1
April 1
June 1
August 1
September 1
October 1
December 1

A.
B.
C.
D.

Bayani, Capital
Credit
80,000

Debit

Bonifacio, Capital
Credit
50,000

10,000
20,000
20,000
10,000
8,000

6,000
2,000
10,000

Assuming that the profit of the partnership is divided on the basis of average capital ratio,
Bayanis share of the profit is:
100,000
140,000
144,000
147,692

3.) Using the information in number 2, and assuming an interest of 20% per annum on
average capital is given, and the balance of the profits is divided equally, the sharing of
the profit shall be (compute for Bonifacios share)
A. 117,600
B. 115,200
C. 237,600
D. 235,200
4.) Bolano, Baler, and Bensan are partners in an accounting firm. Their capital account
balances at year-end were P180,000, P220,000, and P100,000, respectively. They share
profits and losses on a 4:4:2 ratio, after considering the following terms:
a. Benson is to receive a bonus of 10% profit after bonus
b. Interest of 10% shall be paid on that portion of a partners capital in excess of
P200,000
c. Salaries of P20,000 and P24,000 shall be paid to partners Bolano and Bensan,
respectively

A.
B.
C.
D.

Assuming a profit of P220,000 for the year, the total profit share of Bensan was
50,800
54,800
38,800
74,800

5.) Banta, Berba, and Borja formed a partnership on January 1, 2007. They had the following
initial investments: Banta P200,000; Berba P300,000; Borja P450,000. The
partnership agreement states that the profits and losses are to be shared equally by the
partners after consideration is made for the following:
a. Salary allowance of P120,000 for Banta, P96,000 for Berba and P72,000 for Borja
b. Average partners capital balances during the year shall be allowed 10% interest.

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P2 01

Practical
Accounti
ng 2
JONATHAN M.
TIPAY, CPA

Additional Information:
a. On June 30, 2007, Banta invested an additional P120,000
b. Berba withdrew P140,000 from the partnership on September 30, 2007.
c. Share on the remaining partnership profit was P10,000 for each partner.
How much is the total interest on average capital balances of the partners?
A. 97,500
B. 107,500
C. 115,250
D. 95,000
6.) Using the information in number 5, partnership profit at December 31, 2007 before
salaries, interest and partners share in the remainder is
A. 399,500
B. 415,500
C. 423,250
D. 395,500
7.) Using the information in number 5, the total partnership capital on December 31, 2007 is
A. 950,000
B. 970,000
C. 1,365,500
D. 1,345,500
8.) On January 1, 2007, Balagtas, Baltimor, Baltazar and Balara formed the BAL Trading, a
partnership with capital contributions as follows: Balagtas P150,000; Baltimor P75,000;
Baltazar P75,000; and Balara P60,000. The partnership agreement stipulates that each
partner shall receive a 5% interest on capital contributed and that Balagtas and Baltimor
shall receive salaries (chargeable as expenses of the business) of P15,000 and P9,000,
respectively. The agreement further provides that Baltazar shall receive a minimum of
P7,500 per annum and Balara a minimum of P18,000, which is inclusive of amounts
representing interest and their respective share in the partnership profits. The balance of
the profits shall be distributed among the partners in the ratio of 3:3:2:2. What amount
must be earned by the partnership in fiscal year 2007, before any charge for interest and
partners salaries, in order that Balagtas may receive an aggregate of P37,500 including
interest, salary and share of profits.
A.
B.
C.
D.

92,000
97,000
50,000
90,000

Dissolution
1.) S. Calibo and S. Camo are partners with capital balances of P30,000 and P40,000 and
sharing profits and losses 40% and 60%, respectively. If S. Cao is admitted as partner
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Practical
Accounti
ng 2

P2 01

JONATHAN M.
TIPAY, CPA

paying P20,000 in exchange for 50% of Calibos equity, the entry in the partnership books
should be as follows:
A. S. Calibo, Capital
S. Cao, Capital
B. Cash
S. Cao, Capital
C. Cash
Goodwill
S. Cao, Capital
D. Cash
S. Calibo, Capital
S. Cao, Capital

15,000
15,000
20,000
20,000
15,000
5,000
20,000
20,000
5,000
15,000

2.) W. Cheng, X. Chavez, and Y. Cher are partners sharing profits and losses in the ratio of
4:3:3, respectively. The condensed Statement of Financial Position of WXY Partnership as
of December 1, 2007 is as follows:
Assets
Cash
Other Assets

50,000
130,000

Total Assets

180,000

Liabilites and Equities


Liabilities
W. Cheng, Capital
X. Chavez, Capital
Y. Cher, Capital
Total Liabilities and
Equities

40,000
60,000
40,000
40,000
180,000

All the partners agree to admit Z. Co as 1/5 partner in the partnership without any
goodwill nor bonus. Co shall contribute assets amounting to
A.
B.
C.
D.

28,000
10,000
35,000
60,000

3.) Moonbits Partnership had a net income of P8,000 for the month ended September 30,
2007. P. Chiu purchased an interest in the Moonbits Partnership of R. Calo and C. Calma by
paying Calo P32,000 for half of his capital and half of his 50% profit sharing interest. At
this time, the capital balance of Calo was P24,000 and the capital balance of Calma was
P56,000. Chiu should receive a credit to his capital account of
A. 12,000
B. 16,000
C. 20,000
D. 26,667
4.) Demiglio, a partner in an accounting firm decided to withdraw from the partnership.
Demigilios share of the partnership profits and losses was 30%. Upon withdrawing from
the partnership, he was paid P74,000 in final settlement of his interest. The total of the
partners capital accounts before the recognition of partnership goodwill prior to
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P2 01

Practical
Accounti
ng 2
JONATHAN M.
TIPAY, CPA

Demigilios withdrawal was P210,000. After his withdrawal, the remaining partners capital
accounts, excluding their share of goodwill, totalled P160,000. The total goodwill of the
firm recognized was
A. 80,000
B. 96,000
C. 120,000
D. 160,000
5.) The partnership of A. De Claro, B. De Guia, and C. Daza has reached an impasse as Daza is
no longer willing to contribute the amount of time and effort to the partnership that he has
previously given. The partners share profits and losses in the ratio of 3:3:4, respectively.
The partners have the following capital balances just prior to Dazas withdrawal from the
partnership.
De Claro
De Guia
Daza
If De Guia purchases Dazas interest from Daza for 32,000 and no goodwill is recorded, the
balance of De Guia capital account immediately after the withdrawal of Daza is
A. 67,000
B. 61,000
C. 60,250
D. 55,000
6.) Using the information in number 5, and assuming that the partners agree that the
partnership will purchase Dazas interest for 32,0000 and no goodwill is to be recorded,
the balance of De Claros capital account immediate after the withdrawal of Daza is
A. 41,400
B. 39,600
C. 39,000
D. 38,250
7.) Using the information in number 5, and assuming that the partners agree that the
partnership will purchase Dazas interest for P32,000, and will record goodwill to the
extent paid to Daza, the balance of De Guias capital account immediately after the
withdrawal of Daza is
A. 35,000
B. 38,000
C. 39,200
D. 41,000
8.) Using the information in number 5, and assuming that the partners agree that the
partnership will purchase Dazas interest for P32,000 and will revalue the partnership
based on the price Daza is willing to accept for his interest in the partnership, the balance
of De Guias capital account immediately after the withdrawal of Daza is
A. 39,000
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45,000
35,000
20,000

Practical
Accounti
ng 2

P2 01

JONATHAN M.
TIPAY, CPA

B. 44,000
C. 63,000
D. 72,000

Liquidation
1.) The following condensed Statement of Financial Position is presented for the partnership of
A. Echoz, B. Egaya and C. Endalo, who share profits and losses in the ratio of 6:2:2,
respectively.
Assets
Cash
Other Assets

40,000
140,000

Total Assets

180,000

Liabilities and Equities


Liabilities
A.Echoz, Capital
B.Egaya, Capital
C.Endalo, Capital
Total Liabilities and
Equity

70,000
50,000
50,000
10,000
180,000

The partners agreed to liquidate the partnership after selling the other assets. If the other
assets are sold for P80,000, how much should Echoz receive upon liquidation, assuming all
the partners are solvent?
A.
B.
C.
D.

12,500
13,000
14,000
50,000

2.) The following Statement of Financial Position was prepared for the Elaine, Flor, and Ginia
Partnership on March 31, 2007:
Assets
Cash
Other Assets

25,000
180,000

Total Assets

Liabilities and Equities


Liabilities
Elaine, Capital (40%)
Flor, Capital (40%)
Ginia, Capital (20%)
Total Liabilities and
Equity

52,000
40,000
65,000
48,000
205,000

205,000
The partnership is being liquidated by the sale of assets in instalments. The first sale of
noncash assets having a book value of P90,000 realizes P50,000. The amount of cash each
partner should receive in the first instalment is

A.
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Elaine
0

Flor
5,000

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Ginia
18,000

Practical
Accounti
ng 2

P2 01

JONATHAN M.
TIPAY, CPA

B.
C.
D.

12,000
27,000
None of these

13,000
5,000

22,000
18,000

3.) Using the information in number 2, and if P3,000 cash is withheld for possible liquidation
expenses, how much cash should Ginia receive?
A. 21,000
B. 17,000
C. 3,000
D. None of the above

4.) Aguas, Bernal, and Coral are partners. On January 3, 2007, their capital balances and profit
and loss ratio are as follows:
Capital
Aguas
Bernal
Coral

Profit and Loss Ratio


25,000
50,000
60,000

60%
25%
15%

Coral withdrew P10,000 during the year. Net loss on December 31, 2007 totaled P20,000. Hence,
the partners decided to liquidate the partnership. It is uncertain how much of the assets will
ultimately yield but favourable realization is expected. It is, therefore agreed to distribute cash as
it becomes available. There are unpaid liabilities of P5,000 and cash on hand of P700. The
amount of noncash assets before liquidation is
A.
B.
C.
D.

110,000
104,300
109,300
105,000

5.) Using the information in number 4, the amount to be realized by the partnership on the
sale of its assets so that Aguas will receive a total of P19,000 in the final settlement of his
interest is:
A. 103,300
B. 9,300
C. 119,300
D. 6,000
6.) Using the information in number 4 and if Coral received a total of P33,000, the amount
that Bernal would have received at this point is:
A. None
B. 2,000
C. 5,000
D. 21,667

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Practical
Accounti
ng 2

P2 01

JONATHAN M.
TIPAY, CPA

7.) The PAL partnership is being dissolved. All liabilities have been paid and the remaining
assets are being realized gradually. The equity of the partners is as follows:
Partners Accounts
Pureza
Altura
Legarda

Loans to (from)
partnership

24,000
36,000
60,000

Profit and Loss Ratio

6,000
0
(10,000)

The second cash payment to any partner/partners under the program of priorities shall be made
thus
A. To L P2,000
B. To A P6,000
C. To L P8,000
D. To A P6,000 and to L P8,000

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