1.

On March 1, 2013, Santos and Pablo formed a partnership with each contributing the following
assets.
Santos Pablo
Cash P30,000 P 70,000
Machinery and equipment 25,000 75,000
Building - 225,000
Furniture and fixtures 10,000 -

The building is subject to a mortgage loan of P80,000, which is to be assumed by the

partnership. The partnership agreement provides that Santos and Pablo share profits and losses
30% and 70%, respectively. On March 1, 2013 the balance in Pablo’s capital account should be:
a. P290,000
b. P305,000
c. P314,000
d. P370,000

2. On June 1, 2013, May and Nora formed a partnership. May is to invest assets at fair value which
are yet to be agreed upon. She is to transfer her liabilities and is to contribute sufficient cash to
bring her total capital to P210,000 which is 70% of the total capital of the partnership.

Details regarding the book values of May’s business assets and liabilities and their corresponding
valuations are:
Book Values Agreed Valuations
Accounts receivable P58,000 P 58,000
Allowance for doubtful accounts 4,200 5,000
Merchandise Inventory 98,400 107,000
Store equipment 32,000 32,000
Accumulated Depreciation-Store equipment 19,000 16,400
Office equipment 27,000 27,000
Accumulated depreciation-Office equipment 14,200 8,600
Accounts payable 56,000 56,000

Nora agrees to invest cash of P42,000 and merchandise valued at current market price. The
value of the merchandise to be invested by Nora and the cash to be invested by May are:
a. P 90,000and P 62,000 respectively
b. P252,000 and P138,000 respectively
c. P 48,000 and P138,000 respectively
d. P 48,000 and P138,000 respectively

3. Presented below is the condensed statement of financial position of the partnership of Go, Lee
and Mao who share profits and losses in the ratio of 6:3:1, respectively:
Cash P85,000 Liabilities P80,000
Other assets 415,000 Go, capital 252,000
Lee, Capital 126,000
Mao, capital 42,000
Total P500,000 Total P500,000
 The partner agree to sell Gaw 20% of their respective capital and profit and loss interest 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. The
capital balance of Go, Lee, and Mao respectively after admission of Gaw are:
a. P198,000; P 99,000; P33,000
b. P201,600; P100,800; P33,600
c. P216,000; P108,000; P36,000
d. P255,000; P126,799; P42,000

4. The partnership of Cat and Dog provides 3:2 sharing in profits and losses. Prior to the admission
of a third partner Elf, the capital accounts are Cat, P120,000 and Dog, P80,000. Elf invests of
P50,000 for a P75,000 interest and partners agreed that the net assets of the new partnership
would be P30,000.

How much is Dog’s capital in the new partnership?

a. P105,000
b. P90,000
c. P70,000
d. P136,000

5. ABC’s partnership provided for the following distribution of profits and losses; “First”, A to
receive 105 of the net income up to P1,000,000 and 20% on the amount of excess thereof;
“Second”, B and C each, are to receive 5% of the remaining income in excess of P1,500,000 after
A’s share as per above and;
“The balance to be divided equally among the partners.”

For the year just ended, the partnership realized a net income of P2,500,000 before distribution
to partners. The share of A is:
a. P1,300,000
b. P1,000,000
c. P1,080,000
d. P1,100,000

6. Herm, Mar and Ama formed a partnership on January 1, 2013, and contributed P150,000,
P200,000 and P250,000, respectively. The Articles of Co-Partnership provides the operating
income be shared among the partners as follows: As salary, for Herm in the amount of P24,000,
for Mar, P18,000 and for Ama, P12,000. Interest of 12% on the average capital during 2013 of
the three (3) partners and the remainder in the ratio 2:4:4 respectively.

Additional information:
• Operating income for the year ended December 31, 2013, P176,000.

• Herm contributed additional capital on July 1, P30,000 and made a drawing on October
1, P10,000, Mar contributed additional capital on August 1, P20,000 and made a
drawing on October 1. P10,000 and Ama made a drawing of P30,000 on November 1.

The partners’ capital balances on December 31, 2013 are:

a. Herm, P179,680; Mar, P229,360; Ama, P239,360
 b. Herm, P179,760; Mar, P229,520; Ama, P239,520
c. Herm, P189,680; Mar, P239,360; Ama, P269,360
d. Herm, P223,180; Mar, P272,060; Ama, P280,760

7. Roy and Sam was organized and began operations on March 1, 2013. On that date, Roy invested
P150,000 and Sam invested computer equipment with current fair value of P180,000. Because
of shortage of cash, on November 1, 2013, Sam invested additional cash of P60,000 in the
partnership, the partnership contract includes the following remuneration plan:
Roy Sam
Monthly salary (recognized as expense) P10,000 P20,000
Annual interest on beginning capital 12% 12%
Bonus on the net profit before salaries and interest but after bonus
Balance equally. 20% -

The salary was to be withdrawn by each partner in monthly installments. The partnership’s net
profit for 2013 is P120,000.

What are the capital balances of the partners on December 31, 2013?
Roy Sam
a. P243,500 P266,500
b. P136,000 P350,000
c. P86,000 P154,000
d. P87,000 P155,000

8. Lina, Mina and Nina were partners with capital balances on January 2, 2013 of P300,000,
P200,000 and P100,000, respectively. On July 1, 2013 Lina retires from the partnership. On the
date of retirement the partnership net loss is P60,000 and the partners agreed that certain asset
is to be revalued at P80,000 from its original cost of P50,000. The partners agreed further to pay
Lina P225,000 in settlement of her interest. The remaining partners continue to operate under a
new partnership, MN partnership.

What is the total capital of MN partnership?

a. P345,000
b. P285,000
c. P340,000
d. P280,000

9. The partnership of Javier, Karim and Laurel share profits and losses in the ratio of 5:3:2,
respectively. The partners voted to dissolve the partnership when it’s assets, liabilities and
capital were as follows:
Assets Liabilities and Capital
Cash P 40,000 Liabilities P60,000
Other assets 210,000 Javier, capital 48,000
Karim, capital 72,000
Laurel, capital 70,000
Total P250,000 Total P250,000
 The partnership will be liquidated over a prolonged period. As cash is available it will be
distributed to the partners. The first sale of non-cash assets having a book value of P120,000
realized P90,000. How much cash should be distributed to each partner after this sale?
a. Javier, P0; Karim, P28,800; Laurel, P41,200
b. Javier, P0; Karim, P30,000; Laurel, P40,000
c. Javier, P35,000; Karim, P21,0000; Laurel, P14,000
d. Javier, P45,000; Karim, P27,000; Laurel, P18,000

10. On July 1, 2013, the Chess Partnership has the following statement of financial position:
Assets Liabilities and Capital
Cash P 20,400 Accounts Payable P122,400
Other assets 219,600 Rook, loan 14,400
Rook, capital (50%) 28,800
King, capital (50%) 74,400
Total P240,000 Total P240,000

As of July 1, 2013, the partners have personal net worth as follows:

Rook King
Assets P62,400 P 91,200
Liabilities 56,400 122,400
The personal net worth of each partner does not include any amounts due to or from the
partnership.

Assume the other assets are sold for P123,600 after incurring liquidation expenses of P4,800.
How much should King receive?
a. P -0-
b. P22,800
c. P24,000
d. P16,800