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Name: Date:
Subject: Section: Score:
INSTRUCTIONS: WRITE YOUR ANSWER BEFORE EACH NUMBER.

1. The condensed statement of financial position of the partnership of Edong, Fredo and Godo with
corresponding profit and loss sharing percentage as of June 30, 2013 was as follows:
Net assets P400,000
Edong, capital (50%) P200,000
Fredo, capital (30%) 120,000
Godo, capital (20%) 80,000
P400,000
As of said date, Edong retired from the partnership. By mutual agreement, he was paid P225,000 for his interest in
the partnership. The total implied goodwill was to be recorded. After Edong's retirement, the total net assets of the
partnership was:
a. P250,000
b. P17 5,000
c. P200,000
d. P225,000

2. The December 31,2011, statement of financial position of the BB, CC, and DD partnership is summarized as
follows:
Cash P100,000 CC, loan .. PIOO.OOO
Other assets, at cost 500,000 BB, capital 100,000
CC, capital 200,000
DD, capital 200,000
P600,000 P600,000
The partners share profits and losses as follows: BB, 20%; CC, 30%; and DD, 50%, CC is retiring from the
partnership and the partners have agreed that "other assets" should be adjusted to their fair value of P600.000 at
December 31, 2011. They further agree that CC will receive P244.000 cash for his partnership interest exclusive of
the loan, which is to be paid in full. No goodwill implied by CC's payment will be recorded. Dayag 2013
After CC's retirement, the capital balances of BB and DD, respectively, will be:
a. P116,000and P240,000 c. P 100,000and P200,000
b. P 101,714 and P254,286 d. P 73,143 and P182,857

3. On June 30,2011, the statement of financial position for the partnership of CC, MM, and PP, together with
their respective profit and loss ratios, were as follows:
Assets, at cost P180,000
CC, loan 9,000
CC, capital (20%) 42,000
MM, capital (20%) 39,000
PP, capital (60%) 90,000
Total P180,000
CC decided to retire from the partnership. By mutual agreement, the assets are to be adjusted to their fair value of
P216,000 at June 30, 2011. It was agreed that the partnership would pay CC P61.200 cash for CC's partnership
interest, including CC's loan which is to be repaid in full. No goodwill is to be recorded. After CC's retirement,
what is the balance of MM's capital account?
a. 36.450 c. 45,450
b. 39,000 d. 46,200

4. In May 2010, Imclda, a partner of an accounting firm, decided to withdraw when the partners' capital balances
were: Mikee, P600,000; Raul, P600,000; and Imelda, P400,000. It was agreed that Imclda is to take the
partnership's fully depreciated computer with a second hand value of P24,000 that cost the partnership
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P36,000. If profits and losses are shared equally, what would be the capital balances of the remaining partners
after the retirement of Imelda?
Mikee Raul
a. 600,000 600,000
b. 592,000 592,000
c. 608,000 608,000
d. 612,000 612,000

5. On December 31, 2013 the condensed statement of financial position of ABC Partnership is presented below:
Total assets P180,000
Amy loan P10,000
Amy capital 45,000
Bea capital 40,000
Cat capital 85,000
Total P180,000
Amy, Bea and Cat share profits and losses in the ratio of 3:2:1 respectively. It was agreed among the partners that
Amy retires from the partnership and the partnership's assets to be adjusted to their fair value of P210,000. The
partners further agreed to pay Amy P64,000 cash for her total interest in the partnership.
What is the capital balance of Cat after the retirement of Amy?
a. P35,000 c. P27,000
b. P92,000 d. P33,000

6. On June 30,2013 the balance sheet for the partnership of Cruz, Merced and Prieto, together with their
respective profit and loss ratio, were as follows:
Assets, at cost P180,000
Cruz, loan 9,000
Cruz, capital (20%) 42,000
Merced, capital (20%) 39,000
Prieto, capital (60%) 90,000
P180,000
Cruz had decided to retire from the partnership. By mutual agreement, the assets are to be adjusted to their fair
value of P216,000 at June 30, 2013. It was agreed that the partnership would pay Cruz P61,200 cash for Cruz's
partnership interest, including Cruz's loan which is to be repaid in full. No goodwill is to be recorded. After Cruz's
retirement, what is the balance of Merced capital account?
a. P36,450 c. P45,450
b. P39,000 d. P46,200

7. Peter, Queen, and Roy are partners with capital balances of P300,000, P300,000, and P200,000, respectively;
and sharing profits and losses equally. Roy is to retire and it is agreed that he is to take certain office
equipment with second hand value of P50,000 and a note for his interest. The office equipment carried in the
books at P65,000 but brand new would cost P80,000. Roy's acquisition of the office equipment would result in
a. Reduction in capital of P5,000 each for Peter, Queen, and Roy.
b. Reduction in capital of P7,5000 each for Peter, Queen, and Roy.
c. Reduction in capital of P15,000 for Roy.
d. Reduction in capital of P55,000 for Roy.

8. Cen, Deng and Lala are partners with capital balances on 31 December 2011 of P300,000, P300,000 and
P200,000 respectively. Profit are shared equally. Lala wishes to withdraw and it is agreed that she is to take
certain furniture and fixtures with second hand value of P50,000 and note for the balance of her interest. The
furniture and fixtures are carried in the books at P65,000. Brand new, the furniture and fixtures may cost
P80,000. Lala's acquisition of the second-hand furniture will result to:
a. Reduction in capital of P15,000 each for Cen and Deng.
b. Reduction in capital of P10,000 for Lala.
c. Reduction in capital of P5,000 each for Cen, Deng and Lala.
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d. Reduction*in capital of P7,500 each for Cen, and Deng.

9. Lina, Mina and Nina were partners with capital balances on January 2, 2013 of P300,000, P200,000 and
PI00,000, 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 c. P340,000
b. P285,000 d. P280,000

10. On October 31, 2010, Morris retired from the partnership of Morris, Philip, and Marl. Morris received P55,000
representing final settlement of his interest in the amount of P50,000. Under the bonus method,
a. P5,000 was recorded as goodwill.
b. P5,000 was recorded as expense.
c. Charged P5,000 against the capital balances of Philip and Marl.
d. P55,000 was recorded as bonus.

11. RR, SS and TT decided to dissolve the partnership on November 30, 2011. Their capital balances and profit
ratio on this date, follow:
Capital Profit
Balances Ratio
RR P50,000 40%
SS 60,000 30%
TT 20,000 30%
The net income from January 1 to November 30, 2011 is P44,000. Also, on this date, cash and liabilities are P40.000
and P90,000, respectively. For RR to receive P55,200 in full settlement of his interest in the firm, how much must be
realized from the sale of the firm's non-cash assets?
a. 196,000 c. 193,000
b. 177,000 d. 187,000
12. Bel, Col, and Del, partners of the BCD partnership, shared profits and losses in the ratio of 5:3:2, respectively.
On December 31,2013, the end of an unprofitable year, they decided to liquidate the partnership. The partners'
capital account balances on the date were as follows:
Bel, capital P22,000
Col, capital 24,900
Del, capital 15,000
The liabilities of the partnership amounted to P30,000 including a loan of P10,000 payable to Bel. The cash balance
was P6,000. The partners planned to realize the non-cash cash assets in installment and to distribute cash as it
becomes available. All three partners are solvent.
If Bel 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 c. P67,900
b. P91,900 d. P61,900
13. The Keaton, Lewis and Meador partnership had the following balance sheet just before entering liquidation:
Cash P10,000 Liabilities P130,000
Non-cash assets 300,000 Keaton, capital 60,000
Lewis, capital 40,000
Meador, capital 80,000
P310,000 P310,000
Keaton, Lewis and Meador share profits and losses in a ratio of 2:4:4. Non-
cash assets were sold for PI80,000. Liquidation expenses were PI0,000. 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?
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a. P0 c. P30.000
b. P26.000 d. P34.000
14. A local partnership was considering the possibility of liquidation since one of the partners is solvent (Tillman)
and the others are insolvent. Capital balances at that time were as follows. Profits and losses were divided on
a 4:2:2:2 basis, respectively.
Ding, capital P 60,000
Laurel, capital 67,000
Ezzard, capital 17,000
Tillman, capital 96,000
Ding's creditors filed a P25,000 claim against the partnership's assets. At that time, the partnership held assets
reported at P360,000 and liabilities of PI20,000. If the assets could be sold for P228.000, what is the minimum
amount that Ding's creditors would have received?
a. 0 c. P36,000
b. 2,500 d. P38,720
15. Jar, Ram, and Millo, who divide profits and losses 50%, 30%, and 20%, respectively, have the following
October 31, 2011 account balances:
Jar, drawing (Dr.) P12.000
Millo, drawing (Cr.) 4,800
Accounts receivable - Jar 7,200
Loans payable-Ram 14,400
Jar, capital 59,400
Ram, capital 44,400
Millo, capital 39,000
The partnership's assets are P211,200 (including cash of P64,200). The partnership is liquidated and Millo receives
P33.000 in final settlement. How much is the total loss on realization?
a. 10,800 c. 54.000
b. 31,200 d. 64,200
16. Because of very unprofitable operations, partners Nal, Lou, and Gee decided to dissolve the partnership when
their capital balances and profit and loss ratio were:
Nal, capital (30%) P175,000
Lou, capital (20%) 125,000
Gee, capital (50%) 175,000
Total P475,000

Upon liquidation, all of the partnership's assets are sold and sufficient cash is realized to pay all liabilities except
one for P25,000. Gee is personally insolvent, but the others are capable of meeting any indebtedness of the firm. By
what amount would the capital of Nal change?
a. 7,500 decrease c. 195,000 decrease
b. 150,000 decrease d. No change
17. Silverio, Domingo, Reyes, and Pastor 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, 2011 are as follows:
Silverio P1,000
Domingo 25,000
Reyes 25,000
Pastor 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 uncol¬ lectible.
The share of Silverio in the loss upon conversion of the non-cash assets into cash was:
a. P4,972 c. P5,400
b. P5,257 d. P5,200
18. On December 31, 2010, the partners of MNP Partnership decided to liquidate their business. Immediately
before liquidation, the following condensed balance sheet was prepared:
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Cash P 50,000 Liabilities P375,000

Noncash assets 900,000 Nieva, loan 80,000
Perez, loan 25,000
Munoz, capital (50%) 312,500
Nieva, capital (30%) 107,500
Perez, capital (20%) 50,000
Total P950,000 Total P950,000
The noncash assets were sold for P400,000. Assuming Perez is the only solvent partners, what amount of
additional cash will be invested by Perez? (rounded to the nearest peso)
a. 37,143 c. 5,000
b. 25,000 d. 0
19. Bach, Johann, and Straus were partners sharing profits and losses based on 4:4:2 decide to liquidate. All assets
of the partnership were liquidated. The condensed statement of financial position just prior to liquidation
follows:
Assets Liabilities and Capital
Cash • P100,000 Liabilities PI 40,000
Other assets 400,000 Bach, Loan 10,000
Bach, capital 45,000
Johann, capital 105,000
Straus, capital 200,000
Total P500,000 Total Liabilities & Capital P500,000
Other assets were sold for P247,500 realizing a loss of P152,500. Parties agreed to fully terminate the partnership's
business, thus, necessitating distribution of cash to partners and in the event of capital deficiency, contribution of
additional cash. The three partners were all solvent and could answer any capital deficiency.
Name the partner and give the corresponding additional cash he had to invest due to his net capital deficiency to
finally settle the liquidation of the partnership.
a. Bach,PI6,000
b. Johami,P44,000
c. Bach,P 6,000
d. Straus,P30,500
20. The partners Aiko, Bren, Cinia and Dior who share profits and losses at 30%, 30%, 20% and 20% respectively
decided to liquidate. All partnership assets are to be converted into cash. Prior to the liquidation, the
condensed statement of financial position is as follows:
Cash , P 100,000 Liabilities P 750,000
Other'assets 1,800,000 Bren, Loan 60,000
Dior, Loan 50,000
Aiko, Capital 420,000
Bren, Capital 315,000
Cinia, Capital 205,000
Dior, Capital 100,000
Total PI,900,000 Total PI,900,000
The non-cash assets realize P800,000, resulting to a loss of P1,000,000. All the partners are solvent, and can
contribute any additional cash to cover any deficiency. In the process of liquidation, deficiency (ies) will occur and
will require additional investment as follows:
a. Cinia at P7,500
b. Dior and Cinia for P50,000 and P7,50O respectively
c. Dior at P50,000
d. None
21. On January 1, 20x1, COMMISERATE CONDOLE Co. received authorization from the SEC to issue share
capital of ₱2,000,0000 divided into 20,000 shares with par value per share of ₱100. Of the total authorized share
capital, 5,000 shares were subscribed at par value and 25% of the total subscription was collected at the
subscription date. On February 1, 20x1, COMMISERATE received full payment for 4,000 subscribed shares
and issued the related share certificates. On February 28, 20x1, COMMISERATE received cash subscription for
2,000 shares at par value.
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Requirements:
a. Provide the necessary journal entries under (1) memorandum method; and
b. Prepare the share capital portion of COMMISERATE’s statement of financial position as of February 28, 20x1.
(Memorandum method only)

22. SECERN TO SEPARATE Co. started operations on January 1, 20x1. Its authorized capitalization is ₱2,000,000
divided into 20,000 shares with par value per share of ₱100. SECERN Co. receives cash subscriptions for 5,000
shares at ₱120 per share. On January 31, 20x1, SECERN receives subscription for 2,000 shares at ₱160 per
share.

Requirement: Provide the necessary journal entries.

23. On April 1, 20x1, the board of directors of PEAL LOUD RINGING OF BELLS Co. declared ₱50 dividends per
share to shareholders of record as of April 15, 20x1 for distribution on May 1, 20x1. The shareholders ’ equity
of PEAL as of April 1, 20x1 is as follows:

Share capital, authorized capital 20,000 shares, ₱100 par 1,600,000

Subscribed share capital 440,000
Share premium 200,000
Retained earnings 908,000
Treasury shares (at cost of ₱120 per share) (288,000)
Other components of equity 140,000
Total shareholders’ equity 3,000,000

Requirement: Provide all the pertinent entries.

24. On April 1, 20x1, DOLEFUL SAD Co. declared share dividends on a “1 share dividend for every 10 shares
held” basis to shareholders of record as of April 15, 20x1 for distribution on May 1, 20x1. The market price per
share on declaration date is ₱120. DOLEFUL’s shareholders’ equity immediately before dividend declaration
is shown below:

Share capital, authorized capital 20,000 shares, ₱100 par 1,600,000

Subscribed share capital 440,000
Share premium 200,000
Retained earnings 908,000
Treasury shares (at cost of ₱120 per share) (288,000)
Other components of equity 140,000
Total shareholders’ equity 3,000,000

Requirement: Provide all the pertinent entries.

25. On April 1, 20x1, VELVETY SMOOTH Co. declared share dividends on a “1 share dividend for every 5 shares
held” basis to shareholders of record as of April 15, 20x1 for distribution on May 1, 20x1. The par value of the
shares is ₱100 while the market price per share on declaration date is ₱120. The total outstanding shares as of
April 1, 20x1 is 18,000.

Requirement: Provide all the pertinent entries.

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