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Midterm ParCor
Midterm ParCor
MIDTERM EXAMINATION
Multiple Choice.
Write the letter of your answer on the blank.
_____16. Which of the following is not a characteristic of most partnerships?
a. Ease of formation
b. Limited Liability
c. Mutual Agency
d. Limited Life
_____17. The ability of a partner to enter into a contract on behalf of all partners is called
a. The partnership agreement
b. Mutual Agency
c. Voluntary Association
d. Unlimited Liability
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_____18. Non-cash assets invested into a partnership are recorded at
a. Their fair market value
b. Their cost
c. Their carrying value
d. Zero
_____19. An advantage of the partnership as a form of business organization would be:
a. The death or withdrawal of a partner may terminate a partnership
b. Partners do not pay income taxes on their share in partnership profit
c. A partnership is created by mere agreement of the partners
d. A partnership is bound by the acts of the partners
_____20. Partnership capital balances include the cumulative effect of
a. Initial investment
b. Additional investments
c. Share in profit
d. Share in loss
e. Drawings
f. All of the above
g. A, b, c and d only
_____21. Partner’s investment may include which of the following?
a. Cash
b. Non-cash assets
c. No-cash assets with liabilities to be assumed
d. All of the above
e. Only a and b
_____22. Rommel and Alexa formed a partnership on March 1, 2022 and contributed the following
assets:
Rommel Alexa
Cash 80,000
Equipment 50,000
The equipment was subject to a chattel mortgage of P10,000 that was assumed by the partnership. The
partners agreed to share profits and losses equally, Alexa’s capital account at March 1, 2022 should be
a. P 50,000 c. P 80,000
b. P 70,000 d. P 40,000
_____23. Banug and Caluban started a partnership. Banug contributed a building that she purchased 10
years ago for P100,000. The accumulated depreciation on the building on the date of formation of the
partnership is P25,000 and the fair value is P110,000. For what amount will Banug’s capital account be
credited on the books of the partnership?
a. P100,000 c. P25,000
b. P75,000 d. P 110,000
_____24. On July 1, Concha and Cuarto formed a partnership, agreeing to share profits and losses in the
ratio of 4:6 respectively. Concha contributed a parcel of land that cost P30,000. Cuarto contributed
P50,000 cash. The land was sold for P40,000 on July 1, three hours after the formation of the
partnership. How much should be recorded in Concha’s capital account on the formation of the
partnership?
a. P30,000 c. P10,000
b. P20,000 d. P40,000
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_____25. On April 30, 2022, Evangelio, Garcia and Havana formed a partnership by combining their
separate business proprietorships. Evangelio contributed cash of P50,000. Garcia contributed property
with a P36,000 carrying amount, a P40,000 original cost, and P80,000 fair value. The partnership
assumed the P35,000 mortgage attached to the property. Havana contributed equipment with a
P30,000 carrying amount, a P75,000 original cost, and P55,000 fair value. The partnership agreement
specified that profits and losses are to be shared equally. Which partner has the largest April 30, 2022
capital account balance?
a. Evangelio c. Havana
b. Garcia d. All capital account balances are equal
_____26. On Aug. 1, Mag-usara and Marapao pooled their assets to form a partnership, with the firm to
take over their business assets and assume the liabilities. Partnership capital are to be based on net
assets transferred after the following adjustments. Profits and losses are allocated equally.
The inventory of Marapao is to be increased by P4,000; an allowance for doubtful accounts of P1,000
and P1,500 are to be set up in the books of Mag-usara and Marapao, respectively; and accounts payable
of P4,000 is to be recognized in Mag-usara’s books. The individual trial balances on August, before
adjustments are as follow:
Mag-usara Marapao
Assets 75,000 113,000
Liabilities 5,000 34,500
What is the capital of Mag-usara after the above adjustments?
a. P65,000 c. P69,000
b. P75,000 d. P68,750
_____27. Same data above, what is the capital of Marapao after adjustments?
a. P 65,000 c. P77,000
b. P81,000 d. P76,000
_____28. Revilleza is an industrial partner. Besides his service, he also contributed capital to the
partnership. There is no agreement as to the distribution of profits or losses. The share of Revilleza in
the profit is
a. to be determined by the remaining partners
b. pro-rata to his contributions
c. such share as may be just and equitable under the circumstances
d. combination of b and c above
_____29. A 1:3:2 ratio is the same as
_____30. Montañez, Nantes and Peramide are partners. Their contributions are as follows: Montañez,
P600,000; Nantes, P400,000 and Peramide, services. The partners agreed to divide profits or losses in
the following percentages: Montañez, 35%; Nantes, 25%; and Peramide, 40%. If there is a profit of
P100,000, how should the profit be distributed among the partners?
a. Montañez, P35,000; Nantes P35,000; Peramide P30,000
b. Montañez, P30,000; Nantes P20,000; Peramide P50,000
c. Montañez, P35,000; Nantes P25,000; Peramide P40,000
d. Montañez, P60,000; Nantes P40,000; Peramide 0.00
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Additional Instruction: Show your solution.
A. Salang had a P675,000 capital balance for eight months and a P725,000 balance for four months.
Salar had a P380,000 capital balance for five months and a P500,000 balance for seven months.
Profits and losses are distributed based on the ratio of their average capital balances.
_____31-32. What is Salang’s average capital balance for the year?
a. P 691,666.67 c. P116,666.67
b. P 916,666.67 d. P 466,666.67
_____33-34. How much of the year’s P800,000 profit should Salang receive?
a. P484,671.53 c. P164,705.89
b. P536,585.37 d. P407,272.73
_____35-36. How much of the year’s P800,000 profit should Salar receive?
a.P315,328.47 c. P635,294.11
b. P263,414.63 d. P392,727.27
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B. On December 31, 2022, Samontina and Tair agreed to combine their proprietorships to form
S&T Partnership. Their statements of financial position are as follows:
Assets
Cash 50,000.00 50,000.00 40,000.00 40,000.00
Accounts Receivable 200,000.00 200,000.00 150,000.00 80,000.00 75,000.00 70,000.00
Inventory 550,000.00 400,000.00 300,000.00 400,000.00
Furniture and Fixtures 1,200,000.00 1,000,000.00 900,000.00 200,000.00 120,000.00 100,000.00
2,000,000.00 620,000.00
Required: Prepare journal entries to record partnership formation. Do not abbreviate account titles. (14
points)
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