Reference no: EM133105751

Questions -

Q1. On May 24, 2016, A admits B for an interest in his business. On this date, A's capital account shows a balance of P452,500. The following were agreed upon before the formation of the partnership:

Prepaid expenses of P25,750 and accrued expense of P17,500 are to be recognized

8% of the outstanding accounts receivable of A amounting to P375,000 is to be recognized as uncollectibles.

B invested P260,000 worth of merchandise and is to be credited with a one-third interest in the partnership. B is to invest or withdraw cash to earn his interest.

Which of the following is true regarding the partnership formation?

a. The total agreed capital upon formation is P690,750

b. The total contributed capital of the partnership is P430,750

c. B will invest P44,625 to earn his interest in the partnership

d. A net debit adjustment of P21,750 affected the capital balance of A upon formation.

Q2. Partner Y and Z agreed to form ZY Partnership sharing profit 40% and 60%. The partnership also assumed the separate liabilities of the partners: Y, P200,000 and Z, P300,000. Cash of P150,000 and P250,000 were also contributed by Y and Z. Immediately after formation, the partners were credited with P500,000 and P400,000 capital. How much is the agreed value of non-cash assets contributed by Z?

a. P450,000 b. P550,000 c. P700,000 d. P1,000,000

Q3. H, I and J contributed P650,000, P550,000 and P600,000 but agreed to share equal interest while maintaining their total capital balance. Which is incorrect?

a. H will be debited for a P50,000 bonus c. J will be debited for P50,000 bonus.

b. I will be credited for a P50,000 bonus d. J will not receive any bonus.

Q4. Jasmin and May have just formed a partnership. Jasmin contributed cash of P1,260,000 and computer equipment that cost P540,000. The fair value of the computer is P360,000. Jasmin has notes payable on the computer of P120,000 to be assumed by the partnership. Jasmin is to have a 60% interest in the partnership. May contributed only P900,000. The partners agreed to share profit and loss equally. Jasmin should make an additional investment or (withdrawal) of how much?

Q5. 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. They agreed that profit and losses will be distributed equally, further more they agreed to align their capital credit to their p and l ratio. How much capital will be credited to B?

Q6. The AAA and BBB partnership agreement provides for AAA to receive a 20% bonus on profits before the bonus. Remaining profits and losses are divided between AAA and BBB in the ratio of 2:3, respectively. Which partner has a greater advantage when the partnership has a profit or when it has a loss?

Profit Loss

a. AAA BBB

b. AAA AAA

c. BBB AAA

d. BBB BBB

Q7. Sponge and Bob entered into a partnership on March 1, 2020 investing P 150,000 and P 125,000 respectively. It was agreed that Sponge, the managing partner, was to receive a salary of P30, 000 per year and also 10% bonus based on net profit after adjustment for the salary, the balance of the profit was to be divided in the ratio of their original capital. On December 31, account balances were as follows:

As of December 31, 2020: Inventories remaining - P 50, 000; supplies - P 7,500. Prepaid insurance were P1, 000; accrued expenses - P 12, 250. Depreciation on furniture and fixtures is to be computed using 5 year life and 10% scrap value. The net income of the partnership for the year ended December 31, 2020 is?

Q8. As of December 31, 2015, D, E and F has adjusted capital balances of P100,000, P250,000 and P150,000, respectively, and shares profit 30:30:40. At the start of 2016, the partners admitted G for a 10% interest in profit and capital by contributing P100,000. The partnership earned P120,000 net income in 2016. How much is E's share in the partnership profit?