ACCOUNTING FOR SPECIAL TRANSACTIONS
FORMATION
1.Moreno, Ella Mhir
2. Angcanan, Jessica Merianne
3. Landua, Norhamida
4. Domingo, Raissa
5. Aldana, Alyssa
6. Quiles, Alyssa Joy
7. Diamos, Elisha Adrienne
8. Peralta, Gleniery
9. Umlas, Lyka Nicole
10. Punzalan, King
OPERATION DISSOLUTION
1. Porras, Trisha 1. Cabatbat, Elisha Faith
2. Guevarra, Ana Maria 2. Constantino, Charlene
3. Calumpita, Darlen 3. Gamban, Jamela Erica
4. Sia, Rycharde 4. Lopez, Ashley Denice
5. Clariz, Charlotte 5. Castillo, Vanessa Rose
6. Viñas, Kassandra 6. Relampagos, Ishe
7. Sciruth E. Ulep 7. Valenzuela, Vinesh Abbey Emmanuelle
8. Sosmeña, Alijah Shane 8. De Guzman, Vinzon
9. Taduran, Aliyah 9. Khaira, Chandan
10. Diaz, Loida Victoria 10. Dimaunahan, Sean Leonard
11. Villanueva, Jhaymie
 LIQUIDATION
1. Almirol, Deceniña
2. Regalado, Liz
3. Franco, Abegail
4. Labo, Rya Aikester V.
5. Regudo, Raphael Vito O.
6. Tabong, Marla Mikaela V.
7. Saldua, Jemimah
8. Villanueva, Atiene
9. Tan, Aldrin
10. Bobadilla, Mardi
 QUESTION 1

Tata and Koya decided to form a partnership on August 1 of the current year. Their Statement of Financial Position on this

TATA KOYA
Cash 59,656 165,780
Accounts Receivable 1,500,000 850,000
Merchandise Inventory 755,000 880,790

Equipment 562,425 126,432

TOTAL 2,877,081 2,023,002

Accounts Payable 399,876 1,159,375

Tata, Capital 2,755,000

Koya, Capital 2,574,012

TOTAL 3,154,876 3,733,387

They agreed to the following adjustments:

- Equipment of Tata is under-depreciated by P87,500 and that Koya is over-depreciated by P131,250.
- Allowance for doubtful accounts is to be set up amounting to P297,500 for Tata and P196,875 for Koya.
- Inventories of P21,875 and P15,320 are worthless in the books of Tata and Koya, respectively.

The partnership agreement provides for a profit and loss ratio of 6:4 for Tata and Koya, respectively.

What is the adjusted capital of Tata and Koya using the Net investment method?

Answer: 2,348,125 and 2,493,067

Tata Koya
Unadjusted capital 2,755,000 2,574,012
Under-depreciated equipment -87,500
Over-depreciated equipment 131,250
Allowance for bad debts -297,500 -196,875
Write-down of inventories -21,875 -15,320
Adjusted capital 2,348,125 2,493,067
Their Statement of Financial Position on this date were:

ated by P131,250.
nd P196,875 for Koya.
respectively.

oya, respectively.
 QUESTION 2

Alyssa, Julia, and Rice are forming a partnership. The appraised value of assets contributed
is 60,000, 80,000, and 100,000, respectively. In addition, Alyssa and Julia agree that
Rice's experience in the partnership is worth 30,000. The partners desire to apply the bonus method where
applicable. What is the total capital recorded at the date the partnership is formed?

Alyssa, Capital 60,000

Rice, Capital 80,000

Julia, Capital 100,000

TOTAL 240,000

Answer: 240,000
 QUESTION 3

thod where Rosie, Carter, and Chelsea created a partnership business with equal amount of capital as

Rosie - cash 300,000, office equipment worth 500,000

Carter - cash 700,000 and merchandise for the balance amount
Chelsea - machinery worth 560,000 and cash for the balance amount

As per their partnership

deed, the capital of each
partner would be equal to
the capital of Rosie.

What is the capital of each partner?

Initial capital of Rosie

Cash 300,000
Office equipment 500,000
Total capital 800,000

Initial capital of Carter

Cash 700,000
Merchandise 100,000
Total capital 800,000

Initial capital of Chelsea

Cash 240,000
Machinery 560,000
Total capital 800,000

Answer: 800,000 ; 800,000 ; 800,000

QUESTION 3 QUESTION 4

April and Jade are joining their separate business to form a pa

contributed for a
usiness with equal amount of capital as follows: total capital of P200,000. The non-cash assets to be contr

ance amount
e balance amount

The partner's capital accounts are to be equal after all contributi

How much is the total assets of the partnership?

Nakuha toh kasi equal lahat ng capital nila

Nakuha toh kasi equal lahat ng capital nila

 QUESTION 4

eir separate business to form a partnership. Cash and non-cash assets are to be
contributed for a
0. The non-cash assets to be contributed and liabilities to be assumed are:
Ella and Mhir have just formed a partnership. E
value of the computer is P 360,000. Ella has n
60% capital interest in the partnership. Mhir co
April Jade make an additional investment (or withdrawal)
Book ValueFair Value Book ValueFair Value
Accounts Receivable 11,250 11,250 Cash

Inventories 11,250 16,875 30,000 33,750 Equipment @fair value

Equipment 18,750 15,000 33,750 35,625 Notes payable
Accounts Payable 5,637.50 5,625 3,750 3,750 Ella, Capital

are to be equal after all contributions of assets and assumptions of liabilities.

s of the partnership? Mhir, Capital
Ella, Capital

Asset Liability Capital

5,625 200,000 Ella, Capital
3,750 Desired Ella, Capital
209,375 9,375 200,000 Ella should withdraw

Answer: 209, 375 Answer: 150,000

 QUESTION 5

hir have just formed a partnership. Ella contributed cash of P 1,260,000 and computer equipment that cost P 540,000. The fair
e computer is P 360,000. Ella has notes payable on the computer of P 120,000 to be assumed by the partnership. Ella is to have
l interest in the partnership. Mhir contributed only P 900,000.The partners agreed to share profit and loss equally. Ella should
dditional investment (or withdrawal) of __________.

1,260,000

Equipment @fair value 360,000

Notes payable -120,000
Ella, Capital 1,500,000

Mhir, Capital 900,000 40%

Ella, Capital 1,350,000 60%
2,250,000 100%

Ella, Capital 1,500,000

Desired Ella, Capital 1,350,000
Ella should withdraw 150,000

Answer: 150,000
 000 and computer equipment that cost P 540,000. The fair
f P 120,000 to be assumed by the partnership. Ella is to have
artners agreed to share profit and loss equally. Ella should
On December 1, 2023, Gina and Gela formed a partnership w

Cash

Machinery and equipment

Land
Sobra ang na invest nya dahil 1,350,000 lang ang Building
Office furniture
Mortgage Loan
The land and building are subject to a mortgage loan of P54,000
Goal naten ang 60% Gela share profits and losses, 40% and 60%, respectively and pa
ratio and using the capital balance of BB as t

a. 18,000
b. 85,500

Answer: 18,000

Gina 40%
Gela 60%

Gela
 QUESTION 6

nd Gela formed a partnership with contributing the following assets at fair market values:
Gina Gela
9,000 18,000

13,500 -
- 90,000
- 27,000
13,500 -
2160
o a mortgage loan of P54,000 that the partnership will assume. The partnership agreement provides that Gina and
% and 60%, respectively and partners agreed to bring their capital balances in the proportion to the profit and loss
g the capital balance of BB as the basis. The additional cash investment made by AA should be:

c. 134,000
d. 166,250

Capital Contribution Agreed Contribution

36,000 54,000 18,000
81,000 81,000 0
117,000 135,000 18,000

135,000
60%
81000
 Question 1

Mike, Ann, and Dre formed partnership on January 1, 20x1. The contribution of the partners are as follows: Mike
P300,000; Ann P250,000 and Dre P450,000. The following are the agreements of the partners:

• Monthly salary to Mike, Anne and Dre of P5,000 each

• Bonus to Mike of 10% of net income after interest and bonus
• Interest of 5% based on the capital contribution. The interest is treated as expense as per agreement
of the partners.

The net income of the partnership in year 20x1 is P264,000. What is the total income of Mike received from the
partnership?

A. 117,000
B. 125,000
C. 147,000
D. 107,000

Answer: A. 117,000

Solution:
Mike Ann Dre Total
Bonus 24,000 24,000
Salary 60,000 60,000 60,000 180,000
Remainder 18,000 15,000 27,000 60,000
Total Share in Net Income 102,000 75,000 87,000 264,000
Interest (5%) 15,000 12,500 22,500 50,000
Total Income 117,000 87,500 109,500 314,000

Bonus = 10% * (Net Income - Bonus)

Bonus = 10% * (264,000 - B)
Bonus = 26,400 - 0.1B
1.1B = 26,400
1.1 1.1
Bonus = 24,000
 Question 2

re as follows: Mike
Mark and Gabriel formed a partnership on May 1, 20x1. Mark invested P350,000 cash while
Gabriel invested equipment's with book value of P600,000 and fair value of P450,000. On
September 1, 20x1, Mark invested additional cash pf P50,000. On October 31, 20x1, Gabriel
withdrew cash against his capital amounting to P20,000. The partners agree on the following:

• Monthly salary allowances of P2,500 and P3,000 to Mark and Gabriel, respectively. The salary
allowance is treated as expense.
• 12% interest based on beginning capital
e received from the • 25% bonus on profit after bonus to partner Mark.

The interest allowance is withdrawn by the partners in anticipation of profit share. The income
summary has a credit balance amounting to P125,000.

Question 1. The total share in net income of partner Gabriel in the partnership is?

A. 64,500
B. 54,000
C. 56,250
D. 87,750

Answer: C. 56,250

Solution:
0.4375 0.5625
Mark Gabriel Total
Bonus 25,000 25,000
Interest 28,000 36000 64,000
Remainder 15,750 20,250 36,000
Share in NI 68,750 56,250 125,000

Bonus = 25% * (Net Income - Bonus)

Bonus = 25% * (125,000 - B)
Bonus = 31,250 - 0.25B
1.25 B = 31,250
1.25 1.25
Bonus = 25,000
Question 2. What is the capital balance of partner Mark on December 31, 20x1?
partnership is?

A. 350,250
B. 380,750
C. 420,500
D. 440,750

Answer: D. 440,750

Solution:
Mark Gabriel Total
Beg. Balance 350,000 450,000 800,000
Additional Investment 50,000 - 50,000
Share in NI 68,750 56,250 125,000
Drawings -28,000 -56,000 -84,000
Ending, Capital 440,750 450,250 891,000

* Salary not included because it was already reflected in the net income as expense
 Question 3

Partners Halo and Kitty have profit and loss agreement with the following provisions:
• Salaries of {30,000 and P45,000 for Halo and Kitty, respectively;
350,000 cash while • A bonus to Halo of 10% of net income after salaries and bonus;
of P450,000. On • And interest of 10% on average capital balances of P20,000 and P35,000, respectively.
er 31, 20x1, Gabriel
ree on the following: • One third of the remaining profits will be allocated to Halo and the balance to Kitty.

espectively. The salary If the partnership had net income of P102,500, how much should be allocated to Partner
Halo?

A. 41,000
B. 61,500
ofit share. The income C. 48,000
D. 64,500

Answer: A. 41,000

Solution

Halo Kitty Total

Bonus 2,500 2,500
Interest 2,000 3,500 5,500
Salaries 30,000 45,000 75,000
Remainder 6,500 13,000 19,500
Net Income 41,000 61,500 102,500

Bonus = 10% * (Net Income - Salaries - Bonus)

Bonus = 10% * (102,500 - 75,000 - B)
Bonus = 10,250 - 7,500 - 0.1 B
1.1 B = 2,750
1.1 1.1
Bonus = 2,500

83,000 =19,500*1/3
102,500 6500
19,500
13,000
1, 20x1?
 Question 4

ng provisions: Ed, Edd, and Eddie are partners owning a grocery store. Their capital account balances were: Ed,
P50,000; Edd, P110,000; Eddie, P50,000. They share profits and losses on a 4:2:2 ratop, after the
following terms;

000, respectively.
lance to Kitty. a. Eddie is to receive a bonus of 10% of net profit after bonus.
b. Interest of 10% shall be paid on that portion of a partner's capital in excess of P100,000.
llocated to Partner c. Salaries of P10,000 and P12,000 shall be paid to partners Ed and Eddie, respectively.

Assuming a net profit of P44,000 for the year, the profits share of Edd was ___________.

A. 9,500
B. 7,800
C. 12,400
D. 5,600

Answer: B. 7,800

Solution:

Ed Edd Eddie Total

Net Profit 44,000
Bonus 4,000 4,000
Interest 1,000 1,000
Salaries 10,000 12,000 22,000
Remainder 6,800 6,800 3,400 17,000
Net Profit 16,800 7,800 19,400 44,000

Bonus = 10% * (Net Income - Bonus)

Bonus = 10% * (44,000 - Bonus)
Bonus = 4,400 - 0.1B
1.1B = 4,400
1.1 1.1
Bonus = 4,000
 Question 5

t balances were: Ed, Hannah and Zoe reports net income of $70,000. The partnership agreement provides for annual
4:2:2 ratop, after the salaries of $50,000 for Hannah and $28,000 for Zoe, and interest allowances of $6,000 to Hannah
and $10,000 to Zoe. Any remaining income or loss is to be shared 60% by Hannah and 40% by Zoe.

ss of P100,000. How much is the amount of net income distributed to Zoe?

espectively.
A. 24,800
___________. B. 20,800
C. 28,200
D. 28,400

Answer: D. 28,400

Solution:
Hannah (60%) Zoe (40%) Total
Salary 50,000 28,000 78,000
Interest 6,000 10000 16,000
Total 56,000 38,000 94,000
Remainder -14,400 -9,600 -24,000
Net income 41,600 28,400 70,000
rovides for annual
f $6,000 to Hannah
nah and 40% by Zoe.
 QUESTION 1

The partner's capital accounts in Anna and Ben partnership before the admission of
their new partner are as follows:

Capital Accounts P/L Ratios

Anna, Capital 200,000 60%
Ben, Capital 120,000 40%
320,000

Carol purchase 1/4 of Anna's capital interest in the partnership. How much is the
capital balance in the partnership of Anna after the admission of Carol?

A. 120,000
B. 150,000
C. 180,000
D. 250,000

ANSWER: B. 150,000

Solution:
Anna Ben Carol Total
Capital, Beginning 200,000 120,000 320,000
Sale of Interest to Carol 50,000 50,000 -
Capital, End 150,000 320,000
 QUESTION 2

April, May, and June are partners who share profits and losses 30%, 25%, 45%,
respectively. April informed May and June that he is withdrawing from the partnership.
The partner's capital accounts at the date of April's withdrawal are P150,000, P135,000,
Blossom, Bubbles, and Butt
and P225,000, respectively. The partnership agreement states that the goodwill, if any,
and P595,000 respectively,
of the withdrawing partner will be recognized for all partners immediately prior to the
as a new partner bringing w
withdrawal of any partner. In this instance, the partners determine that the goodwill
partnership which includes
associated with April is P22,500. Assuming that April's equity is purchased by May (60%)
should Mojo Jojo contribut
and June (40%), what is the amount of May's capital account at the date of April's
withdrawal?

A. 172,500
B. 150,000
C. 257,250
D. 153,750

ANSWER: C. 257,250

Share of April in Revaluation 22,500 Solution:

Revaluation 75,000
Total Capital
Share of April in Revaluation 22,500 Interest acquired by Mojo
Share of May in Revaluation 18,750 Cash to be contributed by M
Share of June in Revaluation 33,750
Total Revaluation 75,000

April, Capital 150,000 392,000

April, Capital after revaluation 172,500 1,365,000
595,000
Share of May to April's Capital after revaluation 103,500 2,352,000
Share of June to April's Capital after revaluation 69,000

May's share to April's Capital after revaluation 103,500

May's capital at the date of April's withdrawal 135,000
May's share in the revaluation 18,750
Total capital of May after April's withdrawal 257,250
 QUESTION 3

ossom, Bubbles, and Buttercup are partners with capital balances of P392,000, P1,365,000,
nd P595,000 respectively, sharing profits and losses in the ratio of 3:2:1. Mojo Jojo is admitted
a new partner bringing with him expertise and is to invest cash for 25% interest on the
artnership which includes a credit of P367,500 for bonus upon his admission. How much cash
ould Mojo Jojo contribute?

A. 294,000
B. 661,500
C. 1,050,000
D. 784,000

ANSWER: D. 784,000

3,136,000
terest acquired by Mojo Jojo 25%
ash to be contributed by Mojo Jojo 784,000

100%
25%
75%

=2,352,000/75%
3136000
 QUESTION 4

Partner A is personally insolvent, owing 400,000. Personal assets will only bring 150,000 when liquidated. At the
same time, A has a credit capital balance in the partnership of 85,000. The capital amounts of the other partners
total a (credit) balance of 200,000. Under the doctrine of marshaling of assets, the personal creditors of A can
collect up to ______.

A. 435,000
B. 150,000
C. 235,000
D. 400,000

ANSWER: C. 235,000

Solution:
Personal Assets 150,000
Credit capital balance in the partnership 85,000
Total 235,000
 Question 5

Bale and Sia are partners who share profits and losses 6:4. They each have a capital balance of P70,000
and P80,000 respectively. They agree to admit Gary as a new partner upon an investment of
equipment costing P70,000 with a fair value of P90,000. What is the new profit-sharing ratio of Bale
and Sia?
hen liquidated. At the A. 40.9%; 37.5%
s of the other partners B. 37.5%;40.9%
al creditors of A can C. 37.5%; 25%
D. 25%; 37.5%

ANSWER: C. 37.5%; 25%

Solution:
TCC Ratio (old)
Bale 70,000 60%
Sia 80,000 40%
Total 150,000 100%
Gary 90,000
Total 240,000
ey each have a capital balance of P70,000
partner upon an investment of
t is the new profit-sharing ratio of Bale

5%

Ratio (new)
37.50%
25.00%

62.50%
 Question 1

The partnership of Cindy, Mindy, and Henry was dissolved on June 30, 20x5 and account balances after no
converted into cash on September 1, 20x5 are:

Assets Liabilities
Cash 50,000.00 Accounts Payable
Cindy, Capital
Mindy, Capital
Henry, Capital

Personal assets and liabilities of the partners at September 1, 20x5 are:

Personal
Personal Assets
Liabilities
Cindy 80,000.00 90,000.00
Mindy 100,000.00 61,000.00
Henry 192,000.00 80,000.00

If Henry contributes P70,000 to the partnership to provide cash to pay the creditors, what amount of Cindy'
equity would appear to be recoverable?

A. 90,000
B. 81,000
C. 79,000
D. None

Answer: B. 81,000

Solution:

Cindy Mindy
Balance before liquidation 90,000.00 (60,000.00)
Additional Investment
90,000.00 (60,000.00)
Additional investment 39,000.00
90,000.00 (21,000.00)
Additional loss for insolvency of Mindy (3:4) (9,000.00) 21,000.00
81,000.00
Additional investment (192,000-80,000-
70,000)
81,000.00
 Question 2

Andrea and Francine formed a partnership on July 1, 20x5 to op

and account balances after non-cash assets were of them. They invested P30,000 and P20,000 and agreed to sha
20x5 are: All their transactions were for cash, and all their subsequent tra
respective bank accounts as summarized below:

Liabilities
120,000.00
90,000.00 Cash Receipts
(60,000.00) Cash Disbursement
(100,000.00)
On October 31, 20x5, all remaining noncash assets in the two st
partnership was dissolved and cash settlement was effected. In
Andrea received:
A. 24,000
B. 26,000
C. 34,000
D. 36,000

editors, what amount of Cindy's P90,000 partnership

Answer: B. 26,000
rable?

Solution:

Initial investments
Investments
Withdrawals
Balance bef. Liquidation
Gain on realization
Balances bef. payment to partners
Payment to partner

Henry Total
(100,000.00) (70,000.00)
70,000.00 70,000.00
(30,000.00) -
39,000.00
(30,000.00) 39,000.00
(12,000.00) -
(42,000.00) 39,000.00
-
42,000.00 42,000.00
₱ 81,000.00
 Question 2

partnership on July 1, 20x5 to operate two stores to be managed by each

0 and P20,000 and agreed to share earnings 60% and 40%, respectively. AA, BB, and CC, partners to a firm, have
ash, and all their subsequent transactions were handled through their will be gi
mmarized below:

Andrea Francine
79,100.00 65,245.00
62,275.00 70,695.00

ning noncash assets in the two stores were sold for cash of P60,000. The
cash settlement was effected. In the distribution of the P60,000 cash,

Answer: B. 26,000
Solution:

Andrea Francine TOTAL

30,000.00 20,000.00 50,000.00 Balances before realization
62,275.00 70,695.00 132,970.00 Divided by: P&L ratio
- 79,100.00 - 65,245.00 - 144,345.00 Loss absorption ability
13,175.00 25,450.00 38,625.00 Priority I
12,825.00 8,550.00 21,375.00
26,000.00 34,000.00 60,000.00 Priority II
- 26,000.00 - 34,000.00 - 60,000.00

Cash Distribution:
Cash Payment to partner
Less: Priority I
 Question 3

and CC, partners to a firm, have a capital balances of P11,200, P13,000, and P5,800, respectively, and share profits in the ratio
will be given to the partners as it becomes available. Who among the partners shall be paid first with an

A. BB
B. No one
C. CC
D. AA

Answer: A. BB

Interest
AA BB CC
before realization 11,200.00 13,000.00 5,800.00
y: P&L ratio 0.57 0.29 0.14
rption ability 19,600.00 45,500.00 40,600.00
(4,900.00)
19,600.00 40,600.00 40,600.00
- (21,000.00) (21,000.00)
19,600.00 19,600.00 19,600.00

Available AA BB
ment to partner 1,400.00
(1,400.00) ₱ 1,400.00
n3

ctively, and share profits in the ratio of 4:2;1. Prepare a schedule showing how available cash
he partners shall be paid first with an available cash of P1,400

A. BB

Payments
AA BB CC Total

1,400.00 1,400.00

- 6,000.00 3,000.00 9,000.00

- 7,400.00 3,000.00 10,400.00

CC
 Question 4

The MNL Partnership is being dissolved. All liabilities have been paid and the remaining assets are being realized
gradually. The equity of the partners is as follows:

Partner's
Partner Loans to (from) Parntership
Accounts
M 24,000.00 6,000.00
N 36,000.00 -
L 60,000.00 (10,000.00)

The second cash payment to any Partner(s) under a program of priorities shall be made thus:

A. To L, P2,000
B. To N, P6,000
C. To L, P8,000
D. To N, P6,000 & L, P8,000

Answer: D. To N, P6,000 & L, P8,000

Solution:
INTERESTS
M N
Balances before Liquidation
Loans 6,000.00 -
Capital 24,000.00 36,000.00
Total Interest 30,000.00 36,000.00
Divided by: P&L Ratio 0.30 0.30
Loss absorption ability 100,000.00 120,000.00
Priority I - -
100,000.00 120,000.00
Priority II - (20,000.00)
100,000.00 100,000.00

PAYMENTS
M N
Balances before Liquidation
Loans
Capital
Total Interest
Divided by: P&L Ratio
Loss absorption ability
Priority I

Priority II 6,000.00
- 6,000.00
 Question 5

Atiene, Bits, and Rev are liquidating their partnership. AT the date the liquidation
ssets are being realized account balances of P162, 000, P192,500, and P215,000, respectively and the part
and 25%, respectively, in addition, the partnership has a P36,000 notes payable to
ED.

Profit & Loss

Ratio When the liquidation begins, what is the loss absorption power
3
3 A.192,500
4 B. 67,375
C. 550,000
hus: D. 770,000

Answer: C. 550,000

Solution:

Bits, Capital
P&L
Total

(10,000.00)
60,000.00
50,000.00
0.40
125,000.00
(5,000.00)
120,000.00
(20,000.00)
100,000.00

L
 2,000.00

8,000.00
10,000.00
 Question 5

AT the date the liquidation begins, Scoot, Joe, and Ed have capital
00, respectively and the partners share profits and losses 40%, 35%,
a P36,000 notes payable to Scott and P20,000 notes receivable from
ED.

is the loss absorption power with respect to Bits?

wer: C. 550,000

192,500.00
0.35
₱ 550,000.00