Mary the Queen College (Pampanga), Inc.

FINAL EXAMINATION IN SPECACC

Accounting for Special Transactions
2nd Semester, A.Y. 2023-2024

Name:___________________________________ Date:______________________
Year, Section and Class Time: _______________ Name of Teacher:

ANSWER SHEET (Letters Only)

(Note: All forms of erasures are considered wrong)

1. 11. 21. 31. 41.

2. 12. 22. 32. 42.

3. 13. 23. 33. 43.

4. 14. 24. 34. 44.

5. 15. 25. 35. 45.

6. 16. 26. 36. 46. BONUS

7. 17. 27. 37. 47. BONUS

8. 18. 28. 38. 48. BONUS

9. 19. 29. 39. 49. BONUS

10. 20. 30. 40. 50. BONUS

 Mary the Queen College (Pampanga), Inc.
FINAL EXAMINATION IN SPECACC
Accounting for Special Transactions
2nd Semester, A.Y. 2023-2024

Name:___________________________________ Date:______________________
Year, Section and Class Time: _______________ Name of Teacher:

Instruction: Write your final answers on the answer sheet provided. Do not use separate paper for your
solutions. Use the space provided or the back portion of the questionnaire for your solutions. Any form of
cheating will be equivalent to zero point. Each number is worth 1 point each.

1. Albert, Claude, and Jamie form a partnership by contributing P25,000, P70,000, and P80,000,
respectively. In addition, the partners agree that Albert should receive P40,000 of goodwill because
of his special skills relevant to this business. What amount of capital will exist for Albert when the
partnership is formed?
a. P45,000 c. P80,000
b. P70,000 d. P65,000

2. Partner Y and Z agreed to form ZY Partnership sharing profit 40% and 60%. The partnership
also assumed the separate liabilities of the partners: Y, P200,000 and Z, P300,000. Cash of
P150,000 and P250,000 were also contributed by Y and Z. Immediately after formation, the
partners were credited with P500,000 and P400,000 capital. How much is the agreed value of
non-cash assets contributed by Y?
a. P450,000
b. P1,000,000
c. P550,000
d. P700,000

3. Alrene ard Gheck drafted a partnership agreement that lists the following assets contributed
at the partnership's formation: that Alrene should contribute cash of P100,000 and furniture
and fixtures of P75,000, whereas, Gheck should contribute cash of P150,000, inventories of
P75,000 and building worth P200,000. The building is subject to a mortgage of P50,000,
which the partnership has assumed. The partnership agreement also specifies that profits
and losses are to be distributed evenly. What amount should be recorded as capital for
Alrene and Gheck, respectively, at the formation of the partnership?
a. P175,000 and P425,000
b. P175,000 and P375,000
c. P275,000 and P275,000
d. P300,000 and P300,000

4. Tino shall receive a bonus of 20% of profit after the bonus and salaries. What is Tino’s bonus?

a. P300,000
b. P350,000
c. P340,000
d. P420,000
 5. Shue, a partner in the Financial Brokers Partnership, has a 30 percent share in partnership
profits and losses. Shue's capital account had a net decrease of P100,000 during 2022.
During 2022, Shue withdrew P240,000 as withdrawals and contributed equipment valued at
P60,000 to the partnership. What was the net income of the Financial Brokers Partnership
for 2022?
a. P266,666
b. P466,666
c. P300,000
d. P190,000

6. Partnership net income is defined as

a. the interest allocation to the partners, based on weighted average invested capital
b. partnership income after deducting partner salaries and interest.
c. partnership income after deducting partner salaries.
d. partnership income before deducting salaries and interest.

7. When can the bonus method be applied?

a. When a partnership is formed
b. When a new partner is added to the partnership
c. When an existing partner retires from the partnership
d. The bonus method can be applied in all three of the above circumstances

8. Which of the following interest component calculation bases is least susceptible to manipulation
when allocating profits and losses to partners?
a. Beginning capital account balance
b. Average of beginning and ending capital account balances
c. Weighted average capital account balance
d. Ending capital account balance

9. Which of the following forms of new partner admission will not result in a change in the partnership's
net assets?
a. Purchase of an ownership interest directly from the partnership
b. Purchase of an ownership interest directly from an existing partner
c. Either of the above
d. Neither of the above

10. In what manner do the remaining partners share in the bonus paid to a withdrawing partner?
a. In proportion to, their residual profit and loss ratios
b. Equally
c. In proportion to their capital account balances
d. The partner with the greatest capital account is assigned the bonus

NUMBER 11 and 12

On December 31, 2020, the Statement of Financial Position of ABC Partnership provided the
following data with profit or loss ratio of 1:6:3:

Current Assets P 1,000,000 Total Liabilities P 600,000

Noncurrent Assets 2,000,000 A, Capital 900,000
B, Capital 800,000
C, Capital 700,000
 On January 1, 2021, D is admitted to the partnership by purchasing 40% of the capital interest of the
partnership at a price of P500,000.

11. What is the capital balance of C after his admission on January 1, 2021?
a. P 540,000
b. P 480,000
c. P 420,000
d. P 960,000

12. Assuming there is an implied asset revaluation upward/downward, what is the capital balance
of A after admission of D on January 1, 2021?
a. P 213,000
b. P 471,000
c. P 500,000
d. P 785,000

NUMBER 13 AND 14

On December 31, 2020, the Statement of Financial Position of ABC Partnership provided the
following data with profit or loss ratio of 5:2:3:

Current Assets P 1,300,000 Total Liabilities P 300,000

Noncurrent Assets 2,000,000 A, Capital 1,400,000
B, Capital 700,000
C, Capital 900,000
On January 1, 2021, D is admitted to the partnership by investing P1,000,000 to the partnership for
40% capital interest.
13. If the all the assets of the existing partnership are properly valued, what is the amount of bonus to
old Partner A?
a. P 300,000
b. P 600,000
c. P 180,000
d. P0

14. If there is an implied asset revaluation upward/downward, what is the capital balance of Partner C
after admission of D?
a. P 1,000,000
b. P 400,000
c. P 650,000
d. P 750,000

NUMBER 15 AND 16

On December 31, 2020, ABC Partnership’s Statement of Financial Positions shows that A, B and C have
capital balances of P400,000, P350,000 and P250,000 with profit or loss ratio of 4:3:3. On January 1,
2021, B retired from the partnership and received P280,000.

15. What is the capital balance of A after the retirement of B?

a. P 440,000
b. P 400,000
c. P 428,000
d. P 360,000
16. If there is an implied asset revaluation upward/downward, what is the capital balance of C after the
retirement of B?
a. P 320,000
b. P 250,000
c. P 280,000
d. P 180,000

17. The dissolution of a partnership occurs

a. Only when the partnership sells its assets and permanently closes its books
b. Only when a partner leaves the partnership
c. At the end of each year, when income is allocated to the partners
d. Only when a new partner is admitted to the partnership
e. When there is any change in the individuals who make up the partnership

18. The following condensed balance sheet is presented for the partnership of Anders, Barnes, and
Crowley, who share profits and losses in the ratio 5:32 respectively:

▪ Cash……………………………………… P60,000
▪ Other assets …………………………….. P640,000
▪ Liabilities …………………………………. P140,000
▪ Anders, Capital …………………………… P280,000
▪ Barnes ,Capital …………………………… P28,000
▪ Crowley, Capital………………………….. P252,000

The partners decide to liquidate the partnership. The other assets are sold for P500,000. How
should the available cash be distributed?
a. Anders, P280,000; Barnes, P28,000; Crowley, P252,000
b. Anders, P210,000; Barnes, P-0-; Crowley, P224,000
c. Anders, P200,000; Barnes, P-0-; Crowley, P220,000
d. Anders, P200,000; Barnes, P-0-; Crowley, P220,000
e. Anders, P2100,000; Barnes, P-0-; Crowley, P210,000

19. Rick, Mary, and Fran are partners in a company that is being liquidated. The three partners have
capital account balances of P46,000, P39,000 and P29,000. In addition, Mary had loaned the
partnership ₱15,000 and the partnership previously loaned Fran P10,000. Assuming the right of
offset is applied, what is the net capital position of the three partners when the liquidation begins?
Rick Mary Fran
a. P46,000 P39,000 P29,000
b. P46,000 P54,000 P19,000
c. P46,000 P24,000 P39,000
d. P46,000 P39,000 P29,000

20. The Abrams, Bartle and Creighton partnership began the process of liquidation with the following
balance sheet:
.
Cash ……..……. P16,000 Liabilities ………………… P 150,000
Noncash assets…….. P434,000 Abrams, capital …………… 80,000
Bartle, capital ……………… 90,000
Creighton, capital …………. 130,000
Total……………….. P 450,000 Total Liabilities and Equities P450,000

Abrams, Bartle and Creighton share and losses in a ratio of 3:2:5. Liquidation expenses are
expected to be P12,000. If the non-cash assets were sold for P234,000, what amount of the
liquidation loss would have been allocated to Bartle?
a. P48,000
 b. P46,800
c. P40,000
d. P42,400

21. Dancey, Reese, Newman and John were partners who shared profits and losses on a 4:2:2:2 basis,
respectively. They were beginning to liquidate their business. At the start of the process, capital
balances were as follows:
Dancey, capital P72,000 Newman, capital P52,000
Reese, capital P32,000 John, capital P24,000

Which one of the following statement is true?

a. The first available P16,000 would go to Newman
b. The first available P16,000 would go to Dancey
c. The first available P8,000 would go to John
d. The first available P8,000 would go to Reese
e. The first available P4,000 would go to John

22. DD, EE and FF decided to liquidate the partnership on July 31, 2021. Their capital balances and
profit ratio on this date follow: DD, P33,600 (45%) : EE, P43,200 (25%) ; FF, P19,200 (30%).

If FF received P24,960 in full settlement of his interest in the firm, how much will EE receive in full
settlement of his interest?
a. P 42,240
b. P 43,200
c. P 48,200
d. P 48,000

NUMBERS 23 AND 24

On December 31, 2020, the Statement of Financial Position of ABC Partnership with profit or loss
ratio of 6:1:3 of partners A, B and C respectively, revealed the following data:

Cash P 1,000,000 Other Liabilities P 2,000,000

Receivable from A 500,000 Payable to B 1,000,000
Other noncash assets 2,000,000 Payable to C 100,000
A, Capital 700,000
B, Capital (650,000)
C, Capital 350,000

On January 1, 2021, the partners decided to liquidate the partnership. All partners are legally
declared to be personally solvent. The other noncash assets were sold for P1,500,000. Liquidation
expenses amounting to P100,000 were incurred.

23. How much cash was received by B at the end of partnership liquidation?
a. P 250,000
b. P 150,000
c. P 290,000
d. P 270,000

24. How much cash was received by C at the end of partnership liquidation?
a. P 270,000
b. P 150,000
c. P 350,000
d. P 220,000
 25. A, B, and C are partners who share profits and losses as follows: A 35%, B 25%, and C 40%. The
Statement of Financial Position of the partnership as of December 31, 2021 is given below:

ABC Company
As of December 31, 2021

Cash P 40,000 Liabilities P 90,000

Non-Cash 550,000 Loan from B 10,000
A, Capital 163,500
B, Capital 117,500
C, Capital 209,000
Total P 590,000 Total P 590,000

On January 1, 2022, the partners decided to liquidate. For the month of January, assets with book
value of P101,290 were sold. At the end of January, payment to partners A, B, and C were P750,
P11,250, and P23,000 respectively. Cash withheld for possible liquidation expenses and
unrecognized liabilities amounted to P6,290.

What is the amount of cash realized from the sale of the non-cash assets?
a. P 91,290
b. P 95,000
c. P 141,290
d. P 0

NUMBERS 26, 27 AND 28

A creditor which loaned a liquidating corporation P100,000 exclusive of P10,000 accrued interest is
expected to receive P98,000 settlement, which includes the P50,000 fair value of collateral asset on
the loan.

The corporation has P8,000,000 liabilities out of which P2,400,000 were secured by collateral
assets. P800,000 of the liabilities were unsecured with priority creditors

26. Compute the estimated deficiency to unsecured creditors.

a. P 1,600,000
b. P 1,040,000
c. P 1,120,000
d. P 960,000

27. Compute the net free assets.

a. P 3,200,000
b. P 3,760,000
c. P 3,680,000
d. P 3,840,000

28. Compute the estimated recovery percentage.

a. 80%
b. 76.66%
c. 78.33%
d. 66.66%

29. Which of the following is not included in the category of unsecured liabilities with priority in a
liquidation case?
a. unpaid wages
b. amounts due to the BIR
c. amounts due to suppliers
 d. administrative expenses of the trustee

30. Which one of the following assets of a corporation is most likely to realize the smallest percentage
of its book value in bankruptcy?
a. Accounts receivable
b. Plant &equipment
c. Goodwill
d. Inventories

Numbers 31 and 32

Seve, Inc. began work in 2022 on a contract that provided for a contract price of P7,200,000. The
details of that contract are as follows:
2022 2023

Cost incurred during the year P 1,200,000 P 3,675,000

Estimated cost to complete (12/31) 3,600,000 0
Billings during the year 1,350,000 5,400,000
Collections during the year 900,000 5,850,000

31. Assume that Seve uses the percentage-of-completion (overtime) method of accounting. The
portion of the total gross profit to be recognized as income in 2022 is
a. P 2,400,000
b. P 1,800,000
c. P 600,000
d. P 450,000

32. Assume that Seve uses the cost recovery method of accounting. The portion of the total gross
profit to be recognized as income in 2023 is
a. P 7,200,000
b. P 2,325,000
c. P 1,350,000
d. P 900,000

Numbers 33 and 34
On January 1, 2020, an entity entered into a long-term construction contract with fixed contract
price of P5,000,000. The entity billed its client as follows: 30% during 2020, 40% during 2021 and
the remainder at the year of project completion. The following data were provided by the cost
accountant of the entity:

2020 2021 2022

Cumulative Cost incurred as of the end of the year P2,200,000 P3,600,000 P4,800,000
Estimated remaining cost to complete at the end of the year
P3,300,000 P900,000 -

33. What is the excess of construction in progress over progress billings on December 31, 2020
under percentage of completion method, cost-to-cost approach?
a. P 500,000
b. P 200,000
c. P 300,000
d. P 400,000
 34. What is the excess of construction in progress over progress billings on December 31, 2021
under cost recovery method?
a. P 100,000
b. P 500,000
c. P 300,000
d. P 400,000

Number 35
Drive+ Builders entered into a construction contract in 2022 with a contract price of P19,200,000. In
2023, a change order increased the contract price by P960,000. The following data were available:

2022 2023
Cost incurred to date P 9,840,000 P 17,280,000
Estimated cost to complete 9,840,000 4,320,000

35. Under IFRS 15, what is the construction-in-progress as of 2023?

a. P 25,680,000
b. P 15,360,000
c. P 15,840,000
d. P 16,320,000

36. In accounting for a long-term construction contract using the percentage-of-completion method, the
gross profit recognized during the first year would be the estimated total gross profit from the
contract, multiplied by the percentage of the costs incurred during the year to the
a. Total contract price
b. Unbilled portion of the contract price
c. Total estimated cost / Total cost
d. Total costs incurred to date

37. Contract costs of a construction contract comprise all of the following, except
a. Costs that directly relate to the specific contract.
b. Costs that are attributable to contract activity in general and can be allocated to the contract.
c. Such other costs that are specifically chargeable to the customer under the terms of the
contract.
d. General administration costs for which reimbursement is not specified in the contract.

38. If at the end of an accounting period, the balance of the Investment in Branch ledger account in the
accounting records of the home office is P20,000 and the balance of the Home Office account in the
accounting records of the branch (after the branch recorded closing entries) is P25.500, the most
likely explanation for the discrepancy of P5,500 is a
a. Remittance of cash to the branch not recorded by the home office
b. Net income of branch not recorded by the home office
c. Net loss of branch not recorded by the home office
d. Collection by the home office of a branch note receivable not recorded by the branch

39. The Shipments to Branch ledger account in the accounting records of the home office of a business
enterprise:
a. Is an asset valuation account
b. Indicates that the home office uses the periodic inventory system
c. Is adjusted at the end of the accounting period to equal the unrealized profit in the branch's
ending inventories
d. Is not displayed in the home office's separate financial statement

40. The combined profit of the entity is equal

a. to the individual profits of the home office and the branch
b. to the individual profits of the home office and the branch after eliminating any unrealized
mark-up during the period
 c. to the individual profit of home office plus the true profit of the branch
d. to the true profit of the home office plus its share in the profit of the branch

41. On December 31, the Investment in Branch account on the home office books of the Unlimited
Company shows a balance of P168,000. The following are some of the transactions between the
home office and the branch:
• Merchandise billed at P12,300 was shipped by the home office to the branch on December
28. The merchandise is in transit and has not been recognized on the books of the branch.
• The branch collected a home office accounts receivable of P50,000 but failed to notify the
home office of this collection.
• The home office was charged P12,800 when the branch returned merchandise to the home
office on December 31. The merchandise is in transit.
• The home office recorded incorrectly the branch net income for November at P22,500. The
branch reported net income of P25,200.

The unadjusted balance of the Home Office account was:

a. P180,300
b. P168,000
c. P220,200
d. P195,600

Numbers 42, 43, 44 and 45

Selected items from the records of the ALBAY Home Office and its OAS Branch Office for 2022 follow:

ALBAY Ho OAS Branch

Inventory, January 1 P 12,000 P ?
Purchases 150,000 30,000
Shipment from Home Office 93,750
Shipment to Branch 75,000
Allowance for overvaluation of Branch Inventory 19,750
Operating expenses 20,000 15,000
Inventory, December 31 14,000 10,875
Sales 200,000 150,000

There are no shipments in transit at December 31. Forty percent (40%) of the branch inventory at year-end
is acquired from other vendors. The beginning inventory in the branch from the Home Office at actual cost
is P5,000 and the beginning inventory in the branch from other vendors was P2,000.

42. The amount of COGS of the Home Office

a. P67,000
b. P73,000
c. P148,000
d. P223,000

43. The amount of COGS of the Branch

a. P119,860
b. P120,875
c. P120,635
d. P120,975

44. The amount of inter-office inventory profit realized from branch sales to outsiders in 2022 is
a. P17,430
b. P18,445
c. P18.205
d. P18,545

45. The combined net income to be reported for 2022 will be

a. P193,750
 b. P319,750
c. P139,750
d. P139,570

Prepared by: Approved by: Received by:

Dean Carlo S. Maneja, CPA William I. Asenci, CPA, MBA Sherwin S. Tamayo
Instructor Dean/Chairperson/Coordinator Printing Office Assistant