Professional Documents
Culture Documents
Accounts payable P1,837,500 P4,637,500 6) How much cash will be presented in the
A, Capital 10,500,000 partnerships statement of financial position?
B, Capital 8,225,000
Total P12,337,500 P12,862,500 D.
On December 1, 2015, MV and CD agreed to invest equal
They agreed to have the following adjustments: amounts and share profits equally to form a partnership. MV
Equipment of A underdepreciated by P350,000 and invested P3,120,000 cash and a piece of equipment. CD
that B is overdepreciated by P525,000; invested some assets which are shown below:
The allowance for doubtful accounts is to be set up
amounting to P1,190,000 for A and P787,500 for B; Carrying amount
Inventories of P87,500 and P61,250 are worthless in Accounts receivable P 400,000
As and Bs books respectively; and Inventory 1,120,000
Machineries, net 2,240,000
The partnership agreement provides for a profit and
Intangibles, net 920,000
loss ratio of 70% to A and 30% to B.
The assets invested by CD are not properly valued. P32,000 of
1) Assuming the use of transfer of capital method,
accounts receivable are proven uncollectible. Inventories are to
how much must be As agreed capital to bring the
be written down to P1,040,000. Included in the machineries is
capital balances proportionate to their profit/loss
an obsolete apparatus acquired for P384,000 with an
ratio?
accumulated depreciation balance of P336,000. Part of the
intangibles is a patent with carrying value of P56,000 which was
2) Assuming the use of transfer of capital method, by
sued upon by a competitor. CD unsuccessfully defended the
what amount will B debit his capital account to
bring the capital balances proportionate to their case and the final decision of the court was released on
November 29, 2015.
profit/loss ratio?
7) What is the fair value of the equipment invested by
3) Assuming A will invest/withdraw cash to bring the
MV?
capital balances of the partners proportionate to
their profit/loss ratio, how much will A invest?
E.
On December 1, 2015, MG and AN are combining their
4) Assuming B will invest/withdraw cash to bring the
separate businesses to form a partnership. Cash and non-cash
capital balances proportionate to their profit/loss
assets are to be contributed. The non-cash assets to be
ratio, how much will B invest?
contributed and the liabilities to be assumed are as follows:
B.
MG
A and B agreed the lists of the following assets to be contributed
Carrying amount Fair value
in the partnership:
Accounts receivable P 250,000 P 262,500
A B
Inventory 400,000 450,000
Cash P2,000,000 P3,000,000
Fixed assets 1,000,000 912,500
Inventory 1,500,000
Accounts payable 150,000 150,000
Land 1,000,000
AN
Building 3,000,000
Carrying amount Fair value
Furniture and fixtures 1,500,000
Accounts receivable P 200,000 P 195,000
The building is subject to a mortgage loan, already past due, in Inventory 200,000 207,500
Fixed assets 862,500 822,500
the amount of P1,000,000. A settled the mortgage from his
Accounts payable 112,500 112,500
personal funds. Partners agreed that A should be credited for
this. The partnership agreement calls for equal division of
MG and AN are to invest equal amounts of cash such that the
profit/loss between A and B
contribution of MG would be 10% more than the investment of
AN.
5) What amounts should be listed as capital for each
8) What is the amount of cash presented on the
partner?
partnerships statement of financial position on
December 1, 2015?
C.
On January 1, 2016, AB and QR agreed to form a partnership.
The following are their assets and liabilities:
AB QR
Cash P136,000 P76,000
Accounts receivable 88,000 48,000
Inventories 304,000 364,000
F. 12) What is the amortized cost of accounts receivable
As of February 1, 2015, Heckel and Jeckel decided to form a invested by Ralph?
partnership. Their statements of financial position on this date
are as follows: 13) What is Ralphs adjusted capital balance?
Heckel Jeckel
Cash P 41,000 P53,500 14) What is the total partners equity immediately after
Accounts receivable 425,000 280,000 the formation of the partnership?
Merchandise inventory - 242,500
Property and equipment 360,000 470,000 15) How much cash did Lauren invest in the
Total P826,000 P1,046,000 partnership?
The capital contribution of each partner is the net amount of the Before any allocation, profit for the year was P169,400. Interest
assets contributed to and liabilities taken over by the for each partner amounts to 10% of the weighted average
partnership. capital balances. Annual salaries of Prof, Sir and Idol are
9) What would be the total partners equity P15,000, P25,000 and P10,000 respectively. Sir receives a
immediately after the formation of the bonus of 20%of profit after deducting the bonus, interest and
partnership? salaries. Any remainder is divided in a 2:2:1 ratio by Prof, Sir
and Idol respectively.
10) How much cash should Heckel invest if the
partnership agreement provides for capital 16) How much of the partnership profit was
balances proportionate to profit/loss sharing ratio distributed to Idol?
of 3:2 to Heckel and Jeckel, respectively, using the
adjusted capital of Jeckel as the base? I.
Emo and Ted are partners engaged in a manufacturing
G. business. Transactions affecting the partners capital accounts
On August 1, 2015, Ralph admits Lauren for an interest in his in 2015 are as follows:
business. On this date, Ralphs capital account shows a balance
of P245,000. The terms and agreement of the partners before Emo Ted
admission follow: Debit Credit Debit Credit
Jan., Bal. P 50,000 P 70,000
Ralphs outstanding accounts receivable were April 1 30,000 P 20,000
P100,000, with related allowance for uncollectible June 30 P 25,000 50,000
accounts of P5,000. An assessment of collectability of Sept. 1 45,000 60,000
the receivables indicates that 80% of the balance is Oct. 1 70,000 40,000
collectible.
The credit balance of P6,000 in the Unearned Interest The income summary account has a debit balance of P45,000.
account in the books of Ralph represents interest The agreement between Emo and Ted include the following
collected in advance for six months starting June 1, terms:
2015. Of this amount, P2,000hs already been earned Interest on average capital at 8%;
as of August 1, 2015. Salaries of P25,000 and P35,000 are given to Emo
A count of supplies revealed unused supplies and Ted, respectively;
approximating P8,000which were not recognized in Bonus to Ted at 25% of net income after deducting
the books of Ralph, since the entire amount of interest and salaries but before deducting the bonus;
supplies purchased during the year was charged to and
supplies expense. Balance is to be divided equally.
Inventory valuation of Ralph should be increased by
P15,000. 17) How much is the net increase/decrease in Teds
Equipment account of Ralph should be depreciated by capital account during 2015?
a additional P10,000.
Lauren is to invest cash equal to one-third of the total J.
partnership capital. The new capital is based on the Aubris was organized and began operations on May 1, 2014.
adjusted capital of Ralph, which means that Ralphs On that date, Aubrey invested P1,000,000 cash and Morris
adjusted capital represents two-thirds of the total invested land and building with fair values of P1,750,000 and
partnership capital. P850,000 respectively. The average capital balances of Aubrey
and Morris were determined to be P1, 223,890 and P1,222,090
11) What is the adjusted balance of unearned interest respectively. The partnership contract includes the following:
income in the books of Ralph, prior to the
formation of the partnership?
Aubrey Morris 21) If profits/losses are divided using the average
Annual salaries P152,200 P151,800 capital ratio, how much is the share of DGB in the
Annual interest on average capital 20% 30% profit?
Remainder 60% 40%
22) Assume that the partners agreed on the following:
During the year ended April 30, 2015, the partnership had net interest on average capital at 8%; salaries of
sales of P3,000,000, cost of goods sold of P1,000,000 and P24,000 and P48,000 to DGB and DSP
operating expenses of P391,090. The partners salaries had respectively; bonus to DGB at 20% of profit after
been recorded as part of the operating expenses. deducting interest and salaries but before
deducting the bonus; and any remaining amount
18) How much is the total share of Aubrey in the net divided equally. How much is the share of DSP in
income for the period? the profit?
K. N.
CD Partnership begins its first year of operations with the AGB and BDC formed a partnership on January 1, 2015. On this
following capital balances: C, capital, P224,000; D, capital, date, AGB contributed net assets of P600,000. On the other
P112,000. According to the partnership agreement, all profits hand, BDC contributed no capital because he will manage the
will be divided as follows: C and D will be allowed salaries of firm on a full time basis. The partnership agreement provides for
P268,800 and P134,400, respectively. The partners will be the following:
allowed with interest equal to 10% of the beginning capital Interest at 5% shall be allowed on the beginning
balances. C will be allowed a bonus of 10% of the net income capital;
after bonus. The remainder will be divided as follows: on the BDC is to be paid salaries of P20,000 per month;
basis of the beginning capital for the first year and equally for BDC is to receive a bonus of 20% of profit computed
the subsequent years. Each partner is allowed to withdraw up to before deducting interest, salaries and bonus; and
P11,200 per year. Assume that the income summary has a debit Profits are to be divided between AGB and BDC in
balance of P16,800 on the first year and credit balance of the ratio of 7:3.
P61,600 on the second year. Assume further that each partner
withdraws the maximum amount from the business each period. There are no withdrawals by either partner during the year. The
partnership income statement contains the following:
19) What is the balance of Ds capital account at the
end of the second year? Revenues P1,720,000
Expenses (including salary, interest and bonus) 840,000
L. Profit P 880,000
Ruvi and Patrick are partners in a merchandising business.
During 2015, they withdrew their salary allowances of P34,000 23) How much is the bonus to BDC?
and P59,000 respectively. Remaining profit/loss are shared in
the ratio of 3:2 by Ruvi and Patrick. The income summary 24) What would be the equity balance of AGB at year-
account before any profit allocation has a credit balance of end?
P180,000. The partners capital accounts show the following:
O.
Ruvi Patrick AJB, BWZ and CYG are partners with average capital balances
Beginning balance P85,000 P67,000 in 2015 of P240,000, P120,000 and P80,000 respectively.
Additional investments 40,000 43,000 Partners receive 10% interest on their average capital balances.
Withdrawal other than salaries (35,000) (20,000) Salaries allowed to AJB and CYG are P60,000 and P40,000
Ending balance 90,000 90,000 respectively, and the balance of the profit is to be divided
equally. In 2015, the partnership sustained a P66,000 loss
20) What would be Patricks equity balance at before interest and salaries to partners.
December 31, 2015 after dividing the profit?
25) How much is the share of CYG in the loss?
M.
DGB and DSP are partners engaged in an export-import P.
business. Several transactions during 2015 affected the The capital accounts of ECV and ATR at the end of the year
partners capital accounts, which are summarized as follows: follow:
ECV ATR
DGB DSP Jan. 1, Balance P160,000 P240,000
Debit Credit Debit Credit Investments:
Jan. 1, Bal. P 600,000 P 800,000 March 28 180,000
March 1 P100,000 October 25 80,000
April 1 200,000 Withdrawals:
May 1 100,000 August 1 20,000
June 30 P 150,000 Sept. 4 40,000
August 31 100,000
October 1 150,000 The partnership had a profit of P120,000 for the year. The
October 31 125,000 50,000 partnership agreement provides that the profit be divided
according to average capital ratio.
The Income Summary account has a credit balance of
P180,000. 26) How much is the share of ECV in the profit for the
year?
Q. after the admission of Alona. Then the new partnership will have
Partners ORD, RFC and JMK had average capital account a profit/loss ratio of Alona, 50%; Alma, 30%, and AJ 20%.
balances during the year of P400,000, P500,000 and P100,000
respectively. The partnership agreement provides for the AA Partnership
following division of profits/losses: Statement of Financial Position
October 31, 2015
Interest: 6% on average capital balances of each partner
Salaries: ORD, P100,000; RFC, P150,000; and JMK, none Current Assets P1,440,000
Remainder: ORD, 20%; RFC, 30%; and JMK, 50% Property and equipment 3,360,000
TOTAL ASSETS P4,800,000
27) If the total share of ORD in the profit is P112,000,
how much should have been the partnership Liabilities P1,280,000
profit? Alma, Capital 2,240,000
AJ, Capital 1,280,000
R. TOTAL LIABILITIES AND EQUITY P4,800,000
BDX, a partner in BBB Partnership has a 30% participation in
partnership profits and losses. BDXs capital account decreased Below are five different conditions under which Alona may be
by a net amount of P240,000 during the calendar year 2015. admitted into the partnership. Compute the individual equity of
During 2015, BDX withdrew P520,000 which was charged Alma, AJ and Alona respectively, after the admission of Alona
against his capital account and contributed property to the for each of the five independent conditions below.
partnership with a fair value of P100,000but with a carrying
value of P80,000 in his books. 33) Alona purchases one-half equity in the
partnership from Alma and AJ for P2,200,000.
28) What was the profit of the BBB Partnership for Payment is to be made directly to Alma and AJ.
2015? Alma and AJ each will retain one-half of their
respective equities and transfer the other halves
S. to Alona.
The partnership agreement of JVV and ADD provides that
annual interest at 10% of average capitals shall be credited to 34) Alona invests P4,000,000 to the partnership
each other. JVV and ADD are provided with monthly salaries of receiving 50% interest in the partnership.
P48,000 and P72,000, respectively. Bonus at 20% of profits
after interest, salaries and bonus shall be credited to JVV. Any 35) Alona invests P4,000,000to the partnership
residual profit/loss is divided 60% to JVV and 40% to ADD. receiving 50% interest. The amount of Alonas
investment implies that the property, plant and
The partnership started operations on July 1, 2015 and uses equipment were carried at amount less than their
calendar year as its reporting period. The profit for the six fair values.
months ended December 31, 2015, after interest and salaries
amounted to P96,000. 36) Alona invests P2,400,000in the partnership and
receives 50% interest in capital and income. All
29) If average capital balances of JVV and ADD are partnership assets and liabilities are fairly valued.
P240,000 and P360,000, respectively, how much is
the bonus credited to JVV? 37) Alona invests P2,880,000 in the partnership and
receives 50% interest in capital and profit. The
30) If average capital balances of JVV and ADD are bonus to Alona wll be charged against Alma and
P100,000 and P200,000, respectively, how much is AJ in the ratio of 3:2, respectively.
the total share of ADD in the total profit?
B.
T. Red and white are partners who share profits and losses in the
Partner S was credited with a salary of P120,000 and interest of ratio of 7:3 respectively. On June 30, 2015, their capital
P60,000 on his capital account and was charged with P20,000 accounts were as follows:Red, P2,800,000; White, P2,400,000.
as his share of the balance in the Income Summary account On that day, they agreed to Admit Blue as a partner with a one-
after taking partners salaries and interest on partners capital third interest in the capital and profits upon his investment of
balances into account. He withdrew P140,000 during the year. P2,000,000. All partnership assets and liabilities are fairly
valued.
31) What amount will S report to the BIR as his share
in the partnership profit? 38) Immediately after Blues admission, what are the
capital balances of Red, White and Blue,
32) How much should the partnership report as S, respectively?
capital in its statement of financial position?
C.
U. Daisy wishes to purchase one-fourth interest in the capital and
profits in the partnership of Mickey, Minnie, and Donald. The
PARTNERSHIP DISSOLUTION three partners agreed to sell one-fourth of their respective
A. capital and profit/loss interest for a total payment of P1,600,000.
A condensed statement of financial position prepared for AA The capital accounts and the respective percentage interests in
Partnership, owned by Alma and AJ, as at October 31, 2015, is profits and losses immediately before the sale to Daisy follow:
shown below. Alma and AJ invited Alona to their partnership.
Alma and AJ have been dividing profits and losses in the ratio of Capital P/L
3:2 respectively, and this ratio will continue between the two Mickey P3,200,000 40%
Minnie 1,600,000 30%
Donald 800,000 30% 47) What should be the balances in the capital
accounts of Cordova and Decena after Elerias
All assets and liabilities are fairly valued. admission?
H. L.
Cordova and Decena are partners who share profits and losses Sy, Tan and Gokong are partners with capital balances of
equally. The capital accounts of Cordova and Decena are P500,000, P400,000 and P300,000 respectively. Profits and
P90,000 and P60,000 respectively. Eleria desires to join the firm losses have been shared equally. Gokong wishes to retire from
and invested P70,000 for a one-fourth interest in the capital of the firm.
the firm.
51) Gokongs interest is sold to Consunji, a new
partner, for P360,000. How much is the total
partnership capital after Gokongs retirement from The firms liabilities amount to P144,000, including P16,000
the firm? owing to C and P14,000 owing to D.
52) Gokongs interest is sold to the remaining After realization of assets, the cash on hand amounted to
partners, each partner paying P180,000. How P150,000.
much is the capital of Tan after Gokongs
retirement from the firm? 60) How much was the loss on realization?
53) Gokong receives P340,000 of partnership funds 61) How much should C and D receive in final
for his interest. The excess payment is attributable settlement of their respective interest?
to an undervaluation of the firms land. All other
assets are fairly valued. How much is Sys capital D.
after the retirement of Gokong? D, E and F are partners with a profit/loss ratio of 5:4:1,
respectively. The partnership is to be liquidated. Prior to
54) Gokong receives P380,000 of the partnership liquidation, the statement of financial position shows the
funds. The remaining partners agree to absorb the following balances:
excess payment to Gokong. How much is the
firms total capital after the retirement of Gokong? Cash P 80,000 Liabilities P 80,000
Other assets 720,000 D, capital 320,000
55) Gokong receives P240,000 of partnership funds E, capital 240,000
for his interest, bonus being credited to the F, capital 160,000
remaining partners accounts. How much is the
capital of Sy after the retirement of Gokong? After realization, E received P120,000 as settlement of his
interest.
PARTNERSHIP LIQUIDATION
62) How much was the loss on sale of assets?
Lump-sum Liquidation 63) How much did F receive in final settlement of his
interest?
A.
The partnership of C, A and G named Break-even decided to 64) What amount of total cash was distributed to the
liquidate their partnership on May 31, 2015. Before liquidating partners?
and sharing of net income, their capital balances are as follows:
C (30%), P250,000; A (30%), P180,000; and G (40%), E.
P220,000. Net income from January 1 to May 31 is P120,000. The statement of financial position of L, M and N just before
Liabilities of the partnership amounted to P210,000and its total liquidation shows the following:
assets including cash amounted to P70,000.
Cash P 20,000
Unsettled liabilities areP110,000. C invested additional cash Non-cash assets 240,000
enough to settle their partnership indebtedness. A is personally Accounts payable 40,000
solvent, G is personally insolvent, and C becomes insolvent N, loan 40,000
after investing the cash needed by the partnership. L, capital 62,000
M, capital 88,000
56) How much were the partnerships non-cash assets N, capital 30,000
sold for?
L, M and N share profits and losses in the ratio of 3:2:5,
57) How much cash will A invest in the partnership? respectively. The non-cash assets were sold for P160,000.
58) How much will C receive as a result of their 65) How much cash is available for distribution to
liquidation? partners in settlement of their capital balances?
On January 15, 2015, the first cash sale of other assets with 79) If in the first distribution A received P172,500 how
carrying amount of P540,000 realized P444,000. Safe much should B has received?
installment payments to the partners were made the same date.
80) If in the first distribution C received P37,500, how
70) If cash of P165,000 is to be withheld for much was the total cash distributed?
contingencies, how much cash should be
distributed to AB? 81) If in the first distribution A received P73,500, how
should C has received?
71) Assuming the first cash sale of other assets with a
carrying amount of P690,000 realized P495,000 82) If B received a total of P15,000 as a result of the
and cash of P240,000 is to be withheld, how much liquidation, what was the total amount realized
cash should be distributed to JK? from the sale of non-cash assets?
B. E.
The accounts of the partnership of TJ, SR and MD at the end of The statement of financial position for J and K Partnership on
its fiscal year on October 31, 2015 are as follows: January 1, 2015 before liquidation is as follows:
72) If MD received P27,000 on the first distribution of In January, assets with a carrying value of P382,500are sold for
cash, what was the amount of cash realized from P326,250, creditors are paid 80% of the amount owing to them,
the initial sale of assets? liquidation expenses of P6,500 and unrecorded liabilities of
P4,750 are paid and P33,750 is distributed to partners.
73) If P55,000 is available for distribution to partners
after all non-partner liabilities are paid, how much 83) For the month of January, how much cash is
should TJ has received? available for distribution to the partners?
74) If in the first distribution, SR received P11,250 how 84) In the schedule of safe payments, how much was
much should MD has received at that point? deducted from Js total interest as share in the
maximum possible loss?
75) If in the first distribution MD received P52,500,
how much is the total cash distributed to F.
partners? The accounts of the partnership of Ace, Vergel and De Dios at
the end of its fiscal year on June 30, 2015 are as follows:
C.
The statement of financial position for FH and VN Partnership Cash P75,000 Liabilities P225,000
on May 1, 2015 before liquidation is as follows: Non-cash 625,000 Loan, De Dios 25,000
Assets Liabilities & Capital Loan, Vergel 25,000 Ace, cap. (30%) 250,000
Cash P70,000 Liabilities P175,000 Vergel cap. (50%) 150,000
Other assets 355,000 FH, cap. (70%) 140,000 De Dios cap. (20%) 75,000
VN, cap. (30%) 110,000 Total P725,000 Total P725,000
Total P425,000 Total P425,000
The partners decided to liquidate the business and the
liquidation took place in several months.
Use the following information for questions 6, 7 and 8.
During the first month, non-cash assets with a book value of
P425,000 were sold for P375,000. The partners withheld A summary balance sheet for the McCune, Nall, and
P75,000 for contingencies. Payment of liabilities during the first Oakley partnership appears below. McCune, Nall, and
month amounted only to P175,000. Oakley share profits and losses in a ratio of 2:3:5,
respectively.
85) How much should have received in the first month
of the partnership liquidation?
Assets
MULTIPLE CHOICE Cash P 50,000
Inventory 62,500
FORMATION AND OPERATION Marketable securities 100,000
Land 50,000
1. Loans made by a partner to the partnership are Building-net 250,000
treated as Total assets P 512,500
A. advances to the partnership for which
interest shall be paid from the date of the Equities
advance. McCune, capital P 212,500
B. advances to the partnership that are carried Nall, capital 200,000
in the partners' capital accounts. Oakely, capital 100,000
C. Accounts Payable of the partnership for Total equities P 512,500
which interest is paid.
D. advances to the partnership for which
interest does not have to be paid. The partners agree to admit Pavic for a one-fifth interest. The
fair market value of partnership land is appraised at P100,000
2. A partner assigned his partnership interest to a and the fair market value of inventory is P87,500. The assets
third party. Which statement best describes the are to be revalued prior to the admission of Pavic and there is
legal ramifications to the assignee? P15,000 of goodwill that attaches to the old partnership.
A. The assignment of the partnership interest
does not entitle the assignee to partnership 6. By how much will the capital accounts of McCune,
assets upon a liquidation. Nall, and Oakley increase, respectively, due to the
B. The assignment dissolves the partnership. revaluation of the assets and the recognition of
C. The assignee has the right to share in the goodwill?
management of the partnership. A. The capital accounts will increase by P25,000
D. The assignee does not become a partner but each.
has the right to share in future partnership B. The capital accounts will increase by P30,000
profits and to receive the proper share of each.
partnership assets upon liquidation. C. P18,000, P27,000, and P45,000.
D. P20,000, P25,000, and P30,000.
3. Under the Civil Code of the Philippines, partners
have 7. How much cash must Pavic invest to acquire a one-
fifth interest?
I. mutual agency. A. P117,500.
II.unlimited liability. B. P120,500.
A. I only. C. P146,875.
B. II only. D. P150,625.
C. I and II.
D. Neither I nor II. 8. What will the profit and loss sharing ratios be after
Pavics investment?
4. Partnerships A. 1:2:4:2.
A. are required to prepare annual reports. B. 2:3:5:2.
B. are required to file income tax returns but do C. 3:4:6:2.
not pay Federal taxes. D. 4:6:10:5.
C. are required to file income tax returns and
pay Federal income taxes. Use the following information for questions 9, 10 and 11.
D. are not required to file income tax returns or
pay Federal income taxes. Albion and Blaze share profits and losses equally. Albion
and Blaze receive salary allowances of P20,000 and
5. Langley invests his delivery van in a computer P30,000, respectively, and both partners receive 10%
repair partnership with McCurdy. What amount interest on their average capital balances. Average capital
should the van be credited to Langleys balances are calculated at the beginning of each month
partnership capital? balance regardless of when additional capital
A. The tax basis. contributions or permanent withdrawals are made
B. The fair value at the date of contribution. subsequently within the month. Partners drawings are not
C. Langleys original cost. used in determining the average capital balances. Total
D. The assessed valuation for property tax net income for 2006 is P120,000.
purposes.
Albion Blaze C. (P8,000) to Bloom and (P12,000) to Carnes.
January 1 capital balances P 100,000 P 120,000 D. P10,000 to Bloom and (P30,000) to Carnes.
Yearly drawings (P1,500 a 18,000 18,000
month) 14. The XYZ partnership provides a 10% bonus to Partner
Permanent withdrawals of Y that is based upon partnership income, after
capital: deduction of the bonus. If the partnership's income is
June 3 ( 12,000 ) P121,000, how much is Partner Y's bonus allocation?
May 2 ( 15,000 ) A. P11,000.
Additional investments of B. P11,450.
capital: C. P11,650.
July 3 40,000 D. P12,100.
October 2 50,000
15. Drawings
A. are advances to a partnership.
9. What is the weighted-average capital for Albion and B. are loans to a partnership.
Blaze in 2006? C. are a function of interest on partnership average
A. P100,000 and P120,000. capital.
B. P105,333 and P126,667. D. *are the same nature as withdrawals.
C. P110,667 and P119,583.
D. P126,667 and P105,333. 16. If the partnership agreement provides a formula for the
computation of a bonus to the partners, the bonus
10. If the average capital for Albion and Blaze from the would be computed
above information is P112,000 and P119,000, A. next to last, because the final allocation is the
respectively, what will be the total amount of profit distribution of the profit residual.
allocated after the salary and interest distributions B. before income tax allocations are made.
are completed? C. after the salary and interest allocations are made.
A. P70,000. D. in any manner agreed to by the partners.
B. P73,100.
C. P75,000.
D. P80,000. Use the following information for questions 17, 18 and 19.
11. If the average capital balances for Albion and Blaze Davis has decided to retire from the partnership of Davis,
are P100,000 and P120,000, what will the final profit Eiser, and Foreman. The partnership will pay Davis
allocations for Albion and Blaze in 2006? P200,000. Goodwill is to be recorded in the transaction as
A. P50,000 and P70,000. implied by the excess payment to Davis. A summary
B. P54,000 and P66,000. balance sheet for the Davis, Eiser, and Foreman
C. P70,000 and P50,000. partnership appears below. Davis, Eiser, and Foreman
D. P75,000 and P45,000. share profits and losses in a ratio of 1:1:3, respectively.
H. M.
Global Co. exchanges a piece of equipment for 4,000 shares of World Class Corp.s records included the following
International Companys ordinary share capital that has a P100 shareholders equity accounts:
par value. The equipment costs Global P1,000,000 when
purchased five years ago, and currently has a fair value of Preference Share, P15 par, 200,000 shares
P560,000. The equipment has a recorded accumulated authorized P2,550,000
depreciation of P550,000 in the books of Global. Share Premium-Preference 340,000
Ordinary Share, no par, P50 stated value,
15) What is the amount credited to Share Premium- 100,000 shares authorized 3,000,000
Ordinary as a result of this exchange?
22) What was the average issue price of the
I. preference share?
Worldwide Co. was authorized to issue 10,000 preference
shares of P200 par value and 100,000 ordinary shares of P20 23) How many ordinary shares were issued?
par value. Subscription for 4,000 shares was received at P225
per share with a downpayment of 25%. The balance is payable N.
after 60 days. Shown below is information relating to the shareholders equity
of Pop Company as of December 31, 2015:
16) What is the amount of Share Premium-Preference
recognized by Worldwide upon receipt of the 12% Cumulative Preference Share
preference share subscription? Capital, P100 par P820,000
Ordinary Share Capital, P30 par, 300,000
J. shares authorized, 100,000 shares
On January 31, 2015, Mendoza Corp. was incorporated with an issued and outstanding 3,000,000
authorized share capital of P3,000,000 divided into 100,000 Additional Paid-in Capital 3,300,000
shares of P30 par. In February, 30,000 shares were sold for P40 Retained Earnings (Deficit) (500,000)
per share. In March, 20,000 shares were sold on a subscription
basis at a price of P45 per share. As of December 31, 2015, 24) What was the original issue price per share of the
one-half of the subscriptions in March was collected. ordinary shares?
B. G.
David Corp. had the following shareholders equity accounts The following capital accounts are shown in the statement of
before the declaration of bonus issue: financial position of Digong Corporation:
Ordinary Share Capital, P100 par, 20,000 Ordinary Share Capital, P100 par, 1,000 shares P100,000
shares issued and outstanding P2,000,000 Share Premium-Ordinary 2,000
Share Premium-Ordinary 100,000 Paid-in Capital from Treasury Shares 3,000
Retained Earnings 1,000,000 Retained Earnings 75,000
Treasury shares, 200 shares at cost 25,000
The fair value of the ordinary share on this date is P150 per
share. The whole 200 treasury shares were sold for P20,000.
4) Assuming that a 10% bonus issue was declared,
what was the amount of the retained earnings 11) What amount if any should be charged to retained
capitalized? earnings account upon sale of the 200 treasury
shares?
5) Assuming that a 20% bonus issue was declared
and distributed, what was the total contributed H.
capital after the distribution of the bonus issue? On July 1, 2015 Mack Corp. was registered with the SEC. Its
authorized share capital consists of 1,000,000 ordinary shares
6) Assuming that a 20% bonus issue was declared, with a par value of P20 per share.
what was the total shareholders equity after the
distribution of the bonus issue? On July 15, 2015, it issued 100,000 shares at P23 per share. On
October 15, 2015, Mack paid to the majority shareholders the
C. sum of P800,000 and issued 50,000 shares of its ordinary share
At the beginning of 2015, Escudero Co. had retained earnings of capital in exchange for land and building. The land was
P100,000. During the year, Escudero reported profit of P50,000, appraised at P1,300,000. The building had an original cost of
sold treasury shares at a gain of P18,000, declared cash P1,500,000 and its depreciated value is P900,000. It was
dividends of P30,000 and declared and distributed a bonus appraised at P1,200,000.
issue of 1,500 shares, P10 par value when the market price was
P20 per share. Outstanding shares were 15,000. On October 15, 2015, the corporation purchased 5,000 shares
of its own ordinary share capital for P110,000. On December 15,
7) What is the amount of retained earnings at 2015, 2,000 of its treasury shares were sold for P25 per share.
December 31, 2015?
12) How much is the Additional Paid-in Capital of
D. Mack Corp. on December 31, 2015?
Cayetano Co. has 15,000 ordinary shares authorized with a par
value of P30 per share of which 6,000 shares were outstanding. I.
The company authorized a bonus issue when the market value The shareholders equity of Tack Corp. as of January 1, 2015 is
was P80 per share, entitling its shareholders to one additional as follows:
share for each share held.
Ordinary Share Capital, P20 par, 200,000
8) What is the amount charged to retained earnings shares authorized, 120,000 shares
as a result of the bonus issue? issued and outstanding P2,400,000
Share Premium 280,000
E. Retained Earnings 1,540,000
The shareholders equity section of Chua Co. as of December
31, 2014 has the following balances:
Tack recorded the following transactions during 2015:
Acquired 2,000 shares of its ordinary share capital for
Ordinary Share Capital, 25,000 shares
P70,000.
authorized, 10,000 shares issued and
Sold 1,200 treasury shares at P42 per share.
outstanding P300,000
Share Premium 400,000 Retired the remaining treasury shares
Retained Earnings 800,000
13) Assuming no other equity transactions occurred
Chuas board of directors declared a 10% bonus issue on March during 2015, what should Tack report at December
31, 2015 when the market value of each share was P70. 31, 2015 as Additional Paid-in Capital?
Accordingly, 1,000 new shares were issued. For the first three
months of 2015, Chua sustained a net loss of P150,000. J.
Deck Corp. was organized on January 1, 2013 at which date it
9) What s is the balance of retained earnings at issued 100,000 shares of P10 par ordinary shares at P15 per
March 31, 2015 interim statement of financial share. During the period January 1, 2013 through December 31,
position? 2015, Deck reported a profit of P450,000 and paid cash
dividends of P230,000. On October 31, 2015, Deck purchased
F. 6,000 ordinary shares at P12 per share. On December 31,
In 2013 Du30 Corp reacquired 6,000 shares of its P1 par value 2015, it sold 4,000 treasury shares at P8 per share.
ordinary share capital at P36 per share. During 2014, Du30
issued 4,000 of these shares at P45 per share.
14) What is Decks total shareholders equity at
December 31, 2015?
K.
Zack, Inc. was organized on January 1, 2015 with authorized
share capital of 500,000, P10 par value ordinary shares. During
2015, Zack issued 10,000 shares at P14 each, purchased 1,000
treasury shares at P13 per share and subsequently sold 800 of
treasury shares at P15 per share and 200 shares at P10 per
share.
L.
Dack Corp. was organized on January 3, 2015 with authorized
share capital of 100,000, P10 par ordinary share capital . During
2015, Dack had the following transactions affecting
shareholders equity:
M.
Homepage, Inc. engaged in the following transactions involving
treasury shares. (Assume that the transactions were listed in
chronological order.)
Purchased for cash 12,500 treasury shares at P20 per
share.
Reissued 5,000 treasury shares at P22 per share.
Reissued 4,000 treasury shares at P22 per share.
N.
On December 29, 2014, the Dawn, Inc. was registered at the
Securities and Exchange Commission, with 100,000 shares of
authorized ordinary share capital of P100 par value. On the
same date, 40,000 shares were sold and issued at P110 per
share. On May 15, 2015, the corporation purchased 1,000
shares at P120 per share. On September 15, 2015, 600 of
these shares were sold for P105. During 2015, the corporation
realized a net profit after tax of P350,000 and paid cash
dividend of P120,000.