1.

The following condensed statement of the financial position I presented for the
partnership of AA, BB, and CC who share profits and losses in the ration of 4:4:2,
respectively:

Cash P 160,000
Other Assets 320,000
Total P 480,000

Liabilities P 180,000
AA, Capital 48,000
BB, Capital 216,000
CC, Capital 36,000
Total P 480,000

How much should AA receive upon liquidation?

a. 0
b. 168,000
c. 12,000
d. 180,000

2. Using the same information in no.1, how much should BB receive upon liquidation?
a. 0
b. 168,000
c. 12,000
d. 180,000

3. Using the same information in no.1, how much should CC receive upon liquidation?
a. 0
b. 168,000
c. 12,000
d. 180,000

4. Assume instead that the other assets were sold for P10,000 and that deficient partners, if
any, are solvent. How much should BB receive upon liquidation?
a. 92,000
b. 0
c. 28,000
d. 32,000

5. Assume instead that the other assets were sold for P10,000 and that deficient partners, if
any, are solvent. How much should AA receive upon liquidation?
a. 92,000
b. 0
c. 28,000
d. None of the above

6. Sheryll and Jommel are partners who share profits and losses in the ratio of 7:3,
respectively. On August 12, 2022, their respective capital accounts were as follows:
Sheryll……………………………………………………………….......P35,000
Jommel……………………………………………………………………30,000
P65,000
On that date they agreed to admit Andrea as a partner with a one-third interest in the
capital and profits and losses, and upon her investment of P25,000. The new partnership
will begin with a total capital of P90,000. Immediately after Andrea’s admission, what are
the capital balance of Sheryll, Jommel and Andrea, respectively?

a. P30,000; P30,000; P30,000

b. P31,500; P28,500; P30,000
c. P31,667; P28,333; P30,000
d. P35,000; P30,000; P25,000
7. The capital accounts for the partnership of ABC and DEF at August 31,2022 are as
follows:
ABC, Capital………………………………………………………P80,000
DEF, Capital…………………………………………………………40,000
P120,000

The partners share profits and losses in the ratio 3:2, respectively. The partnership
is in desperate need of cash, and the partners agree to admit GHI as a partner with
one-third in the capital and profits and losses upon his investment of P30,000.
Immediately after GHI's admission, what should be the capital balances of ABC,
DEF and GHI respectively, assuming bonus is to be recognized.

a. P50,000; P50,000; P50,000

b. P60,000; P60,000; P60,000
c. P66,667; P33,333; P50,000
d. P68,000; P32,000; P50,000

8. Alva and Cristine are partners with capital balances P60,000 and P20,000,
respectively. Profits and losses are dovoded on the ratio of 60:40. Alva and Cristine
decided to form a new partnership with Lea, who invested land valued at P15,000
for a 20% capital interest in the new partnership. Lea’s cost of the land was
P12,000. The partnership elected to use the bonus method to record the admission
of Lea into the partnership. Lea’s capital account should be credited for:
a. P12,000
b. P15,000
c. P16,000
d. P19,000

9. Jesse, Joseph, and Leslie are partners with capital accounts of P70,000, P120,000,
and P90,000, respectively. The partnership shares profits and losses 45%, 30%,
25%, respectively. They are considering allowing Hans to join the partnership by
investing directly into the partnership. The partners intend to revalue the assets
before Hans' admission. Neither bonus nor goodwill are required. If the asset's
market value exceeds book value P150,000, how much will Hans invest to acquire a
20% equity interest in the partnership?

a. P107,500
b. P100,000
c. P86,000
d. 70,000

10. Sandra and Joshua are partners. They have capital account balances of P250,000
and P200,000, respectively, and they share profits and losses 70/30. The partners
are considering admitting Judy as a new partner with a 25 percent equity interest for
an investment in the partnership of P180,000. Before admission, Sandra and Joshua
will revalue the partnership's assets. If the net increases the partnership's assets is
P125,000, what will be the balance in Sandra's capital account immediately before
Judy's admission?

a. P262,500
b. P337,500
c. P528,500
d. P575,000
11. Larry, Marsha, and Natalie are partners in a company that is being liquidated. They
share profits and losses 55 percent. 20 percent, and 25 percent, respectively. When
the liquidation begins they have capital account alances of P108,000, P62,000, and
P56,000, respectively. The partnership just sold equipment with a historical cost
and accumulated depreciation of P25,000 and P18,000, respectively for P10,000.
What is the balance in Marsha's capital account after the transaction is completed?

a, P62,000
b. P61,400
c. P62,600
d. P65.000

12. Larry, Marsha, and Natalie are partners in a company that is being liquidated. They
share profits and losses 55 percent, 20 percent, and 25 percent, respectively. When
the liquidation begins they have capital account balances of P108,000, P62,000, and
P56,000, respectively. The partnership just sold equipment with a historical cost
and accumulated depreciation of P25,000 and P18,000, respectively for P10,000.
What is the balance in Larry's capital account after the transaction is completed?

a. P106,350
b. P108,000
c. P109,650
d. P110.000

13. Donald, Marion, and Jeff are liquidating their partnership. At the date the
liquidation begins Donald, Marion, and Jeff have capital account balances of
P147,000, P260,000, and P285,000, respectively and the partners share profits and
losses 35%, 25%, and 40%, respectively. In addition, the partnership has a P28,000
Notes Payable to Donald and a P15,000 Notes Receivable from Jeff. When the
liquidation begins, what is the loss absorption power with respect to Donald?

a. P 80,000
b. P340,000
c. P420,000
d. P500,000

14. As of December 31, 20x5, the books of Ton Partnership showed capital balances of:
T P40,000; O, P25,000; N, P5,000. The partners' profit and loss ratio was 3:2:1,
respectively. The partners decided to liquidate and they sold all non-cash 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 Tin the distribution of the P28,000 cash would be:

a. P17,800
b. 18,000
c. P19,000
d. 17,000

15. The Keaton, Lewis and Meador partnership had the following balance sheet just
before entering liquidation:

Cash P 10,000 Liabilities P130,000

Non-cash assets 300,000 Keaton, capital 60,000
P310,000 Lewis, capital 40,000
Meador, capital 80,000
P310,000
 Keaton. Lewis and Meador share profits and losses in a ratio of 2:4:4. Non-cash
assets were sold for P180,000. Liquidation expenses were P10,000. Assume that
Keaton was personally insolvent with assets of P8,000 and liabilities of P60,000.
Lewis and Meador were both solvent and able to cover deficits in their capital
accounts, if any. What amount of cash could Keaton's personal creditors have
expected to receive from partnership assets?

a. PO
b. P26,000
c. P30,000
d. P34,000

16. XX, YY and ZZ are partners who share profits and losses in the ratio of 5:3:2.
respectively. They agree to sell a 25% of their respective capital and profits and
losses ratio for a total payment directly to the partners in the amount of
P140,000.00. They agree that goodwill or revaluation of assets of P60,000 is to be
recorded prior to admission of AA. The condensed balance sheet of the XYZ
partnership is as follows:

Cash P 60,000 Liabilities P100,000

Non-cash assets. 540,000 XX, Capital 250,000
Total P600,000 YY, Capital 150,000
ZZ, Capital 100,000
Total P600,000

The capital of XX, YY and ZZ respectively after the payment and admission of AA
are:

a. P187,500; P112,500; and P75,000

b. P210,000; P126,000; and P84,000
c. P280,000; P168,000; and P112.000
d. P250,000; P150,000; and P100,000

17. On June 30, 20x5, the balance sheet of Western Marketing, a partnership. is
summarized as follows:

Sundry assets P150,000

West, capital 90,000

Tern, capital 60,000

West and Tern share profit and losses at a 60:40 ratio, respectively. They agreed to
take in Cuba as a new partner, who purchases 1/8 interest of West and Tern for
P25,000. What is the amount of Cuba's capital to be taken up in the partnership
books if book value method is used?

a. P12,500
b. 18,750
c. P25,000
d. 31,250
18. The capital accounts of the partnership of NN, VV, and JJ on June 1, 20x5 are
presented below with their respective profit and loss ratios:

NN P139,200 1/2

VV 208,800 1/3

JJ 96,000 1/6

On June 1, 20x5, LL is admitted to the partnership when LL purchased, for

P132,000, a proportionate interest from NN and JJ in the net assets and profits of
the partnership. As a result of a transaction LL acquired a one fifth interest in the
net assets and profits of the firm. What is the combined gain realized by NN and JJ
upon the sale of a portion of their interest in the partnership to LL?

a. P 0
b. 43,200
c. P62,400
d. 82,000

19. The following condensed balance sheet is presented for the partnership of LL, PP,
and QQ, who share profits and losses in the ratio of 4:3:3, respectively:

Cash_________________________________________________P 90,000
Other assets ____________________________________________830,000
LL, loan ________________________________________________20,000
P940,000

Accounts payable ________________________________________P210,000

QQ, loan _________________________________________________30,000
LL, capital _______________________________________________310,000
PP, capital _______________________________________________200,000
QQ, capital ______________________________________________190,000
P940,000

Assume that the assets and liabilities are fairly valued on the balance sheet and that
the partnership decides to admit FF as a new partner, with a 20% interest. No
goodwill or bonus is to be recorded. How much should FF contribute in cash or
other assets?

a. P 140,000
b. 142,000
c. P175,000
d. 177,500

20. In the AD partnership. Allen's capital is P140,000 and Daniel's is P40,000 and they
share income in a 3:1 ratio, respectively. They decide to admit David to the
partnership. Each of the following questions is independent of the others. Allen and
Daniel agree that some of the inventory is obsolete. The inventory account is
decreased before David is admitted. David invests P40,000 for a one-fifth interest.
What is the amount of inventory written down?

a. P 4,000
b. P10,000
c. P15,000
d. P20,000
SOLUTION
1-3
AA BB CC TOTAL
Capital/Interest 48,000 216,000 36,000 300,000
Gains and (48,000) (48,000) (24,000) (120,000)
Losses
Realization
(200,000-
320,000) 0 168,000 12,000 180,000
Remaining
Interest

4-5
AA BB CC TOTAL
Capital/Interest 48,000 216,000 36,000 300,000
Gains and (124,000) (124,000) (62,000) (310,000)
Losses
Realization
(200,000-
320,000) (76,000) 92,000 (26,000) (10,000)
Remaining 76,000 - 26,000 102,000
Interest
Investment 0 92,000 0 92,000
Distribution to
partners
\
11. (C) – P62,000 + [P10,000 – (P25,000 – P18,000)]
12. (C) – P108,000 + [10,000 – (P25,000 – P18,000)] (.55)
13. (C) – (P147,000 + P28,000)/.35
14.

15.

16.

17.

18.
19.

20.