Professional Documents
Culture Documents
P2 Quizzer 2015
P2 Quizzer 2015
A.F.
On May 1, 2015, Annie and Vinnie decide to combine their businesses and form a partnership.
Their balance sheets on March 1, before adjustments, showed the following:
Annie
Vinnie
Cash
P9,000
P3,750
Accounts Receivable
18,500
13,500
Inventories
30,000
19,500
Furniture and fixture (net)
30,000
9,000
Office equipment (net)
11,500
2,750
Prepaid expenses
6,375
3,000
TOTAL
P105,375
P51,500
Accounts Payable
Capital
TOTAL
P45,750
P18,000
59,625
33,500
P105,375
P51,500
1. Compute the net (debit) credit adjustment for Annie and Vinnie respectively:
a. 2,870; 2,820
b. (2,870); (2,820)
c. (870); 180
d. 870; (180)
2. Compute the total liabilities after formation:
a. 61,950
b. 63,750
c. 65,550
d. 63,950
3. Compute the total assets after formation:
a. 157,985
b. 156,875
c. 160,765
d. 152,985
60%
30%
10%
P252,000
126,000
42,000
The partners decide to sell Frank 20% of their respective capital and profit and loss interests for a
total payment of P90,000. Frank will pay the money directly to the other partners. The other
partners agree that goodwill is not to be recorded.
4. What amount should be credited to Frank capital?
a. 84,000
b. 90,000
c. 96,000
d. 108,000
5. What are the capital balances of the partners after admission to the partnership?
Girly
Owen
Tippy
a. 198,000
99,000
33,000
b. 210,600
100,800
33,600
c. 210,000
108,000
36,000
d. 255,600
127,800
42,600
On December 1, 2015, Teddy and Sabrina formed a partnership with each contributing the
following assets at fair market values:
Teddy
Sabrina
Cash.. P 5,200
Machinery and Equipment 12,550
---Land . ---Building.. ---Office furniture.
18,250
P 22,375
81,250
31,375
----
The land and building are subject to a mortgage loan of P54, 000 that the partnership will
assume. The partnership agreement provides that Teddy and Sabrina share profits and losses,
40% and 60% respectively and partners agreed to bring their capital balances in proportion to the
profit and loss ratio and using the capital balance of Sabrina as the basis. The additional cash
investment made by Teddy should be:
a P18,000
b P85,500
c P134,100
d P166,250
Presented below is the condensed balance sheet of the partnership of Go, Lee, and Mao who
share profits and losses in the ration of 6:3:1, respectively:
Cash
Other assets
P85,000
415,000
P500,000
Liabilities
Go, Capital
Lee, Capital
Mao, Capital
P80,000
252,000
126,000
42,000
P500,000
The partners agree to sell Gaw 20% of their respective capital and profit and loss interests for a
total payment of P90,000. The payment by Gaw is to be made directly to the individual partners.
The partners agree that implied goodwill is to be recorded prior to the acquisition by Gaw. What
are the capital balances of Go, Lee and Mao, respectively, after the acquisitions by Gaw?
a. P198,000 ; P99,000 ; P33,000
b. P201,600 ; P100,800 ; P33,600
c. P216,000 ; P108,000 ; P36,000
d. P255,600 ; P127,800 ; P42,600
P 50,000
62,500
100,000
50,000
250,000
P 512,500
Equities
Lee, capital
P 212,500
Sy, capital
200,000
Go, capital
100,000
Total equities
P 512,500
The partners agree to admit Han for a one-fifth interest. The fair market value of partnership land
is appraised at 100,000 and the fair market value of inventory is 87,500. The assets are to be
revalued prior to the admission of Han and there is 15,000 of goodwill that attaches to the old
partnership.
By how much will the capital accounts of Lee, Sy, and Go increase, respectively, due to the
revaluation of the assets and the recognition of goodwill?
a. The capital accounts will increase by 25,000 each.
b. The capital accounts will increase by 30,000 each.
c. 18,000, 27,000, and 45,000
d. 20,000, 25,000, and 30,000
Cesar and Damon share partnership profits and losses at 60% and 40%, respectively. The
partners agree to admit Egan into the partnership for a 50% interest in capital and earnings.
Capital accounts immediately before the admission of Egan are:
Cesar (60%) P300,000
Damon
(40%) P300,000
Assume that Egan invested P400,000 for the ownership interest. Egan paid the money directly to
Cesar and to Damon for 50% of each of their respective capital interests. The partnership records
goodwill.
What is the amount of goodwill to be recorded?
a. 100,000
b. 200,000
c. 600,000
d. 800,000
Assume that Egan invested P400,000 for the ownership interest. Egan paid the money directly to
Cesar and to Damon for 50% of each of their respective capital interests. The partnership records
goodwill.
What would be the capital balances of Cesar and Damon after the admission?
a. 420,000; 380,000
b. 190,000; 420,000
c. 380,000; 210,000
d. 210,000; 190,000
Assume that Egan invested $500,000 for the ownership interest. Egan paid the money to the
partnership for a 50% interest in capital and earnings. The partnership records goodwill.
The journal entry for the admission of Egan would include;
a. Credit to Goodwill for 100,000
b. Credit to Cash for 500,000
c. Debit to Goodwill for 100,000
d. Debit to Egan, Capital for 600,000
Sydney and Michael are partners who share profits and losses in the ratio of 7:3, respectively. On
October 5, 2016, their respective capital accounts were as follows: Sydney: P35,000; Michael:
30,000.
On that date they agreed to admit Vic as a partner with a 1/3 interest in the capital and profits and
losses, and upon his investment of P25,000. The new partnership will begin with a total capital of
P90,000. Immediately after Vics admission, what are the capital balances of Sydney, Michael,
and Vic, respectively?
a. P30,000 ; P30,000 ; P30,000
b. P31,500 ; P28,500 ; P30,000
c. P31,667 ; P28,333 ; P30,000
d. P30,000 ; P30,000 ; P25,000
Theories:
1. When a partner retires and withdraws assets in excess of his book value, the remaining
partners absorb the excess
a. equally.
b. in their profit-sharing ratio.
c. based on their average capital balances.
d. based on their ending capital balances.
2. When the goodwill method is used to record the admission of a new partner, total partnership
capital increases by an amount