Chapter 1 Formation

Problem
1. Lyris and Rex decide to combine their businesses and form a partnership on July 1,2018. the following are their assets
and liabilities on July 1, 2018 before formation:
Lyris Rex
Assets P210,750 P103,000
Liabilities 91,500 36,000
The following agreements are made to adjust assets and liabilities:
a. Both partners will provide P5,000 allowance for doubtful accounts.
b. Lyris’s fixed assets were over depreciated by P1,000 and Rex’s fixed assets were under-depreciated by
P500.
c. Accrued expenses are to be recognized in the books of Lyris and Rex in the amount of P1,200 and P1,000
respectively.
d. Obsolete inventory to be written off by Lyris amounted to P3,500.
e. Lyris and Rex also agreed to share profits and losses equally.
What is the total assets of the partnership after the formation?
a. P297,550
b. P300,750
c. P303,550
d. P298,550
Solution: B
Total capital before adjustments (210,750 + 103,000) P313,750
Allowance for doubtful accounts (10,000)
Accumulated Depreciation (1,000 – 500) 500
Obsolete inventory (3,500)
Total Asset of the Partnership P300,750
Advance Accounting Textbook 2017- Guerrero Prob. 1-32
2. Ericka and Ella each operating a separate business agreed to form a partnership on July 1, 2018. The assets and
liabilities of the two sole proprietorship on the date of formation are as follows:
Ericka Ella
Cash P19,200 P72,000
Accounts Receivable 192,000 144,000
Merchandise Inventory 240,000 216,000
Equipment 60,000 72,000
Accounts Payable 60,000 96,000
Notes Payable 12,000
The partners agreed on the following adjustments.
Ericka accounts receivable are to be taken over at a book value less than 15% and Ella’s accounts receivable at book
value less 10%. Ericka’s equipment is new and considered adequate for the new business. Ella’s equipment is disposed
at 90% of its book value. It is agreed that Ericka bear one-fourth of the loss resulting from the sale.
Assuming Ella invest sufficient cash to give him a one-half interest in the partnership after charging to Ericka’s capital
account his share of the loss on the sale by Ella of the equipment, how much must Ella invest?
a. P16,800
b. P20,400
c. P12,400
d. P18,200
Solution: B

Ericka Ella
Cash P19,200 P136,000
Accounts Receivable 163,200 129,600
Merchandise Inventory 240,000 216,000
Equipment 60,000
Accounts Payable (60,000) (96,000)
Notes Payable (12,000)
Contributed Capital 410,400 386,400
Loss on sale of equipment (1,800) 1,800
Net Assets 408,600 388,200
Additional investment by Ella 20,400
Agreed Capital 408,600 408,600
Advance Accounting Textbook 2017- Guerrero Prob. 1-33
3. As of July 1,2018 Ally And Althea decided to form a partnership. Their balance sheet on this date are:
Ally Althea
Cash P15,000 P37,500
Accounts Receivable 540,000 225,000
Merchandise Inventory 202,500
 Machinery and Equipment 150,000 270,000
Total 705,000 735,000

Accounts Payable 135,000 240,000

Ally, Capital 570,000
Althea, Capital 495,000
Total 705,000 735,000

The partners agreed that the machinery and equipment of Ally is under depreciated by P15,000 and that of Althea by
P45,000. Allowance for doubtful accounts to be set up amounting to P120,000 for Ally and P45,000 for Althea. The
partnership agreement provides for profit and losses ratio and capital interest of 60% to Ally and 40% to Althea. How
much cash must Ally invest to bring the partner’s capital balances proportionate to their P&L ratio?
a. P52,560
b. P102,500
c. P142,560
d. P172,500

Solution: D
Althea adjusted capital P405,000
Divided by: Althea’s P&L Percentage 40%
Total Agreed Capital 1,012,500
Multiply by: Ally’s P&L percentage 60%
Ally’s agreed capital 607,500
Ally’s adjusted contributed capital* (433,000)
Additional cash to be invested by Ally 172,500

* Ally Althea
Unadjusted Balances 570,000 495,000
Accum. Depreciation (15,000) (45,000)
Allowance for Doubtful (120,000) (45,000)
Accounts
Adjusted capital balances 435,000 405,000
CPA Reviewer Advanced Accounting 2019-Dayag Prob. 1-4
4. Dominique, Christian, and Ericka form a partnership on May 1, 2018. They agreed that Dominique will contribute office
equipment with a total fair value of P40,000; Christian will contribute delivery equipment with a fair value of
P80,000;and Ericka will contribute cash. If Ericka wants a one-third interest in the capital and profits, he should
contribute cash of:
a. P40,000
b. P120,000
c. P60,000
d. P180,000

Solution: C
Total Agreed capital [(40,000 + 80,000) /2/3] 180,000
Ericka’s interest 1/3
Cash to be contributed by Ericka 60,000
CPA Reviewer Advanced Accounting 2016-Guerrero Prob. 1-4

5. Marc and Lyris sole proprietorship formed a partnership. Marc contributed cash of P2,205,000 and Office equipment
that cost P945,000. The equipment had been used and had been 70% depreciated, the fair value of the equipment is
P630,000. Marc also contributed a note payable of P210,000 to be assumed by the partnership. Marc is to have 60%
interest in the partnership. Lyris contributed only P1,575,000 merchandise inventory at fair value. The partners’
capital should be in conformity with their interest in the partnership. After the formation the partners agreed to share
profit and losses equally.
Assuming the used of bonus method, which of the following statements is true?
a. The agreed capital of Marc is P2,625,000.
b. The total agreed capital of the partnership is P4,375,000.
c. The capital of Lyris will increase by P105,000 as a result of the transfer of capital.
d. There is either an investment or withdrawal of asset.
Solution: C
Marc Lyris
Cash 2,205,000
Office Equipment 630,000
Merchandise Inventory 1,575,000
 Notes payable (210,000)
Contributed capital 2,625,000 1.575.000
Agreed capital 2,520,000 1,680,000
Bonus to Lyris (105,000) 105,000

Advance Accounting Textbook 2017- Guerrero Prob. 1-31

6. On August 1, Althea and Marc pooled their assets to form a partnership, with the firm to take over their business assets
and assume the liabilities. Partners capitals are to be based on net assets transferred after the following adjustments.
(Profits and losses are allocated equally.) Marc’s inventory to be increased by P4,000; an allowance for doubtful of
P1,000 and P1,500 are to be set up in books of Althea and Marc, respectively; and accounts payable of P4,000 is to be
recognized in Althea’s books. The individual trial balances on August, before adjustments, follow:
Althea Marc
Assets P75,000 P113,000
Liabilities 5,000 34,500
What is the capital of Althea and Marc after the above adjustments?
a. Althea, P68,750; Marc, P77,250 c. Althea, P65,000; Marc, P76,000
b. Althea, P75,000; Marc, P81,000 d. Althea, P65,000; Marc, P81,000
Solution: D
Althea Marc
Assets P75,000 P113,000
Less: Liabilities 5,000 34,500
Unadjusted Capital P 70,000 P78,500
Add(deduct):adjustments
Increase in inventory 4,000
Allowance for doubtful (1,000) (1,500)
Accounts Payable (4,000)
Adjusted Capital Balances P 65, 000 P 81,000
Dayag 2005, Problem 1-5
7. Christian and Dominique have just formed partnership. Candy contributed a cash of P126,000 and computer equipment
that cost P54,000.The fair value of the computer is 36,000. Christian has a notes payable on the computer of P12,000
to be assumed by the partnership. Christian is to have 60% capital interest in the partnership. Dominique contributed
only P90,000. The profit and loss ratio of the partners as agreed is equally.
Christian should make an additional investment (withdrawal) of:
a. P 96,000 b. P 84,000
c. P(76,800) d. P(15,000)
Solution: D
Total agreed capital (P90,000 ÷ 40%) P225,000
Contributed capital of Christian (P126,000+P36,000-P12,000) 150,000
Total agreed capital (P90,000 ÷ 40%) 225,000
Christian, agreed capital interest 60%
Agreed capital of Christian 135,000
Contributed capital of Christian 150,000
Withdrawal P 15,000
Guerrero 2017, Problem 1-26

8. Rex,Ericka and Allyza are forming a new partnership. Rex is to invest cash of P10,000 and stapling equipment originally
costing P120,000 but has a second value of P50,000. Ericka is to invest cash of P160,000, while Allyza, whose family is
engaged in selling stapling equipment, is to contribute P50,000 and a brand new stapling equipment to be used by the
partnership with a regular price of P120,000 but which cost their family’s business P100,000. Partners agree to share
profits equally. The capital balances upon formation:
a.R,P220,000;E,P160,000;A,P150,000 b. R,P150,000;E,P160,000;A,P170,000
c.R,P160,000;E,P160,000;A,P160,000) d. R,P176,666;E,P176,666;A,P176,668
Solution: B
Rex Ericka Allyza
Cash P100,000 P160,000 P50,000
Equipment at second-hand 50,000 120,000
Assets invested P150,000 P160,000 170,000
Less: liabilities assumed 0 0 0
Capital Balance P150,000 P160,000 P170,000
Dayag 2005, Problem 1-8
9. Gemma, Fatima and Lyris are partners with capital balances on December 31, 2018 of P300,000, P300,000 and
P200,000, respectively. Profits are shared equally. Lyris wishes to withdraw and it is agreed that Lyris is to take certain
equipment with second hand-value of P50,000 and note for the balance of Lyris’ interest. The equipment are carried
on the books at P65,000. Brand new equipment may cost P80,000.The value of the note that will Lyris get from the
partnership’s liquidation:
a. P 150,000 b. P 195,000
c.P145,000 d. P154,000

Solution: C
Equipment at carrying value P65,000
Equipment at second-hand value 50,000
Decrease in equipment P15,000
Multiply by P&L ratio of each partner 1/3
Reduction in capital 5,000

Unadjusted capital of Lyris P200,000

Less:share in decrease of equipment 5,000
Adjusted capital of Lyris 195,000
Less:Equipment received at second-hand value 50,000
Value of notes payable P145,000
Dayag 2005, Problem 1-7
10. Jay-r admits Chian as a partner in business. Accounts in the ledger for Jay-r, just before the admission of Chian are the
following:
Cash P6,800
Accounts Receivable 14,200
Merchandise inventory 20,000
Accounts payable 8,000
Jay-r Capital 33,000
It is agreed that for purposes of establishing Jay-r’s interest the following adjustments shall be made:
a. An allowance for doubtful accounts of 3% of accounts receivable is to be established.
b. The merchandise inventory is to be valued at P23,000.
c. Prepaid salary expenses of P600 and accrued rent expense of P800 are recognized.
d. Chian is to invest sufficient cash to obtain a 1/3 interest in the partnership.
Jay-’s adjusted capital before the admission of Chian; (2) and the amount of cash investment by Chian:
a.(1)P 35,347;(2) P11,971 b.(1)P 35,374;(2) P17,687
c.(1)P 36,374;(2) P18,487 d. (1)P28,174;(2) P14,087
Solution: B
Unadjusted capital of Jay-r P33,000
Add(deduct):
Allowance for doubtful accounts (3%*P14,200) (426)
Increase in merchandise inventory (23,000-20,000) 3,000
Prepaid salary 600
Accrued rent expense (800)
Adjusted balance P35,374
Divided by capital interest of Jay-r 1/3
Total partnership capital 53,061
Less:Adjusted capital of Jay-r P35,374
Capital Balance of Chian P17,687
Dayag 2005, Problem 1-6
Chapter 2 Partnership Operation
Problem
1. Fatima and Gemma formed a partnership on January 2, 2018 and agreed to share profits 90%, 10%, respectively. Fatima
contributed capital of P25,000. Gemma contributed no capital but has a specialized expertise and manage the firm full
time. There were no withdrawals during the year. The partnership agreement provide for the following:
Capital accounts are to be credited annually with interest at 5% of beginning capital.
Gemma is to be paid a salary of P1,000 a month.
Gemma is to received a bonus of 20% of income calculated before deducting his salary and interest on both
capital accounts.
Bonus, interest, and Gemma’s salary are to be considered partnership expenses.
The partnership 2018 income statement follows:
Revenues P96,450
Expenses (including salary, interest, and bonus) 49,700
Net income 46,750
What is Gemma’s 2018 bonus?
a. P11,688
b. P12,000
c. P15,000
d. P15,738
Solution: C
Comprehensive income P46,750
Salary (1,000 x 12) 2,000
Interest (25,000 x 5%) 1,250
Comprehensive income before salary and interest* 60,000
Divide by 80%
Comprehensive income before salary, bonus and interest 75,000
Income before salary and interest (60,000)
Bonus to Gemma 15,000
*Since P60,000 is the total comprehensive income before salary and interest and the bonus is 20% before deducting
salary and interest, then P60,000= 80% of the income based to be used for computing the bonus.
CPA Reviewer Advanced Accounting 2016-Guerrero Prob. 1-44
2. Argyll and Ericka formed a partnership on January 3,2018 with cash investments of Argyll P120,000 and Ericka
P180,000. On December 31,2018, the net income of the partnership was P69,600. The net income included an
extraordinary gain of P12,000.
What is the share of Argyll in the net income of P69,600, if income before extraordinary items is shared equally
between Argyll and Ericka after allowance of 20% bonus to Ericka based on income before extraordinary item after the
bonus. Extraordinary items are shared on the basis of original investments.
a. P27,840
b. P32,640
c. P28,800
d. P24,000
Solution: C
Net income before extraordinary gain and bonus (69,600 – 12,000) P57,600
Net income after bonus (57,600/120%) 48,000
Bonus to Ericka 9,600
Distribution of Net income

Argyll Ericka Total

Bonus 9,600 9,600
Balance, equally 24,000 24,000 48,000
Net income before extraordinary 24,000 33,600 57,600
gain
Extraordinary gain 4,800 7,200 12,000
Total 28,800 40,800 69,600

Advance Accounting Textbook 2017- Guerrero Prob.2-17

3. Dominique and Christopher have been partners for several years. During that time they have shared profit and losses
(60/40). They are currently revising the profit and losses ratios to (70/30). Dominique and Christopher decide to adjust
the capital accounts at the date of the change to reflect the difference between market value and book value of assets
and liabilities. At the date of the change, the partnership owns a building with a book value of P350,000 and a market
value of P600,000. How much will Dominique’s capital account be adjusted at the date of change in the profit and loss
ratio?
a. P25,000 increase
b. P50,000 increase
c. P25,0000 decrease
d. P50,000 decrease
Solution: C
Market value of building P600,000
 Book value of building 350,000
Difference 250,000
multiply by (70%-60%) 10%
Decrease in Capital 25,000
CPA Reviewer Advanced Accounting 2019-Dayag Prob. 1-60
4. Christian and Althea are partnership sharing profits 60% and 40% respectively. The average profit for the past two years
are to be capitalized at 20% per year (for purposes of admitting new partner) in determining the aggregate capital of
Christian and Althea after adjusting the profits for the following items omitted from the books:
Omission at year-end 2017 2018
Prepaid expense P1,600
Accrued expense 1,200
Deferred income P1,400
Accrued income 1,000
Other pertinent information are as follows:
2017 2018
Net income of partnership P14,400 P13,600
Capital Accounts, end of the year
Christian 45,000 54,000
Althea 45,000 55,000
The aggregate capital of Christian and Althea after capitalizing the average profits of 20% per annum is:
a. P67,765
b. P72,105
c. P69,000
d. P71,000
Solution: C
2017 2018
Unadjusted net income P14,400 P13,600
Prepaid Expense-2017 1,600 (1,600)
Accrued expense-2017 (1,200) 1,200
Deferred income-2018 (1,400)
Accrued income-2018 1,000
Adjusted net income 14,800 12,800

Total adjusted net income (14,800 + 12,800) P27,600

Divided by 2
Average net income P13,800
Divided by (capitalized at) 20%
Aggregate Capital 69,000
CPA Reviewer Advanced Accounting 2019-Dayag Prob. 1-47
5. Rex is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus a bonus of 10% of net income
after salaries and bonus as a means of allocating profit among partners. Salaries traceable to the other partner are
estimated to be P100,000. What amount of income would be necessary so that Rex would consider the choices to be
equal?
a. P165,000
b. P290,000
c. P265,000
d. P305,000
Solution: B
Bonus required (40,000 – 25,000) P15,000
Divided by 10%
Total Comprehensive income after bonus and salaries 150,000
Add back: Salaries (25,000 + 100,000) 125,000
Bonus 15,000 140,000
Net profit before bonus and salaries 290,000
CPA Reviewer Advanced Accounting 2016- Guerrero Prob. 1-58
6. Gemma, a partner in the GF Partnership, has 30% participation in partnership profits and losses. Gemma’s capital
account has a net decrease of P60,000 during the year 2016. During 2016, Gemma withdraw P130,000(charged against
his capital account) and contributed property valued at P25,000 to the partnership.
What was the net income of GF Partnership?
a. P 150,000 b. P 233,333
c .P 350,000 d. P 550,000
Solution: A
Decrease in capital P 60,000
Drawings (130,000)
Contribution 25,000
Profit share 45,000
Net income (45,000 ÷ 30) P150,000
 Guerrero 2017, Problem 2-34
7. Fatima is trying to decide whether to accept salary or a salary of P25,000 plus a bonus of 10% of net income after
salary and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are
estimated to be P100,000. What amount of income would be necessary that Fatima would consider the choices to be
equal?
a. P 165,000 b. P 265,000
c. P 290,000 d. P 305,000
Solution: C
Bonus=10%(NI-Salaries-Bonus)
P15,000=.10(NI-(P100,000+P25,000)-P15,000)
P15,000=.10(NI-P140,000)
P15,000=.10NI-P14,000
29,000/.1=NI
NI=P290,000
Dayag 2005, Problem 1-17
8. The partnership agreement of Lyris, Rex and Ella provides for the year-end allocation of net income in the following
order:
First, Lyris is to receive 10% of net income up to P200,000 and 20% over P200,000.
Second, Rex and Ella each are to receive 5% of the remaining income over P300,000.
The balance of income is to be allocated equally among the three partners.
The partnership’s 2018 net income was P500,000 before any allocations to partners. What amount be allocated to
Lyris?
a. P 202,000 b. P 206,000
c. P 216,000 d. P 220,000
Solution: C
Lyris Rex Ella Total
Lyris FirstP200,000*10% P20,000 P20,000
OverP200,000:(500k-200k)*20% 60,000 60,000
Rex&Ella:5% of remaining income
Over P300,000(500k-20k
-60k-300k)*5% 6,000 6,000 12,000
Balance:allocate equally 136,000 136,000 136,000 408,000
P216,000 P142,000 P142,000 P500,000
Dayag 2005, Problem 1-19
9. Chian, a partner in the CJ Partnership, is entitled to 40% of the profits and losses. During 2016, Chian contributed land
with a fair value of P60,000. Also during 2016, Chian had drawings of P80,000. The balance of Chian’s capital account
was P120,000 at the beginning of 2016 and P150,000 at the end of the year,
What is the partnership profit (loss) for 2016?
a. P(75,000) b. P (50,000)
c .P150,000 d. P 125,000
Solution: D
Chian capital, beginning P120,000
Additional investment (Land) 60,000
Drawings (80,000)
Capital balance before net profit (loss) 100,000
Capital balance, end 150,000
Profit share (40%) 50,000
Net profit (P50,000 ÷ 40%) P125,000
Guerrero 2017, Problem 2-32

10. Jay-r and Dom are partners with capitals of P200,000 and P120,000 respectively. The partnership agreement provided
the following:
10% interest on their capital investments
Annual Salary of Dom, P36,000
Remainder 60:40 ratio to Jay-r and Dom
What is the profit to be earned by the partnership before charges of interest, salary and the balance, so that Dom will
receive P40,000 in the remainder of the profit after salary and interest?
a. P 168,000 b. P 138,000
c. P 136,000 d. P 132,000
Solution: A
Jay-r Dom Total
Interest P 20,000 P 12,000 P 32,000
Annual Salary 36,000 36,000 62,000
Remainder (60:40) 60,000 40,000 100,000
Total P116,000 P 52,000 P168,000
Guerrero 2017, Problem 2-18
Chapter 3 Partnership Dissolution
Problem
1. Christian and Dominique, a partner in an accounting firm, decided to withdraw from the partnership. Dominique‘s
share of the partnership profits and losses was 20%. Upon withdrawing from the partnership she was paid P74,000 in
final settlement for his interest. The total of the partners’ capital accounts before recognition of partnership goodwill
prior to Dominique’s withdrawal was 210,000. After his withdrawal the remaining partners’ capital accounts, excluding
their share in goodwill, totaled P160,000. The implied goodwill of the firm was:
a. P120,000
b. P140,000
c. P160,000
d. P250,000
Solution: A
Partnership capital before withdrawal by Dominique P210,000
Partnership capital after withdrawal (160,000)
Book value of Dominque’s interest 50,000

Price paid to Dominique P74,000

Book value of interest (50,000)
Implied goodwill on 20% interest 24,000

Implied goodwill on entire firm (24,000/20%) P120,000

CPA Reviewer Advanced Accounting 2016- Guerrero Prob. 1-65
2. Partners Rex and Ericka share profits in the ratio of 6:4, respectively. On December 31, 2018, their respective accounts
were Rex, P120,000 and Ericka,P100,000. On that date, Ella was admitted as partner with 1/3 interest in capital and
profits for an investment of P80,000. The new partnership began in 2018 with a total capital of P360,000. Immediately
after Ella’s admission:
Amount of goodwill to be credited Rex capital account would be
to Ericka
a. P40,000 P108,000
b. P20,000 P120,000
c. P40,000 P132,000
d. P60,000 P132,000

Solution: C
Agreed Capital of old partner (360,000 x2/3) P240,000
Contributed Capital (120,000 + 100,000) (220,000)
Goodwill to old partners, 6:4 20,000

Agreed Capital of new partner P120,000

Contributed Capital of new partner (80,000)
Goodwill to new partners 40,000

Rex’s capital before goodwill P120,000

Goodwill (20,000 x 60%) 12,000
Rex’s Capital 132,000
CPA Reviewer Advanced Accounting 2016- Guerrero Prob. 1- 30
3. Marc and Ally partnership’s statement of financial position at December 31, 2014, reported the following:
Total Assets P100,000
Total Liabilities 20,000
Marc, Capital 40,000
Ally, Capital 40,000
On January 2, 2018, Mar and Ally dissolved their partnership and transferred all assets and liabilities to a newly formed
corporation. At the date of incorporation, the fair value of the net assets was P12,000 more than the carrying amount
on the partnership’s books, of which P7,000 was assigned to tangible assets and P5,000 was assigned to goodwill. Marc
and Ally were each issued P5,000 shares of the corporation’s P1 par value common stock. Immediately following
Incorporation, additional paid- in capital in excess of par should be credited for:
a. P68,000

b. P70,000
c. P77,000
d. P82,000
Solution: D
Carrying value of net assets (100,000 – 20,000) P80,000
Adjustments to reflect fair value 12,000
Fair value of net assets 92,000
Common stock, P1 par (5,000 shares x 2 x P1) (10,000)
Additional paid-in capital/ Share premium 82,000
 Advance Accounting Textbook 2017- Guerrero Prob. 3-22
4. Marc and Ally entered into a partnership on May 31, 2018, contributing a cash of P48,000 and P32,00,respectively, and
agreeing to divide earnings in the ratio of their initial investments after allowing annual salary allowance of P12,000
each. On December 31, 2018, the income summary account had a credit balance of P34,000, while the drawing account
showed a debit balance of P14,000 for Marc and P10,000 for Ally.
At the beginning of the next year, Christopher was admitted into the firm as a new partner with a 33 1/3% interest for
a capital credit equal to his cash investment of P60,000. Marc and Ally then effected a private cash settlement
between themselves in order to make the capital balance conforms to a new profit sharing ratio of 4:2:3 respectively,
with salary allowances scrapped. How much of the amount of the private cash settlement effected between old
partners?
a. P5,000
b. P9,000
c. P12,000
d. P15,000
Solution: B
Since, there is an admission of a new partner and the agreed capital is determinable, thus , we determine first
whether there is a goodwill or bonus, therefore:
Total agreed capital (60,000/33 1/3%) P180,000
Less: Total contributed capital:
Initial Investment (48,000 + 32,000) P80,000
Net Income 34,000
Drawings (140,000 + 10,000) (24,000)
Contributed Capital of Marc and Ally 90,000
Investment of Christopher 60,000 150,000
Goodwill to old partner 30,000
Total agreed capital differs from contributed capital therefore goodwill exists.
CPA Reviewer Advanced Accounting 2019- Dayag Prob. 1-78

5. The partners’ capital (income – sharing ratio in parentheses) of Lyris, Argyll, Christian and Christopher LLP on May
31,2018, were as follows:
Lyris (20%) P 60,000
Argyll (20%) 80,000
Christian (20%) 70,000
Christopher (40%) 40,000
Total partners’ capital (20%) 250,000
On May 31, 2018, with the consent of Lyris, Argyll and Christopher:
a. Christian retired from the partnership and was paid P50,000 cash in full settlement of his interest in the
partnership.
b. Dominique was admitted to the partnership with a P20,000 cash investment for a 10% interest in the net
assets of Lyris, Argyll and Christopher.
The capital account to be credited to Dominique is:
a. P22,000
b. P27,000
c. P20,000
d. P25,000
Solution: A
Total amount before retirement P250,000
Retirement of Christian (70,000)
Bonus to remaining partner due to retirement of Christian 20,000
Capital balance before admission of Dominique 200,000
Cash investment of Dominique 20,000
Total agreed capital of partnership (equal to the contributed capital) 220,000
Multiplied by interest acquired 10%
Capital account to be credited to Dominique 22,000
CPA Reviewer Advanced Accounting 2019 - Dayag Prob. 1-106
6. Argyll, Dom, Marc were partners with capital balances as of January 1, 2018, of P20,000, P30,000,P40,000 respectively,
sharing profit and losses on a 5:3:2 ratio. On July 1, 2018 Argyll withdraw from the partnership. Partners agreed that at
the time of withdrawal, certain inventories had to be revalued at P14,000 from its cost of P10,000. For the six month
period ending June 30, 2018, the partnership generated net income of P28,000. Further, partners agreed to pay
Argyll,P39,000 for his interest and that the remaining partners’ capital accounts, would be adjusted for whatever
goodwill the settlement would generate. The payment of Argyll included a goodwill of:
a. P 3,000 b. P10,000
c. P 5,000 d. P 8,500
 Solution: A
Amount paid P39,000
Less: Book value of interest of Argyll(50%) 6,000
Partial goodwill to Argyll 3,000
Capital 20,000
Add: Share in adjustment of asset(14k-10k)*50% 2,000
Share in net income(28k*50%) 14,000
36,000
Dayag 2005, Problem 1-70
7. Jay-r and Christian formed a partnership and agreed to divide initial capital equally, even though Jay-r contributed
P25,000 and Christian contributed P21,000 in identifiable assets. Under the bonus approach to adjust the capital
accounts, Christian’s unidentifiable assets should be debited for:
a. P 11,500 b. P2,000
c. P 4,000 d. P 0
Solution: D
Under the bonus method, unidentifiable assets (ie Goodwill) are not recognized. The total resulting capital is
the FMV of the tangible investments of the partners. Thus, there would be no unidentifiable assets recognized by the
creation of this partnership.
Dayag 2005, Problem 1-59
8. On June 30, 2016 the balance sheet of GF marketing, a partnership, is summarized below:
Assets P150,000
Gemma, capital 90,000
Fatima, capital 60,000
Gemma and Fatima share profit and losses at 60:40 ratio, respectively. They agreed to take Chian as a new partner,
who purchases 1/8 interest of Gemma and Fatima for P25,000. What is the amount of Chian’s capital to be taken up in
the partnership books if the book value method is used?
a. P 12,500 b. P25,000
c. P 18,750 d. P31,250
Solution: C
Amount paid P25,000
Less:Book value of interest acquired
(150,000*1/8) 18,750
Gain of Gemma & Fatima P6,250
Dayag 2005, Problem 1-48
9. Jay-r, a partner in an accounting firm, decided to withdraw from the partnership. Jay-r’s share of the partnership’s
profits and losses was 20%. Upon withdrawing from the partnership, he was paid P88,800 in the final settlement for his
interest. The total of the partners’ capital accounts before the recognition of partnership goodwill prior to Jay-r’s
withdrawal was P252,000. After his withdrawal the remaining partners’ capital accounts, excluding their share of
goodwill totalled P192,000. The total goodwill of the firm was:
a. P 144,000 b. P192,000
c. P 168,000 d. P300,000
Solution: A
Amount paid P88,800
Less: Book value of interest of Jay-r(20%)
Total partner’s capital before withdrawal 252,000
Less: Total partner’s capital after withdrawal 192,000 60,000
Excess/Partial Goodwill 28,880
Divided by 20%
Total goodwill P144,000
Dayag 2005, Problem 1-73
10. Lyris & Ally partnership’s balance sheet at December 31, 2018 reported the following:
Total assets P100,000
Total liabilities 20,000
Lyris, capital 40,000
Althea, capital 40,000
On January 2, 2019, Lyris and Althea dissolved their partnership and transferred all assets and liabilities to a newly-
formed corporation. At the date of incorporation, the fair value of net assets was P12,000 more than the carrying
amount on the partnership’s books of which P7,000 was assigned to tangible assets and P5,000 was assigned to
goodwill. Lyris and Althea issued P5,000 shares each of the corporation’s P1 par value common stock. Immediately,
following incorporation, additional paid-in capital in excess of par should be credited for:
a. P 68,000 b. P77,000
c. P 70,000 d. P82,000
Solution: D
Carrying value of net assets (100k-20k) P80,000
Add: adjustments to reflect FV 12,000
FV of net assets P92,000
Less: Common stock,P1 par(5,000shares*2*1) 10,000
Additional paid-in capital P82,000
Dayag 2005, Problem 1-8
Chapter 4 Partnership Liquidation
Problem
1. On January 3, 2018 Rex, Ella and Althea formed a partnership, agreeing to divide profits 2:1:1, respectively. On July
31, 2018, with operations going unfavorable, the partners decided to dissolved the firm, The following data are
available.
Rex Ella Althea
Capital contributions P50,000 P22,500 P20,000
Drawings (Dr.) 15,000 10,000 10,000
Net loss, July 31,2016, P30,000 15,000 7,500 7,500
After realization the net asset of the firm is valued at P65,000. In the settlement to partners, how much should be paid
to the partners?

Rex Ella Althea

a. P38,750 P14,375 P11,875
b. P50,000 P20,000 P17,750
c. P38,750 P20,000 P11,875
Solution: A d. P6,250 0 0
Rex Ella Althea Total
Capital balance before realization 20,000 5,000 2,500 27,500
Gain on realization (Squeeze) 18.750 9,375 9,375 37,500
Capital balance after realization P38,750 14,375 P11,875 65,000
Advance Accounting Textbook 2017- Guerrero Prob. 4-24
2. Marc, Ericka, Fatima and Gemma are partners, sharing earnings in the ratio of 3/21, 4/21, 6/21 and 8/21, respectively.
The balances of their capital accounts on December 31, 2018 are as follows:
Marc P1,000
Ericka 25,000
Fatima 25,000
Gemma 9,000
The partners decide to liquidate, and they accordingly convert the non-cash assets into P23,200 of cash. After paying
the liabilities amounting to P3,000, they have P22,200 to divide. Assume that a debit balance of any partner’s capital is
uncollectible.
The shares of Marc in the loss upon conversion of the non-cash assets into cash was:
a. P4,972
b. P5,257
c. P5,400
d. P5,200
Solution: C
Book value of non-cash asset (Sch. 1) P61,000
Cash Realization (23,200)
Loss on Realization 37,800
Marc‘s P/L ratio 3/21
Marc’s share 5,400

Schedule 1
Payment to partners 22,200
Add back liabilities paid 3,000
Cash balance after realization 25,200
Less: Cash Realized from sake of assets 23,200
Cash balance before realization 2,000
Total assets (60,000 + 3,000) 63,000
Book value of non-cash assets 61,000
CPA Reviewer Advanced Accounting 2016- Guerrero Prob. 1- 79
3. Fatima, Gemma, and Althea decided to dissolve the partnership on November 30, 2018. Their capital balances and
profit ratio on this date, follow:
Capital balances Profit Ratio
Fatima P50,000 40%
Gemma 60,000 30%
Althea 20,000 30%
The net income from January 1 to November 30,2018 is P44,000. Also, on this date, cash and liabilities are P40,000 and
P90,000, respectively. For Fatima to receives P55,200 in full settlement of his interest in the firm, how much must be
realized from the sale of firm’s non-cash assets?
a. P196,000
b. P`177,000
c. P193,000
d. P187,000
Solution: C
Total Capital (50,000 + 60,000 + 20,000 + 44,000) P174,000
 Total Liabilities 90,000
Total Assets 264,000
Cash (40,000)
Non-cash assets 224,000
Loss on realization (55,200 – 67,600*) / 40% 31,000
Proceeds from sale 193,000
CPA Reviewer Advanced Accounting 2019- Dayag Prob. 1-120
4. Lyris, Dominique and Argyll, who divide profits and losses 50%, 30%, and 20%, respectively, have the following October
31,2018 accounts balances:
Lyris Drawing (Dr.) P12,000
Argyll Drawing (Cr.) 4,800
Accounts receivable- Lyris 7,200
Loan Payable- Dominique 14,400
Lyris, Capital 59,400
Dominique, Capital 44,400
Argyll, Capital 39,000
The partnership’s asset are P21,000 (including cash of P64,200) the partnership is liquidated and Argyll receives
P33,000 in the final settlement. How much is the total loss on realization?
a. P10,800
b. P31,200
c. P54,000
d. P64,200
Solution: C
Total interest of Argyll:
Capital 39,000
Drawings 4,800 43,800
Less: Cash received in final settlement 33,000
Share in loss on realization 10,800
Divide by: P/L ratio of Argyll 20%
Loss on realization 54,000
CPA Reviewer Advanced Accounting 2016- Guerrero Prob. 1- 131
5. The Christian, Rex, and Christopher partnership became insolvent on January 1, 2018 and the partnership is being
liquidated as soon as practicable. In this respect the following information for the partners has been marshaled:
Capital balances Personal Assets Personal Liabilities
Christian P70,000 P80,000 P40,000
Rex (60,000) 30,000 50,000
Christopher (30,000) 70,000 30,000
Total (20,000)

Assume that residual profits and losses are shared equally among the three partners. Based on this information,
calculate the maximum amount that Christian can expect to receive from the partnership liquidation is:
a. P20,000
b. P40,000
c. P70,000
d. P110,000
Solution: A
Christian Rex Christopher
Balances before realization 70,000 (60,000) (30,000)
Additional investment 30,000
Balance 70,000 (60,000)
Additional loss (1:1) (30,000) 60,000 (30,000)
Balances 40,000 (30,000)
Additional investment (70,000 – 30,000 – 30,000) 10,000
Balances 40,000 (20,000)
Additional loss (20,000) 20,000
Balances 20,000
CPA Reviewer Advanced Accounting 2019- Dayag Prob. 1- 142
6. On December 31, 2016, the accounting records of Allyza,Fatima and Argyll Partnership included the following ledger
account balances:
Receivable from Allyza P132,000 Allyza, Capital P553,500
Loan to Argyll 40,500 Argyll, Capital 452,500
Salary payable to Fatima 135,000 Fatima, Capital 486,000
Total assets includes cash amounting to P234,500. The partnership was liquidated on December 31, 2016, and Allyza
received P351,000 cash pursuant to the liquidation. Allyza, Fatima and Argyll shared net income and losses in a 5:3:2
ratio, respectively.
In settlement to partners, how much cash is paid to Fatima?
a. P 545,500 b. P 587,500
c. P 0 d. P 542,000
 Solution: A
Settlement to Allyza P351,500
Allyza capital before liquidation (net):
Allyza capital P553,500
Receivable from Allyza ( 132,000) 421,500
Loss of Allyza (50%) P 70,000
Total loss on realization (P70,000 ÷ 50%) P140,00
Allyza Fatima Argyll Total
CB before liquidation 553,500 452,500 486,000 1,492,000
Receivable from Allyza (132,000) (132,000)
Loan to Argyll (40,500) (40,500)
Salary payable to Fatima 135,000 135,000
Interest before realization 421,500 587,500 445,500 1,454,500
Loss on realization ( 70,000) ( 42,000) ( 28,000) (140,000)
Settlement to partners 351,500 545,500 417,500 1,314,500
Guerrero, 2017 Problem 4-26
7. On June 11, 2016, Ericka, Ella and Rex form a partnership investing cash of P15,000, P13,500 and P4,200 respectively.
The partners share profits 3:2:2 and on August 30, 2016, they have a cash of P1,000 and other assets of P47,500;
liabilities are P25,600. On this date they decide to go out of business and sell all the assets for P30,000.Rex has
personal assets of P1,500 that may, if necessary, be used to meet partnership obligations. How much should be
distributed to Ella upon liquidation of the partnership?
a. P 4,000 b. P 2,040
c. P 4,860 d. P 0
Solution: C
TOTAL Ericka Ella Rex
Capital balances, June 11 P32,700 P15,000 P13,500 P4,200
Net loss from operation (squeeze) (9,800) (4,200) (2,800) (2,800)
Capital balances, August 30 before
Liquidation (48,500-25,600) P22,900 P10,800 P10,700 P1,400
Loss on realization (47,500-30,000) (17,500) (7,500) (5,000) (5,000)
Balances P 5,400 P 3,300 P 5,700 (3,600)
Additional investment by Rex 1,500 1,500
Balances P 6,900 P 3,300 P 5,700 (2,100)
Elimination of Rex deficiency (1,260) (840) 2,100
Payment to partners P 6,900 P 2,040 P 4,860 –
Guerrero, 2017 Problem 4-12
8. After operating for 5 years, the books of the partnership of Rex and Marc showed the following balances:
Net assets P169,000
Rex, capital 110,500
Marc, capital 58,500
If liquidation takes place at this point and the net assets are realized at book value, the partners are entitled to:
a. Rex, P117,000 & Marc, P52,000 c. Rex,P126,750 & Marc, P42,250
b. Rex,P84,500 & Marc, P84,500 d.Rex,P110,500 & Marc, P58,500
Solution: D
Since the noncash assets are realized at book value therefore, there is no gain or loss, in which case
partners are entitled to receive an amount equivalent to their capital interest.
Dayag 2005, Problem 1-91
9. As of December 31, 2018, the books of JCG Partnership showed capital balance of: J P40,000; C, P25,000; G, P5,000.
The partner’s profit and loss ratio was 3:2:1, respectively. The partners decided to liquidate and they sold all noncash
assets for P37,000. After settlement of all liabilities amounting P12,000, they still have cash of P28,000 left for
distribution. Assuming that any capital debit balance is uncollectible, the share of Jay-r in the distribution of P28,000
would be:
a. P17,800 b. P19,000
c. P18,000 d. P17,000
Solution: A
J C G Total
Balances before liquidation P40,000 P25,000 P5,000 P70,000
Loss on realization
(28,000-70,000)3:2:1 (21,000) (14,000) (7,000) (42,000)
Balances 19,000 11,000 (2,000) 28,000
Loss on possible insolvency (1,200) (800) 2,000
Cash received P17,800 10,200 28,000
Dayag 2005, Problem 1-94
10. The following condensed balance sheet is presented for the partnership of Argyll, Esta and Rico who share profits and
losses in the ratio of 4:3:3:
Cash P160,000
Other assets 320,000
 Total 480,000
Liabilities P180,000
Argyll, Capital 48,000
Esta, Capital 216,000
Rico, Capital 36,000
Total P480,000
The partners agreed to dissolve the partnership after selling the other assets for P200,000. Upon dissolution of
partnership, Argyll should have received:
a. P0 b. P72,000
c. P48,000 d. P84,000
Solution: A
A E R
Capital balances before liquidation P48,000 P216,000 P36,000
Loss on realization(320k-200k) (48,000) (36,000) (36,000)
Cash received 0 P180,000 -
Chapter 5 Partnership Installment Liquidation
Problem
1. Marc, Ally, and Ella, partners in MAE partnership, shared profits and losses in the ratio of 5:3:2, respectively. On
December 31,2018, the end of an unprofitable year, they decided to liquidate the partnership. The partners’ capital
balances on the date were as follows:
Marc, Capital P22,000
Ally, Capital 24,900
Ella, Capital 15,000
The liabilities of the partnership amounted to P30,000 including a loan of P10,000 payable to Marc. The cash balance
was P6,000. the partners planned to realize the non-cash assets in installment and to distribute cash as it becomes
available. All three partners are solvent.
If Marc received a total of P20,000 as a result of liquidation, what was the total amount realized by the partnership on
the non-cash assets?
a. P85,900
b. P 91.900
c. P67,900
d. 61,900
Solution: D
Marc, Capital P22,000
Marc, loan 10,000
Total interest before cash distribution 32,000
Cash Received 20,000
Loss share (50%) 12,000

Loss on realization (12,000 / 50%) 24,000

Non-cash assets:
Total capital 61,900
Total Liabilities 30,000
Total Assets 91,900
Cash (6,000) 85,900
Cash realized 61,900
CPA Reviewer Advanced Accounting 2016- Guerrero Prob. 1-93
2. A cash distribution plan (payment priority program) for the Ella, Rex and Ericka partnership appear as follow:
Priority Creditor Ella Rex Ericka
First P300,000 100%
Next P80,000 70% 30%
Next P70,000 3/7 4/7
Remainder 22% 34% 44%

If P550,000 of cash is to be distributed, how much will be received by the priority creditors, Ella, Rex and Ericka?
Priority Creditor Ella Rex Ericka
a. P0 P0 P0 P0
b. 0 121,000 187,000 242,000
c. 300,000 55,000 85,000 110,000
d. 300,000 108,000 58,000 84,000
Solution: D

Priority Creditor Ella Rex Ericka Total

First P300,000 300,000 300,000
Next P80,000 (7:3) 56,000 24,000 80,000
Next P70,000 (3:4) 30,000 40,000 70,000
Remainder 22,000 34,000 44,000 100,000
300,000 108,000 58,000 84,000 550,000
550,000 – 300,000 – 80,000 – 70,000 = 100,000
CPA Reviewer Advanced Accounting 2019- Dayag Prob. 1- 146
3. Fatima and Dominique, partners who share profits and losses equally decided to liquidate their partnership business in
installment. The statement financial position showed Cash, P35,000; Liabilities, P200,000; Fatima, Capital, P71,000;
Dominique, Capital, P54,000. Anticipated liquidation expenses amounts to P10,000. How much cash can be distributed
safely to each partner at this point?
Fatima Dominique
a. P5,000 0
b. P5,000 P500
c. P3,000 0
d. P5,000 P1,000
Solution: A

Fatima Dominique
Cash balances before cash distribution P71,000 P54,000
 Possible loss, [(20,000 + 125,000) – 35,000] (60,000) (60,000)
P110,000 + 10,000 = 120,000
Balances 11,000 (6,000)
Additional loss to Fatima (6,000) 6,000
Payment to partner Fatima 5,000- -
CPA Reviewer Advanced Accounting 2016- Guerrero Prob. 1- 88
4. The MAG 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’ account Loan to (from) partnership P/L ratio
Marc P24,000 6,000 3
Ally 36,000 - 3
Gemma 60,000 (10,000) 4
The second cash payment tom any partner(s) under a program of priorities shall be made:
a. To Gemma P2,000
b. To Ally P6,000
c. To Marc P8,000
d. To Ally, P6,000 & Marc P8,000
Solution: D

Interest Payment
Marc Ally Gemma Marc Ally Gemma Total
Balances before
realization
Loans 6,000 (10,000)
Capital 24,000 36,000 60,000
Total Interest 30,000 36,000 50,000
Divided by: P/L ratio 3/10 3/10 4/10
Loss absorption ability 100,000 120,000 125,000
Priority I - - (5,000) 2,000 2,000
100,000 120,000 120,000
Priority II - (20,000) 20,000 6,000 8,000 14,000
100,000 100,000 100,000 6,000 10,000 16,000

CPA Reviewer Advanced Accounting 2017- Dayag Prob. 1- 145

5. A statement of financial position for the partnership of Dominique , Ella and Lyris, who share profits in the ratio of
2:1:1, shows the following balances just before liquidation:
Cash P12,000
Other Assets 59,500
Liabilities 20,000
Dominique, Capital 22,000
Ella, Capital 15,500
Lyris, Capital 14,000
On the first month of liquidation, certain assets are sold for P32,000. Liquidation expenses of P1,000 are paid, and
additional liquidation expenses are anticipated. Liabilities are paid amounting to P5,400, and sufficient cash is retained
to insure the payment to creditors before making payments to partners. On the first payment to partners, Dominique
receives P6,250.
The total Cash distributed to the partners in the first installment is:
a. P20,000
b. P12,500
c. P25,000
d. P10,000

Solution: A

Balance Payment
Dominique Ella Lyris Dominique Ella Lyris
Total Interest 22,500 15,500 14,000
P/L ratio 2/4 1/4 1/4
Loan Absorption balances 44,000 62,000 56,000
Priority I - to Ella (6,000 x 1/4) (6,000) 1,500
Balances 44,000 56,000 56,000
 Priority II - to Ella and Lee
(12,000 x 1/4); (12000 x
1/4) (12,000) (12,000) 3,000 3,000
Total 44,000 44,000 44,000 4,500 3,000

Further cash distribution, P&L ratio

Cash distribution to Dominique P6,250
Divide by Dominique P&L ratio 2/4
Amount in excess of P7,500 12,500
Total payment under priority I and II 7,500
Total cash distribution to partner 20,000
Advance Accounting Textbook 2017- Guerrero Prob. 5-10
6. When Marc and Chian, partners who share earnings equally, were incapacitated in an airplane accident, a liquidator
was appointed to wind up their business. The accounts showed cash, P35,000; other assets, P110,000;
Liabilities,P20,000;Marc capital,P71,000; and Chian capital,P54,000. Because of the highly specialized nature of the
noncash assets, the liquidator anticipated that considerable time would be required to disposed them. The expenses of
liquidating the business are estimated at P10,000.
How much cash can be distributed safely to each partner at this point?
a.P5,000 Marc;P0,Chian b. P5,000,Marc;P500,Chian
c.P3,000 Marc;P0,Chian d. P5,000,Marc;P1,000,Chian
Solution: A

Marc Chian Total

Balances before liquidation P71,000 P54,000 P125,000
Loss on possible realization
Of non-cash assets(equal) (55,000) (55,000) (110,000)
Balances 16,000 (1,000) 15,000
Liquidation expenses (5,000) (5,000) (10,000)
Balances 11,000 (6,000) (5,000)
Loss for possible insolvency
Of Chian (6,000) 6,000 -
Cash received P5,000 P5,000
Dayag 2005, Problem 1-100
7. Jay-r, Dom & Argyll, who divide profits and losses 50%,30% and 20%, respectively, have the following October 31, 2018
account balances:
Jay-r, Drawing (Dr.) P12,000
Argyll, drawing (Cr.) 4,800
Accounts receivable-Jay-r 7,200
Loans payable-Dom 14,400
Jay-r, capital 59,400
Dom, capital 44,400
Argyll, Capital 39,000
On thus data, the partnerships assets are P211,200 (including cash of P64,200). The partnership is liquidated and Argyll
receives P33,000 in final settlement. How much is the total loss on realization?
a. P10,800 b. P54,000
c. P31,200 d. P64,200
Solution: B
Total interest of Argyll:
Capital 39,000
Drawing(Cr) 4,800 43,800
Less: Cash received in final settlement 33,000
Share in loss on realization 10,800
Divided by profit loss ratio of Argyll 20%
Loss on Realization P54,000
Dayag 2005, Problem 1-99
8. Gemma and Fatima formed a partnership on July 1 2018 to operate two stores to be managed by each of them. They
invested P30,000 and P20,000 and agreed to share earnings of 60% and 40%, respectively. All their transactions were
for cash and all their subsequent transactions were handled through their respective bank accounts as summarized
below:
Gemma Fatima
Cash receipts P79,100 P65,245
Cash Disbursements 62,275 70,695
On October 31, 2018, all remaining noncash assets in the stores were sold for P60,000 cash. The partnership was
dissolved and cash settlement was effected. In distribution of P60,000, Gemma received:
a. P24,000 b. P34,000
c. P26,000 d. P36,000
Solution: C
Gemma Fatima Total
Initial Investments P30,000 P20,000 P50,000
 Investments(personal disbursements) 62,275 70,695 132,970
Withdrawals(personal receipts) 79,100) (65,245) (144,345)
Balance before liquidation P13,175 25,240 38,625
Gain on realization(60,000-38,625) 12,825 8,550 21,375
Balances before payment to partners P26,000 34,000 60,000
Payment to partner (26,000) 34,000 60,000
Dayag 2005, Problem 1-104
9. On January 1, 2016, the partners of Lyris, Thea and Ally, who share profits and losses in the ratio of 5:3:2,
respectively, decided to liquidate their partnership. On this date, the partnership condensed balance sheet was as
follows:
Cash P50,000
Other Assets 250,000
Liabilities 60,000
Lyris, Capital 80,000
Thea, Capital 90,000
Ally, Capital 70,000
On January 15, 2016, the first cash sale of other assets with a carrying amount of P150,000 realized P120,000. Safe
installment payments to the partners were made the same date. How much should be distributed to Lyris, Thea, Ally,
respectively?
a.P15,000;P51,00;P44,000 b. P40,000;P45,00;P35,000
c.PP55,000;P33,00;P22,000 d. P60,000;36,00;P24,000
Solution: A
Lyris(5) Thea(3) Ally(2)
Balances before liquidation P80,000 P90,000 P70,000
Loss on realization(120k-150k) (15,000) (9,000) (6,000)
Balances 65,000 81,000 64,000
Loss on possible realization
Of noncash assets(250k-150k) (50,000) (30,000) (20,000)
Cash received P15,000 P51,000 P44,000
Dayag 2005, Problem 1-90
10. A cash distribution plan for Gail, Nelson and Audrie partnership appears below:
Priority Creditors Gail Nelson Audrie
First P300,000 100%
Next P80,000 70% 30%

Next P70,000 3/7

4/7
Remainder 22%
34% 44%
If P550,000 cash is to be distributed, how much will be received by the priority creditors Gail, Nelson and Audrie,
respectively?
a.P0;P0;P0;P0 b. P0;P121,000;P187,00;P242,000
c.P300,00;P55,000;P85,000;P110,000 d. P300,000;108,00;P58,000 ;P84,000
Solution: D
Priority Creditors Gail Nelson Audrie
First P300,000 P300,000
Next P80,000 P56,000 P24,000
Next P70,000 30,000 P40,000
Remainder 22,000 34,000 44,000
P300,000 P108,000 P58,000 P84,000
Dayag 2005, Problem 1-107