Reference no: EM132793320
Questions -
Q1. The partnership agreement of AAA, BBB and CCC provides for the year-end allocation of net income in the following order:
-First, AAA is to receive 10% of net income up to P100,000 and 20% over P100,000
-Second, BBB and CCC each are to receive 5% of the remaining income over P150,000
-The balance of income is to be allocated equally among the three partners
The partnership's 2019 net income was P250,000 before any allocations to partners. What amount should be allocated to AAA?
a. P110,000
b. P108,000
c. P101,000
d. P103,000
e. None of the choices
Q2. The Articles of Partnership of Adam and Eve the following provisions were stipulated:
-Annual salary of P60,000 each
-Bonus to Adam of 20% of the net income after partner's salaries and bonus, the bonus being treated as an expense.
-Balance to be divided equally.
The partnership reported a net income of P360,000 after partners' salaries but before bonus. How much is the share of Eve in the profit?
a. None of the choices
b. P210,000
c. P150,000
d. P60,000
e. P90,000
Q3. Garcia and Henson formed a partnership on January 2, 2019 and agreed to share profits 90% and 10%, respectively. Garcia contributed capital of P 25,000. Henson contributed no capital but has a specialized expertise and manages the firm full time. There were no withdrawals during the year. The partnership agreement provides for the following:
-Capital accounts are to be credited annually with interest at 5% of beginning capital.
-Henson is to be paid a salary of P1,000 a month.
-Henson is to receive a bonus of 20% of income calculated before deducting his salary and interest on both capital accounts.
-Bonus, interest, and Henson's salary are to be considered partnership expenses.
-The partnership 2019 income statement as follows:
Revenues P96,450
Expenses (including salary, interest, and bonus) 49,700
Net income P 46,750
What is Henson's 2019 bonus?
a. P15,738
b. P12,000
c. P11,688
d. P15,000
e. None of the choices
Q4. The partnership contract of the J, Y, and P Partnership provided for the division of net income or losses in the following manner:
-Bonus of 20% of income before the bonus to J
-Interest at 15% on average capital account balances to each partner.
-Remaining income or loss, equally to each partner.Net income of the J, Y and P Partnership for 2019 was at P180,000 and the average capital account balances for that year were J, P200,000; Y, P400,000; and P, P600,000.
How much of the P180,000 partnership profit for 2019 should be distributed to J?
a. P12,000
b. None of the choices
c. P66,000
d. P78,000
e. P54,000
Q5. The partnership contract of Ivan and Irvin provided for salaries of P90,000 to Ivan and P70,000 to Irvin, with any remaining income or loss divided equally. During, 2020, pre salaries income of Ivan and Irvin Co. was P200,000, and both Ivan and Irvin withdrew cash from the partnership equal to 80% of their salary allowance, During 2020, Ivan's equity in the partnership:
a. Decrease more than Irvin's equity
b. None of the choices
c. Decrease the same amount as Irvin's equity
d. Increase the same amount as Irvin's equity
e. Increase more than Irvin's equity
Q6. A, a partner in the ABC Partnership, has a 30% participation in partnership profits and losses. A's capital account has a net decrease of P 60,000 during the calendar year 20x1. During 20x1, A withdrew P130,000 (charged against his capital account) and contributed property valued at P 25,000 to the partnership. What was the net income of the ABC Partnership for 20x1?
a. P150,000
b. None of the choices
c. P233,333
d. P350,000
e. P550,000
Q7. Fernando & Jose are partners with capital balances of P30,000 and P70,000, respectively. Fernando has a 30% interest in profits and losses. All assets of the partnership are at fair market value except equipment with book value of P300,000 and fair market value of P320,000.
At this time, the partnership has decided to admit Rosa and Linda as new partners. Rosa contributes cash of P55,000 for a 20% interest in capital and a 30% interest in profits and losses. Linda contributes cash of P10,000 and an equipment with a fair market value of P50,000 for a 25% interest in capital and a 35% interest in profits and losses. Linda is also bringing special expertise and clients contact into the new partnership. Using the bonus method, what is the amount of bonus?
a. P14,000
b. P24,750
c. None of the choices
d. P18,250
e. P7,500
Q8. The capital accounts of the partnership of Nakpil, Ortiz, and Perez on June 1, 2019 are presented below with their respective profit and loss ratios:
Nakpil P139,200 1/2
Ortiz 208,800 1/3
Perez 96,000 1/6
P 444,000
On June 1, 2019, Quizon is admitted to the partnership when he purchased, for P 132,000, a proportionate interest from Nakpil and Ortiz in the net assets and profits of the partnership. As a result of a transaction, Quizon acquired a one-fifth interest in the net assets and profits of the firm. Assuming that implied goodwill is not to be recorded, what is the combined gain realized by Nakpil and Ortiz upon the sale of a portion of their interest in the partnership to Quizon?
a. P43,200
b. P82,000
c. None of the choices
d. 0
e. P62,400
Q9. When Mill retired from the partnership of Mill, Yale, and Lear, the final settlement of Mill's interest exceeded Mill's capital balance. Under the bonus method, the excess
a. Was recorded as an expense.
b. Had no effect on the capital balances of Yale and Lear.
c. Reduced the capital balances of Yale and Lear.
d. None of the choices
e. Was recorded as goodwill