Quiz2 ParCor

Quiz2 – Partnership and Corporation Accounting
Test I. MULTIPLE CHOICE

1. It refers to intangible assets recognized upon acceptance or withdrawal of a partner.
a. franchise b. trademark
c. bonus d. revaluation of asset
2. The method admitting new partner in the partnership which involves a personal transaction
between the incoming partner and the existing partner by
a. Investments b. admission
c. purchase d. consensus
3. The method admitting new partner in the partnership which involves a personal transaction
between the incoming partner and the existing partner by
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a. revaluation of asset to new partner b. bonus to new partner
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c. bonus to old partner eH w d. answer not given
1. When the total agreed capital is equal to the total contributed capital and the contributed
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capital by the incoming partner is equal to his capital credit, there is
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a. revaluation of asset to new partner b. revaluation of asset and bonus to

old partner
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c. bonus to old partner d. answer not given

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2. The admission of a new partner under the bonus method will result in
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a. bonus to new partner b. bonus to either the incoming or existing

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partner
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c. bonus to existing partners d. revaluation of asset to incoming partner

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3. When the partnership purchases a retiring partner’s interest, the settlement to the retiring
partner includes the following except
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a. Cash b. depreciation expense

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c. equipment d. notes payable

4. The following should be considered in determining the interest of a retiring partner except
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a. payable to a co-partner b. share in asset adjustment

c. receivable from the partnership d. share in profits
5. If the total contributed capital exceeds the agreed capital with the new partner’s investment
is the same as his capital credit, then the admission of the new partner involved a
a. bonus to new partner b. bonus to old partners

c. negative asset revaluation d. positive asset revaluation
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6. If the agreed capital is equal to the total contributed capital with the capital credit and
contribution of the old and new partners being the same, there exists
a. asset revaluation and bonus b. negative asset revaluation

c. no asset revaluation and no bonus d. positive asset revaluation
7. If the capital credit of the new partner is less than his contribution with no adjustment in
asset values, then the admission resulted in a
a. bonus to old partner b. bonus to new partners

c. no bonus d. both A and B
8. A partner who withdraws his interest at book value receives assets
a. equal to his capital interest b. with indeterminate value

c. less than his capital interest d. above his capital interest
9. The withdrawal of a partner of his interest at more than book value results in a
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a. bonus from remaining partners b. gain to remaining partners
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c.
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loss to remaining partners d. gain or loss depending on the
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tax basis
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10. A partner retires from the partnership and the final settlement is more than his capital
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interest. Under the bonus method, the excess

a. is recorded as an expense
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b. increases the capital balances of the remaining partners

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c. reduces the capital balances of the remaining partners

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d. is recorded as gain
11. When Delfin retired from the partnership of Delfin, Delan and Desta, the final interest
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exceeded Delfin’s capital balance. Under the bonus method, the excess
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a. had no effect on the capital balances of Delan and Desta

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b. was recorded as asset revaluation

c. reduces the capital balances of Delan and Desta
d. was an expense
12. The accounting treatment for the sale of the interest of a retiring partner to an outsider or
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to the remaining partners is the same as

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a. admission of a partner by purchase b. admission of a partner by investment

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c. sale of interest to the partnership d. both A and B

13. When a partnership purchases the interest of a retiring partner at less than book value,
there must be a
a. bonus to remaining partners
b. bonus to retiring partner
c. bonus to remaining partners/negative asset revaluation or both
d. bonus to retiring partners/negative asset revaluation or both
14. A partner may withdraw his interest at an amount equal to all of the following except at:
a. book value b. future expected value

c. less than book value d. more than book value
15. When Alcantara retired from the partnership with Bores and Cruz, the final interest is less
than Alcantara’s capital balance. Under the bonus method, the difference
a. had no effect on the capital balances of Bores and Cruz
b. was recorded as asset adjustment
c. increases the capital balances of Bores and Cruz
d. was a revenue
16. Which of the following is not the cause of dissolution of a partnership?
a. Marriage b. insolvency
c. death d. incapacity
17. When the total agreed capital is equal to the total contributed capital and the contributed
capital by the incoming partner is less than to his capital credit, there is
a. revaluation of asset to new partner b. bonus to new partner

c. bonus to old partner d. answer not given
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Test II. PROBLEM SOLVING
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PROBLEM: A eH w
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The balance sheet of Ooh La La Partnership on December 31, 2013 is given below:
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Cash P 25,000 Accounts Payable P 70,000

Receivable 25,000 Loan Payable to Mateo 30,000
Inventories 180,000 Mateo, Capital (30%) 75,000
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Plant and Equipment 120,000 Vicente, Capital (30%) 75,000

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Ibe, Capital (40%) 100,000

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P 350,000 P 350,000
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Consider the following requirements independently.

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1. A new partner, Francisco was admitted in January 1, 2014 who purchased Matero’s capital by
giving his car costing P 250,000 but with a book value of P 125,000 and a market value of P
100,000. Francisco, Capital was credited for_________
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2. A new partner, Ong was admitted in January 1, 2014 who bought __ of Ibe’s share for P 60,000/
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Before her admission, the partners agreed to write down inventories to P 50,000. Ibe’s capital
after the admission will decrease by_________
PROBLEM: B
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A, B, C, and D are partners in the XYZ Co. with total contributed capital of P 350,000. They share profit
and loss in the ratio of 5:3:2:1, respectively.
3. Under the revaluation of asset method, how much should be recognized A if E was accepted in
the partnership upon investment of P 100,000 for a 1/5 interest?
4. Let’s say the contributed capital by E was 150,000 for a 1/5 interest in the partnership and that
they agreed to have a total capitalization of P 600,000. How much should be recognized as
bonus and revaluation of assets to the old partners?
PROBLEM: C
Superman, Wonder Woman and Hawk Girl are partners of Justice League with investments of P
300,000, P 225,000, and P 225,000 and with profit and loss ratio of 40:30:30, respectively. On January
1, 2014, the partners felt that they need another partner who is intelligent enough to handle the
administrative operations of Justice League that they agreed to accept Batman upon cash investment
amounting P 250,000.00, and will be credited appropriately for his investment. It was agreed that the
total capitalization of the new partnership will be P 1,250,000.00
5. How much is the overall revaluation of asset to be recognized by the partnership?

6. What is the revised profit and loss ratio of Superman?
7. How much is the revised capital of Wonder Woman?
8. How much revaluation of asset or bonus is to be allotted to Batman?
PROBLEM: D
Fer, Mar, and Rho are partners with contributed capital amounting to P 250,000, P 200,000, and P
50,000, respectively; with profit and loss ratio based on their capital contributions. The partners
agreed to accept Paru-paro in the partnership upon investment of cash amounting to P 300,000.00
Consider the following requirements independently.
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9. Under the bonus approach, if Paru-paro will be credited for a 20% interest in the partnership,
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how much will be the capital of Fer after admission? Assume that before admission, they agreed
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that the partnership assets will be re-valued by increasing it by P 50,000.00.
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10. Under the revaluation of asset approach, the partners agreed that the total capital should be P
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1,200,000 and that Paru-paro will be credited according to his capital contribution. How much
will be the adjusted capital of Mar?
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11. Let’s say that the total agreed capital of the partnership is P 1,500,000 and that Paru-paro will
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be credited for P 500,000 with a 1/3 interest in the partnership. How much revaluation of asset
should be recognized to Rho and bonus given by Rho to Paru-Paro?
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PROBLEM: E
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The capital balances in the FSH are Farrah’s capital P 500,000, Sarah’s capital P 300,000, and Hanna’s
capital P 200,000, and income ratios are 5:3:2, respectively. The FISH Partnership is formed by
admitting Irish in the firm with a cash investment of P 500,000 for a 25% capital interest.
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12. The bonus to be credited to Hanna’s capital in admitting Irish is_________
PROBLEM: F
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Gentile purchases 50% of Jew’s capital interest in the JS Partnership for P 220,000. The capital
balances of Jew and Samaritan are P 300,000 and P 400,000, respectively.
13. Gentile’s capital balance following the purchase is _______
PROBLEM: G
Capital balances in the CARE Partnership are C’s capital P 500,000, A’s capital P 400,000, R’s capital P
300,000, and E’s capital P 200,000, and income ratios are 4:3:2:1, respectively. E withdraws from the
firm following payment of P 290,000 in cash from the partnership.
14. A’s capital balance after recording the withdrawal of E is ___________

PROBLEM: H
Mary admits Jane as a partner in the business. Balance sheet accounts of Mary just before the
admission of Jane show: Cash, P 26,000, Accounts Receivable, P 120,000, Merchandise Inventory, P
180,000 and Accounts Payable, P 62,000. It was agreed that for purposes of establishing Mary’s
interest, the following adjustments be made: 1) an allowance for doubtful accounts of 3% of accounts
receivable is to be established; 2) merchandise inventory is to be adjusted upward by P 25,000, and 3)
prepaid expenses of P 3,600 and accrued liabilities of P 4,000 are to be recognized.
15. If Jane is to invest sufficient cash to obtain 2/5 interest in the partnership, how much would Jane
contribute to the partnership?
PROBLEM: I
Presented below is the condensed balance sheet of the partnership of Kathy, Lovely, and Mary who
share profits and losses in the ratio of 6:3:1, respectively:
Cash P 85,000 Liabilities P 80,000

Other Assets 415,000 Kathy, capital 252,000
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Lovely, capital 126,000
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Mary, capital 42,000
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TOTAL
eH w P 500,000 P 500,000
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16. The partners agree to sell Nena 20% of their respective capital and profit and loss interest for a
total payment of P 90,000. The payment by Nena is to be made directly to the individual
partners. The partners agree that implied revaluation of asset is to be recorded prior to the
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acquisition by Nena. The capital balance of Kathy, Lovely, and Mary respectively after admission
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of Nena are: ________________________________
PROBLEM: J
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Smith, a partner in an accounting firm, decided to withdraw from the partnership. Smith’s share of the
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partnership profits and losses was 20%. Upon withdrawing from the partnership he was paid 88,800
in final revaluation of asset prior to Smith’s withdrawal was 252,000. After his withdrawal, the
remaining partners’ capital accounts, excluding their share of revaluation of asset, totalled 192,000.
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17. The total revaluation of asset of the firm was: _______________

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PROBLEM: K
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Partners Mary, Joyce and May share profits and losses 4:2:4 respectively. The statement of financial
position at September 30, 2014 follows:
ASSETS LIABILITIES AND CAPITAL

Other Assets 720,000 Mary, Capital 148,000
Joyce, Capital 260,000
May, Capital 192,000
TOTAL ASSETS P 800,000 TOTAL LIABILITIES & P 800,000
CAPITAL
The assets and liabilities are recorded at their current fair values. Mae is to be admitted as a new
partner with a 20% capital interest and a 20% share of profits and losses in exchange for a cash
investment. Asset revaluation or bonus will not be considered.
18. What is the amount to be contributed by Mae?
PROBLEM: L
Zayda, Dizon, and Cynthia have been partners in a law office for 15 years. Dizon has decided to retire
and wishes to withdraw from the partnership. To facilitate Dizon’s withdrawal, the partnership closed
its books and prepared the statement of financial position shown below:

Cash P 318,000 Accounts Payable P 60,000
Accounts Receivable, net 72,000 Zayda, Capital 150,000
Books 120,000 Dizon, Capital 240,000
Other Assets 90,000 Cynthia, Capital 150,000
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CAPITAL
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Zayda, Dizon, and Cynthia share profits and losses in the ratio of 3:4:3, respectively.
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19. If Dizon will receive P 250,000 upon retirement, what will be the capital balance of Zayda under
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the bonus method?

20. If Dizon will receive P 250,000 upon retirement, what will be the capital balance of Zayda under
the asset revaluation method?
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PROBLEM: M
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Daza, Diaz, and Ditas are partners with capital balances of P 80,000, P 120,000, and P 160, 000,
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respectively. They share profits and losses in the ratio of 30:40:30. Diaz decides to withdraw from the
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partnership. Diaz receives P 160,000 in settlement of his interest.

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21. If the bonus method is used, what is the capital balance of Ditas immediately after the
retirement of Diaz?
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22. Assuming that asset revaluation method is used, what is the capital balance of Ditas
immediately after the retirement of Diaz?
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23. Assume that Diaz was paid P 100,000, and any difference is considered as bonus either to the
retiring or remaining partners, what will be the capital balance of Daza immediately after the
retirement of Diaz?
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24. Consider number 23 and assume that instead of a bonus method, the partnership used the
revaluation method, what is the total partnership capital immediately after the retirement of
Diaz?
PROBLEM: N
Sarah, Bea, and Kim are partners who share profits and losses in the ratio of 5:3:2, respectively. They
agree to sell Maja 25% of their respective capital and profits and losses ratio for a total payment
directly to the partners in the amount of P 140,000. They agree that the asset revaluation of P 60,000
is to be recorded prior to admission of Maja. The condensed statement of financial position of the SBK
Partnership is presented below.

Other Assets 540,000 Sarah, Capital 250,000
Bea, Capital 150,000
Kim, Capital 100,000
CAPITAL
25. How much is the capital of Sarah after the payment and admission of Maja?
PROBLEM: O
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C2 Partnership had a net income of P 24,000 for the month ended September 30, 2014. Carreon
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purchased an interest in the C2 Partnership of Calvo and Calma by paying Calvo P 72,000 for half of his
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capital and half of his 50% profit sharing interest. Before the admission, the capital balance of Calvo
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was P 96,000 and the capital balance of Calma was P 144,000 with profit and loss ratio based on their
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capital contribution.
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26. How much capital credit should be given to Carreon?

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PROBLEM: P
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Ferdie, Richard and Rose are partners sharing profits and losses in the ratio of 4:3:3, respectively. The
condensed statement of financial position of their partnership as of December 1, 2014 is presented
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below.
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Other Assets 260,000 Sarah, Capital 120,000
Bea, Capital 80,000
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Kim, Capital 80,000

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CAPITAL
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27. All the partners agree to admit Randy as 1/6 partner in the partnership without any asset
revaluation nor bonus, Randy shall contribute assets amounting to ________________
PROBLEM: Q
Conrado, Cosio and Cosme are partners whose capital balances and share in profits are as follows:
Conrado P 250,000
Cosio 150,000
Cosme 100,000
Cueto is admitted into the partnership by paying P 60,000 for ¼ share in equity of Cosio and by
contributing P 200,000. The partners agree to the total capitalization to P 750,000, ¼ of which is
Cueto’s capital credit. Cueto’s share in the net income is also ¼ and the old partners are to divide net
income in the old ratio among themselves.
28. The profit and loss sharing among Conrado, Cosio and Cosme after the admission of Cueto is:
____________________________
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Quiz2 – Partnership and Corporation Accounting

Test I. MULTIPLE CHOICE

a. revaluation of asset to new partner b. revaluation of asset and bonus to

c. bonus to old partner d. answer not given

a. bonus to new partner b. bonus to either the incoming or existing

c. bonus to existing partners d. revaluation of asset to incoming partner

a. Cash b. depreciation expense

c. equipment d. notes payable

a. payable to a co-partner b. share in asset adjustment

a. bonus to new partner b. bonus to old partners

a. asset revaluation and bonus b. negative asset revaluation

a. bonus to old partner b. bonus to new partners

a. equal to his capital interest b. with indeterminate value

interest. Under the bonus method, the excess

b. increases the capital balances of the remaining partners

c. reduces the capital balances of the remaining partners

a. had no effect on the capital balances of Delan and Desta

b. was recorded as asset revaluation

to the remaining partners is the same as

a. admission of a partner by purchase b. admission of a partner by investment

c. sale of interest to the partnership d. both A and B

a. book value b. future expected value

a. revaluation of asset to new partner b. bonus to new partner

Cash P 25,000 Accounts Payable P 70,000

Plant and Equipment 120,000 Vicente, Capital (30%) 75,000

Ibe, Capital (40%) 100,000

Consider the following requirements independently.

5. How much is the overall revaluation of asset to be recognized by the partnership?

Consider the following requirements independently.

12. The bonus to be credited to Hanna’s capital in admitting Irish is_________

13. Gentile’s capital balance following the purchase is _______

14. A’s capital balance after recording the withdrawal of E is ___________

Cash P 85,000 Liabilities P 80,000

of Nena are: ________________________________

17. The total revaluation of asset of the firm was: _______________

ASSETS LIABILITIES AND CAPITAL

18. What is the amount to be contributed by Mae?

ASSETS LIABILITIES AND CAPITAL

the bonus method?

partnership. Diaz receives P 160,000 in settlement of his interest.

ASSETS LIABILITIES AND CAPITAL

26. How much capital credit should be given to Carreon?

ASSETS LIABILITIES AND CAPITAL

Kim, Capital 80,000

TOTAL ASSETS P 360,000 TOTAL LIABILITIES & P 360,000

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