Reference no: EM133015688
Questions -
Q1. On January 31, 2020, partners Yu, Sting, and Ky had the following loan and capital account balances (after closing entries for the month) Loan receivable from Yu 40,000 dr Yu, Capital 60,000 dr Loan payable to Ky 120,000 cr Sting, Capital 240,000 cr Ky, Capital 140,000 cr
The partnership's income sharing ratio was 50:20:30 to Yu, Sting and Ky, respectively. On January 31, 2020, One was admitted to the partnership for a 20% interest in total capital of the partnership in exchange for an investment of P80,000 cash. Prior to One's admission, the existing partners agreed to increase the carrying amount of the partnership's inventories to current its fair value by P120,000.
What is the capital account to be credited to Sting upon his admission?
A. 264,000 B. 259,200 C. 254,000 D. 230,000
Q2. May, Two, and Low, sharing profits and losses in the ratio of 50:30:20, have capital credit balances of P400,000; P300,000 and P200,000, respectively. They decided to admit Nose as a new partner for a 30% interest in the partnership upon Nose's investment of an amount equal to five-sixths of his capital credit with no asset adjustment to be recognized. Immediately after the admission of Nose, how much will be the capital credit balance of Two?
A. 300,000 B. 282,000 C. 270,000 D. 250,000
Q3. Nali contributed P24,000 and To contributed P48,000 to form a partnership and they agreed to share profits in the ratio of their original capital contributions. During the first year of operations, they made a profit of P16,290; Nali withdrew P5,050 and Toh P8,000. At the start of the following year, they agreed to admit Me into the partnership. Me was to receive a one fourth interest in the capital and profits upon payment of P30,000 to Nali and Tohh, whose capital accounts were to be reduced by transfers of Me's capital account of amounts sufficient to bring them back to their original capital ratio. How much of the P30,000 paid by Me must be given to Nali?
A. 10,000 B. 9,300 C. 5,570 D. 3,730
Q4. On December 31, 2018, the unadjusted Statement of Financial Position of LAV Partnership shows the following data with profit and loss sharing agreement of 2:3:5.
Total Assets 100,000 Total Liabilities 40,000
Lorna 10,000
Amy 20,000
Veronica 30,000
On December 31, 2018, Lorna decided to retire from the partnership. However, before the distribution of cash to Lorna, the following data errors were discovered during the pre-retirement audit:
During the year, machinery was over depreciated by P15,000.
The net income for the year is overstated by P5,000.
After the adjustment, Lorna received P15,000 for her capital interest. What is the capital of Amy after Lorna's retirement?
A. 27,500 B. 23,000 C. 21,875 D. 20,000