Pls Peta EGeet artnership is P 25,000 and the fair value is P110,000. ‘SAINT PAUL SCHOOL Qualifying Exam Review of PROFESSIONAL STUDIES Ge,Dena Mei H- . Partnership Formation je 1. Lacson and Bernal started a partnership. Lacson contributed a building that he purchased 10 years ‘ago for P 100,000. The accumulated depreciation on the building on the date of formation of the For what amount will Lacson’s capital account be credited on the books of the partnership? 2. Jayson, Raymund, and Susan are new CPA's and are to form partnership, Jayson Is to contribute cash ‘of P50,000 and his computer originally costing P 60,000 but has a second hand value of P 25,000. Raymund is to contribute cash of P 80,000. Susan, whose family is selling computers, is to contribute ‘ash of P 25,000 and a brand new computer with a regular selling price of P°60,000but which cost is P 50,000. Partners agree to share profits equally. ed tarek doe Ctl a) Determine the capital balances of each partner immediately after formation of the partnership. b) Prepare the entry/entries to record the Investment of each partner in the books of the partnership. ‘fs 3. Mateo and ue formed a parineshipon Apri and contributed the lowing assets: Mateo. clio Cash P 300,000 P 100,000 land P 300,000 The land was subject to @ mortgage of P.50,000, which was assumed by the partnership. Under the Partnership contract, Mateo and Julio will share profit and loss in the ratio of one-third and two-thirds respectively a) What amount should be recorded as capital for Julio at the formation of the partnership? % {2,00 b) How much is the total capital of the partnership afier formation? 90 , wed 4. RD formed a partnership on February 10, 2019. R contributed cash of P150,000, while D contributed inventory with a fair value of P120,000. Due to R's expertise in selling, D agreed that R should have 60_ percent of the total capital of the partnership. R and D agreed to recognize goodwil What is the total capital of the RD partnership and the capital balance of R after the goodwill Is recognized? ti 5. Elsa and Pearl form a new partnership. Elsa invests P 300,000 in cash for her 60 percent interest in the Capital and profits of the business. Pearl contributes land that has an original cost of P 40,000 and a fair market value of P70,000, and a building that has a tax basis of P 50,000 and a fair market value of P 90,000. The building is subject to a P40,000 mortgage that the partnership will assume. a) What is the capital balance of Pearl in the partnership? 4) What amount of cash should Pearl contribute to the partnership? Prepared by: Marilou E. Malquisto, CPA, RCA Page 1 of 36. On March 1, 2019, Candace and Noreen formed a partnership with each contributing the following no candace ‘Noreen Cash 60,000 © ©—-P-140,000 Office equipment 50,000 150,000 Building 450,000 Furniture & Fixtures 20,000 (a) : ‘The building is subject to a mortgage loan of P-180,000, which is to be assumed by the partnership. ‘The partnership agreement provides that Candace and Noreen share profits and losses at 30% and 70% respectively. Assuming that the partners agreed to bring theirrespective capital in proportion to their P&L ratios, and using Noreen capital as the base. 2) Compute the capital account balance of Noreen on March 1, 2019 “°° b) Compute the additional cash to be invested by Candace) o». 7. The partnership of Perez and Reyes was formed on March 31, 2019. At that date, Perez invested P ‘50,000 cash and Office equipment valued at P 30,000, Reyes invested P 70,000 cash, merchandise valued at P 110,000, and furniture valued at P 100,000, subject to a notes payable of P 50,000 (which the partnership assumes). The partnership provides that Perez and Reyes share profits and losses 25:75, respectively. The agreement further provides that the partners should initially have an equal Interest in the partnership capital with no additional investments of assets a) Determine the capital of each partner on March 31, 2019. . b) Prepare the necessary entry/entries to record the above transactions in the books of the partnership, 8. Jamby and Minam just formed a partnership. amby contributed cash of P2,205,000 and olfice equipment that cost P945,000. The equipment had been used inher sole proprietorship and had been 70% depreciated, the appraised value ofthe equipment is P630,000. Jamby also contributed a note payable of P210,000 to be assumed by the partnership. Jamby is to have 60% interest in the partnership. Miriam contributed only 2,575,000 merchandise inventory at fait market value. Assume the use of bonus method, the partners’ capital must be in conformity with their profit and loss ratio upon formation. ‘What is the capital of Miriam upon formation of the partnership? 9. Kim has been operating a pizza parlor as a sole proprietor for several years. On December 31, 2019, ‘the business has the following account balances: Cash 10,000 Inventory 30,000. 9) Equipment 50,000 ‘Accumulated Depreciation 10,000 Uabilties 10,000 Kim, Capital 70,000 © qe Kim would like to raise some additional capital, as he is interested in eventually buying a building for ‘the pizza parlor. He offers Alma an interest in the business and the two agree to form a partnership. ‘An audit and appraisal of Kim's business disclose that all assets and liabilities are-valued appropriately ‘on the books of the business except for inventory that was overvalued by P 7,000. kim and Alma prepare and sign articles of co partnership that include all significant operating policies. Alma will contribute cash for a 30 percent capital interest. The kim-Alma Partnership will acquire all of Kim's ‘business and assume its debts, > ¥7, '2) How much cash must be contributed by Alma to the partnership? 7 'b) Prepare the entries to record the initial capital contribution of the partners on the books of the partnership, Prepared by: Marilou E. Malqulsto, CPA, RCA Page 2 0f3 ane10. The balance sheet of Levi on February 28, 2019 is as follows: 2,150 Accounts Payable 3,600 Cash Accounts receivable 3,500) 7 Allo. For doubtful accounts (1,250) 2,250 Levi, Capital 2,300 Merchandise Inventory 4,500 Equipment 3,000 Accumulated dep’n 4.000) 2.000 . P.10,200 210,000 ‘Turla offers to invest P 20,000 cash. Levi may withdraw or contribute cash to make his capital balance equal to P 10,000, The offer was accepted by Levi after the adjustment below: 1) Equipment is overstated by P 200.~ 2) Merchandise is to be value at P(4,000.> _ 3) Allo. for doubtful accounts shouid be increased to.P1,500.) 2) What Is the capital of Levi in the partnership? b) How much is the total assets of the partnership after the formation?Qualifying Exam Review é Dae mee gee °° ee > _- te aloe” "Partnershil erations 2A 0 erento MO, POP 1 Dang ABE form a parerslp wit investments of 40,000 and P. 200,00, respectively. The Re rrenhip reported net income of P270,000 for six months operations rtners assuming no agreement concerning the Journalize the distribution of net income to the Pat division of income. 218 2. ‘Allan and Michael ate partners. Their capital accounts during 2019 were as follows: allan, Capital Michael, Capital Poca 1. PAO “3S HGDO TAM} PE > 4B) PP 8,000 “Bia 716. 7,000 10/31. 18,0003. 10/7 12,000 . poy, MAD Net income of the partnership is @39,500Yor the year 2019. Cin, 4, - 4 4 20 Compute for the share in the net income of Allan and Michael under each of the follow ‘assumptions: ate ee : Ae Wo. gine oe aries come isto be divided GOK to alan, and Oto Miah, 520 op tore 29? cor 33K oe jon om B)_Netincome is dvided inthe ratio of beginning capltal d)_Net income is divided in the ratio of Weighted average capital ose fe t $) Alanis allowed a bonus of 20% of net income after bonus & the balanceis vided equals ji, & wet 4 Albin and: Blaze share profits and losses equally. Albion and Blaze receive salary allowances of 000 and P30,000, respectively, and both partners receive 10% interest on their average capital Pains nverage canital balances are calculated atthe beginning of each month balance regardless ranen addons capital contributions oF permanent withdrawals are made subsequent within the snonth, Total net icone Yor 201975 P120,000. Albion laze January 1 capital balances » —100,000 120,000 BY 6 Ascugtrel Yearly drawings (P1,500 a month) Te~r"4¥y &t44~4.8,000 18,000 ? Permanent withdrawals of capital: ; June 3 (22,000 ) : May 2 (15,000 ) mH Additional investments of capital suly3 40,000 october 2 50,000 ‘a) What is the weighted-average capital for Alblon and Blaze in 2019? b) What will the final profit allocations for Albion in 20197 ) What is the capital of Blaze at the end of 20197 A ae ies . ; Gio oz Rt SKE 2 : 266 = TF lor 4, We 29.F AV ook é C , nae 120) gz ee KS LS : x Prepared by: Marilou E. Malquisto, CPA, RCA Pagelof34, Apartnership begins its first year with the following capital balances: ‘Arthur, Capital... +. 60000 Baxter, Capital .... + B04 Cartwright, Capital 100,000 igned in the following manner: inning capital balance. ‘The articles of partnership stipulate that profits and losses be assi Each partner is allocated interest equal to 10 percent of the begi + Baxter allocated compensation of P20,000 per year. 2 Any remaining profits and losses are allocated on a 3:3: basis, respectively. + Each partner is allowed to withdraw up to P 5,000 cash per year. Assuming thatthe gétyncome Is P50,000 and that each partner withdraws the maxienlm amount he ‘account at the end of that year? - allowed, what is the balance In Cartwright’ capital 5. Ga} and Wii Yormed a partnership on January 2, 2019 with intial investment of: P 100,000, 2150000, and P 225,000, respectively. The partnership agreement states that profits and losses are ‘to be shared equally by the partners after consideration Is made forthe followi ‘Salaries are allowed to partners: P 6,000 for lan, for Jeff and P 3,000 for Nifio. 1 Arorage partner's capa balances during the yea shal be allowed a Om Interest. he J onurof20% af income afer salaries, Interests and bonus wil be given fONINQ. J Any remaining, Income wil be divided based on 35:2 ratios for ln, Jeff, nd Nit, 1 respectively. ‘Additional information: '* On June 30, 2019{faW/invested an additional P 60,000. ‘* The For each of the following independent cases, prepare the journal entry that was made to record the admission of Shaw Into the partnership: a) Shaw purchased.20 percent of the respective copital balances of Miller and Davis, paying 22> Ave 9 Pp=ya00 cash directly to each of them. ) Shaw invested P30,000 cash In the partnership for ¢ 20 percent ownership interest. Total capital after recording his admission wos P150,000. ©). Straw invested: PA40;000 cust into the purtmership for w 20-percent ownership interest: Tote ‘capital after recarding his admission was 160,000. ) Shaw invested 50,000 Into the partnership for a 20 percent interest. Goodwill Is to be recognized. le 20 Réed, Sharp, and Tuckér were partners with capital account balances of P 80,000, P 100,000, and 70,000, respectively. They agreed to admit Upton to the partnership. Upton purchased 30% of each partner's interest, with payments to Reed, Sharp, and Tucker of P 32,000, P 40,000, and P 28,000, reser. Before te admission cf Upton, the pra ands sharing rato wes 2:2, The pares ‘agreed to use the bonus method to account for the admission of Upton to the partnership, 2) What is the capital of Upton immediately after his admission? ge ey 1b) Prepare the journal entry to record the admission of Upton to the partnership. =. e 3, Inrthe ABC partrrership (to which Danie seeks admittance), the capttal batances of Albert, Bert; anth Connell, who share income in the ratio of $:3:2 are: Albert 500,000 Bert 300,000 Connell 200,000 If no goodwill or bonus Is recorded, how much should Daniel Invest for a 20 percent interest? Gow 4, Lindsey and Ruth are partners with capital balances of P 60,000 and P 20,000, respectively. Profits and losses are divided in the ratio of 6:4 Lindsey and Ruth décided to form a new partnership with Jobelle, ‘who invested land valued at..15,000 for a 20% capital interest in the new partnership. Jobelle’s cost of the land was P 12,000. a) How much copital will be credited to Jobelle upon her admission? eS 6) What Is the capital balance of Lindsey after the admission of Jobelle? i 5. At December 31,'Rod and Sol are partners with a capital balance of P40,000 and P20,000, and they share profits and losses in the ratio of 2:1, respectively. On this date, Pete invests P17,000 In cash for 2 one-fifth interest in the capital and profit of the new partnership. Assuming that goodwill Is not recorded, how much should be credited to Pete’s capital account on December 31? Rot cue Y SH99 S339 c " Pon che 16400 7 0 Prepared by: Marilou E. Malquisto, CPA, RCA Page 1 of 36 Paul and fay’sell musical Instruments through their partnership. To bring in additional funtls ang -expadtise, they decide ta-admit Janet to.the-partnership. Pauls capitals P 400,000, Ray's.capltal is P 200,000, and they share income in a ratio of 7:3, respectively. Paul and Ray agree that some of the liwentory is obsolete. The inventory account Is decreased before Janet is admitted. Janet invests 190,000 for a one-fourth @ p gee sco 9S? Prepare the entries necessary to record Janet's admission. ee 7. Partners Zaira and Dency share profits and the ratio of 6:4, respectively. On December 31, 2019, their ‘respective accounts were Zaire, P 120,000 and Dency, P 100,000. On that date, Jultfer was admitted as a partner with 21/3 Interest In capital and profits for an Investment of P 80,000. The partners decided to use the goodwill method in recording the admission of Julfer to the partnership. @) How much the totals ogreed capttal of the partnership? 6) What Is the copital balance of Dency after the admission of bulfer? <) What amount of goodwill wil be recorded by the partnership upon admission of hlfer? 8. Geniand Ricare partners who share profits and losses in the ratio of 6:4 respectively. On May 2, 2019, ‘their respective capital accounts were as follows: a 60,000 Ric 50,000 On that date, Lito was admitted as a partner with a one-third interest in capital and profts for an lrwestment of P40,000, The new partnership began with a total-capitaLot.P1S0,000. 9) Immediately after Lito’s admission, Ben’s capital account balance should be? : b). What is the capitol of Lito inthe new partnership? : 9. Red, White and Blue are partners in a business, and share in ts profits atthe respective ratios of 50%, '30%, and 20%. AE the. beginning of the new yaar, they admitted Yellow, who i-to invest in-the firm ‘sufficient cash to have a 40% interest in the partnership and profits. The following tral balance is taken from the original partnerships records: - Debit Credit oe Cash 100,000 a 98 Marketable securities 75,000 y ‘Accounts Receivable 225,000 rome ‘Accounts payable 50,000 Notes payable 30,000 Red, capital 175,000 “= White; capital 100,000 Blue, capital 45,000 400,000 400,000 “The securities have a market value of P 60,000 end an allowance of P 35,000 is to be set up for the le. No other adjustments of the net assets are considered necessary, however, the accounts receivablt three partners among themselves must bring the balances in ther capital accounts In agreement ‘with their interest in profit. , What omount must be invested by Yeliow? » What ore the balances in the partners” capital eccounts after Yelow’s Admission? ©) What is the amount of settlement made between the old partners? Prepared by: Marilou E. Maiquisto, CPA, RCA Page2of 3/ 10. On anuary 1, 2019, Glenda, Catherine, and Katleya formed a partnership by combining their separate usiness proprietorships. Glenda contributed.cash.of-P $0,000. Catherine contributed property with 3 P 36,000 carrying amount, a P 40,000 original cost, and P 80,000 fair value. The partnership accepted Fesponsibility for the P 35,000 mortgage attached to the property. Katleya contributed equipment with a P 30,000 carrying amount, a P 75,000 original cost, and P $5,000 fair value. The operating neaene for 2015 of the partnership amounted to P 250,000. The partnership agreement specifies the jollowing: a. "Salary allowance of P 120,000 to Glenda; b. A5% interest on their original capital contributions; €. Bonus to Catherine of 10% of net income after deducting salary and interest; and d. Remaining profits and losses are to be shared equally among the partners. On January 2, 2020, the partners decided'to admit Cherry Mae as a new partner with a 25% interest in the capital of the new partnership for a cash investment of P 140,000, The old partners decided to share any profits and losses equally after the admission of Cherry Mae. a) What is the capital balance of Glenda before the admission of Cherry Moe? b) What is the capital of Cherry. Mae in.the new. partnership? ¢) Prepare journal entries to record the: 1. formation of the partnership on Jonuary 1, 2019 2. distribution of the operating Income for 2019 to the partners 3. admission of Cherry Mae on January 2, 2020Go, DAVA MBI H. |AINT PAUL SCH ESSIONAL STUDIES Qualifying Exam Review Partnership Dissolution: Retirement/Withdrawal of a Partner 1.) nthe JAW partnership, lane's apts #00 000)Anne's P 80,000, and Wiliams F.75,00) They \C/ share income in @3:2:1 ratio, respectively. Wiliam is retiring from the partnership. - - Prepare journal entries to record \Willam’s withdrawal according to each of the following Independent assumptions: 4% 9. Willa is pald 80,000, and no goodwill s recorded. ', Wiliam is paid P 85,000, and only his share ofthe goodwill is recorded. €. Wiliam is pald 78,000, and al implied goodwill is recorded. 2. When Dani withdrew from John, Daniel, Hary, and Danny LLP, he was paid P 80,000, although his ‘capital account balance was only P 60,000, The four partners shared net income and losses equally. Prepare the journal entry to record Danny's withdrawal in the partnership. 3. Donald, Anne; and Todd have the following capital balances; P 40,000, P 50,000 and P 30,000 respectively. The partners share profits and losses 20%, 40%, 2nd 40% respectively. Anne retires and Is paid P 80,000 based on the terms of the original partnership agreement. (2. if the goodwill method is used, what s the capital ofthe remaining partners? . the bonus method is used, what i the capital ofthe remaining partners? 47 Whats the total partnership capital afer Anne retires ecevngP 3,000 and using the bonus method? 4, The capital balances and profit/loss sharing ratio of Lobrigo, Valdez, and Montecina beford the retirement of Lobrigo are: Partners Capital Profit & Lossratio tc mo “obrigo 150,000 30% we sk NS Valder 160,000 30% teas Montecina 200,000 4% 10, ake Lobrigo is paid P 165,000 upon retirement. (What is the partnership's total capital after the retirement of Lobrigo? 5. The balance sheet for the partnership of Nen, Pap, and Sup at January 1, 2019 follows. The partners share profits and losses in the ratio of 3:25, respectively Assets at cost P480,000 abilities P135,000 “ Nen,capital 75,000." Pap, capital 120,000 2 ‘Sup, capital 150,000 2s" Nem is retiring from the partnership. By mutual agreement, the assets are to be adjusted to thelr fair "value of P'540,000'at January 1, 2019. Pap and Sup agree that the partnership will pay Nen P 135, ‘cash for his partnership interest What the balance of Pap’ capital account after News retrement? 47 S wo Coe) 15K Prepared by: Marilou E. Malquisto, CPA, RCA Page tof 26. The following balances as at October 31, 2019, for the partnership of Kiks, Le ali were as follows. Cash P 50,000 Liabilities P 15,000 Leila, Loan 15,000 Kiks, Loan 22,500 Sah is Non-Cash Assets 400,000°° Kiks, Capital 105,000 ar : Leila, Capital 97,500 —______ Mimi, capital 225,900 Totals P 465,000 40. Totals P 465,000 ‘Kiks, has decided to retire from the partnership on October 31. Partners agreed to adjust the non- ‘ash assets to their fair market value of P490,000. The estimated profit to October 31 is P100,000.: Kiks will be paid 173,000 for her partnership interest inclusive of her loan which is repaid in full Their profits and loss is 3:3:4 to Kiks, Leila, and Mimi respectively. What will be the balance of Lella’s Capital account after the retirement of Kiks? 7. The existing partnership of(Joy; {ess3 and {oni reported the following immediately prior to the retirement of Joi 7 ‘Amount Profit/Lossratio Cash 150,000 acre’ Equipment 300,000 Accounts payable 150,000 Joy, capital 75,000 25% Jessa, capital 100,000 30% Joni, capital 125,000 45% ‘The partners agreed that the equipment is overstated by P-50,000. Accrued salaries of P 10,000 are to be recognized. Joni is to be paid by the partnership at book value of her adjusted interest after the ‘agreed adjustment ofits assets and liabilities plus P 12,000. Compute the amount of payment to Joni for her retirement. b. Compute for capital balance of Jessa after Joni’s retirement. Prepare the necessary entries in the books of the partnership related ta the retirement of Jonl.Ge, Tang Mei ¥. © SAINT PAu Setoas Qualifying Exam Review siONAL STUOIES Partnership Dissolution with Liquidation 1. The following information Is pertinent to the partnership of Aren and Lord who share profits and lossegeaua>) Debit Credit Cash P 60,000 - Non-cash assets ao,006> ‘Accounts payable 100,000, Aren, capital 180,000 => Lord, capital 120,000 > Income and expense summary 100,000 The partnerships dsolved and lqudated. The sale of non-cash assets for 300,000. + Prepare the journal entries to record the: e 8. Sale of non-cash assets b. Payment of liabilties Cash distribution to partners 2. The balance sheet of the PPP Partnership, just before liquidation, is as follows: cash 40,000 Liabilities 70,000 Non-cash Assets, 140,000, Ping, Capital (60%) 50,000 Pang, Capital (20%) 50,000 Pong, Capital (20%) 10.000 Total 180,000 Total 180,000 Determine the amount of cash distributed to the partners assuming: a. noncash assets are sold for P150,000 ._noncash assets are sold for P70,000 3. After operating for 3 years, the books of Gigoy Partnership showed the following balances: Total Assets P 130,000 Gig, Capital 20,000 Goy, Capital 50,000 If liquidation takes place at this point and assets are realized at book value, Goy will received ; ? 4, The partnership of Dale; Edgar, and Fred was dissolved, and by July 1, 2019, all assets had been converted into cash and all partnership liablities were paid. The partnership balance sheet on July 1, 2019 (with partner residual profit and loss sharing percentages) was as follows: Cash P 10,000 Fred, capital(30%) P 40,000 Dale, capital(40%) (20,000) Edgar, capital(30%) (10,000) Total assets P 10,000 Total equity P ___10,000 —_= — ‘The value of partners’ personal assets and liabilities on July 1, 2019 were as follows: Dale Edgar Fred Personal assets P 000 P 30,000 P—_25,000 Personal liabilities 20,000 10,000 tok Came How much of the available cash should be distributed to Fred? Us Page 10f3 Prepared by: Marilou €. Malquisto, CPA, RCA(On March 1, 2019, the ABC partnership decides to complete a lump-sum liquidation as soon 4, Dossible. The partnership balance sheet prepared on March 1 appears below: Cash P50,000° Accounts Payable P 200,000 Accounts Receivable \ 60,000 Due to Partner A 30,000 Inventory 100,000 A, Capital (30%) 350,000 Investments 40,000 B, Capital (40%) + lasfoov4 ‘80,000 Plant & equipment 650,000 €, Capital (30%) (240,000 Total P200,000 Total ‘P900,000 partners A and C have sufficient ‘The partners share profits and losses in the ratio « 43:4:3) Parte )s personally insolvent, but non-cash assets are sold foc PS: are made to the partners on March 16, immediately after the creditors have been paid, '&, Determine the gain or loss on sale of noncash assets « ‘The following balance sheet is presented for the Drofits and losses in the ratio of 4:3:3. Cash - 90,000 Other assets 830,000 «Colt, loan 20,000 Total assets 12940,000 'b. Determine the avaliable cash for distribution to partners, Determine the cash received by each partner on the final distribution ial assets to satisfY any capital deficits. On March 15, 2019, the }P 10,000 liquidation expenses was paid. Lump sum payments partnership of Colty Mark, and.Clock) who share ‘Accounts payable 210,000 lock, loan 30,000 Colt, Capital 310,000 ‘Mark, Capital 200,000 Clock, Capital 190,000 Total liabilities and capital 940,000 Ca ‘The partners decide to liquidate the partnership and the other assets are sold for P700,000. ‘How much of the available cash should be distributed to Colt? Following is the balance sheet of the CPA Partnership before realization of assets on July 1, 2005: cash P 10,000 _Labilties 28,000 ‘Accounts receivable 50,000” Carlo, Capital 45,000 Inventory 30,000 °° Pedro, Capital 27,000 Equipment 89.000" Andro, Capital 30,000 Total 750,000 Total 150,000 ‘The partners share income 40:40:20, respectively. On July 2, the partnership is liquidated. 60% of the receivables are collected and that inventory is sold for P20,000, Equipment is sold for P30, How much Is to be distributed to Pedro? 8. As of December 31, 2019, the books of GTB Parthership showed capital balances of Gueco-P40,000; Tiongco-P25,000; Barcelona-P5,000. The partners profit and loss ratio was 3:2:1> respectively. The partners decided to dssoWve and lquldate. They sod all noncash assets Tor 237,009 cash, After ‘settlement of all liabilities amounting to | 'P12,000, ‘they still have P28,000 cash left for distribution. ‘a. The oss on realization of the noncash assets was bb. Assuming that any debit balance of partners capital is uncollectible, the share of Gueco on 28,000 cash for distribution was Prepared by: Marilou E. Malquisto, CPA, RCA Page 20f 3 \9. On October 31,2019, A,8, and C decided to dissolve the partnership. Their capital balances and profits ‘and losses ratio on this date are as follows: Capital Balance P/L Ratio ‘AP 40,000 20% 8 70,000 50%) c 40,000 30% Cash and Liabilities are P20,000 and P45,000, respectively. Net income from January to October is °28,000. How much must be realized from the sale of non-cash assets for B to receive P32,500? 10. On December 31, 2019, the accounting records of the Colors Partnership included the following information: Black, Drawing (debit balance) 24,000 White, Drawing (debit balance) 9,000 Green, Loan 30,000 Black, Capital 123,000 White, Capital 100,500 : Green, Capital 108,000 Total assets amounted to-P478,500) including P52,500 cash, and llabllities totaled P150,000. The partnership was liquidated on December 31, 2019, and White received P83,250 cash pursuant to the liquidation. Black, White, and Green share net income and losses in a 5:3:2 ratio respectively. How much should Black and Green receive upon liquidation of the partnership? 11. L. Jurado, M. Kabigting, N.-Lacosta, and 0. Marcelo are partners, sharing earnings in the ratio of 3:4:6:8. The balance of their capital accounts on December 31, 2019 are as follows: L Gurado P 1,000 M. Kabigting 25,000 N. Lacosta 25,000 ©. Marcelo 9.000 60,000 ‘The partners decided to liquidate, and they accordingly convert the noncash assets into 723,200 of cash. After paying the liabilities amounting to P3,000, they have P22,200 to divide. Assume that a debit balance in any of partners capital is uncollectible. a. The book value of the noncash assets amounted to b. The share of Jurado In the loss upon conversion of the noncash assets Into cash was wa cc. When the P22,200 was divided, Lacosta gotGe, Dana Mei 4 SAINT PauL Senooy Qualifying Exam Review of PROFESSIONAL STUDIES Accounting for Partnership ~ Quizzer 1. @©B and Pecided to liquidate their partnership on July 31,2019. Their capital balances and proft and loss ratio are as follows: 5 Capital Balances Profit and Loss Ratio FF 100,000 40% 6G 120,000 30% HH 40,000 30% Fram lansry 1,201 uy 32, 2039 the partnership's 15,009 Only 31,2019 before realization the balance of cash igP50,000and that of liabilities is R100, For FF to receive P80,000 In the settlement of his interest upon liquidation, the non-cash assets must be sold for A 2 Presented below is the balance sheet ofthe partnership of Rivera, Sanchez and Torres, who share incon.e and loss in the ratio of 6:3) respectively. cash P 170,000 Other Assets 30,000 Total Assets 090.900 abies 160,000 Rivera, capital 504,000 Ise £0" 45. Sanches, capital asz0ma 2212 | 7, Torres, capital 84,000 |r?" “otal Liabilities and capital magooo0 © \ a} Assume that the partners agree to(sell)R. Vidal 20%/of thelr respective interests in the partnership for a total payment of P180,000. The payment by Vidal is tobe made directly to the individual partners. What are the capital balances of Rivera, Sanchez, and Torres, respectively, immediately after the admission of Vidal? 6) Assuming the assets and liabilities of the partnership are fairly valued anv! the partnership ‘wishes to admit Vidal with 2.25% Interest without recording goodwill or bonus. How much should Vidal invest in the partnership? “4. GeeHan partnership begins is first year of operations with Gee) capital of 160,000 and Han capital of 7 0,000. According to the partnership agreement, all profits will distributed as folio vs See will be allowed a monthly salary of P 10,000 ‘s_The partners will be allowed with interest equal to 10% of the capital balance 3s ofthe first day of the year ‘= Gee willbe allowed a bonus of 10% of the net income after salaries. The remainder will be divided on the basis of 60:40 for the first Year and 59:5!) for the second vear. Assurve further, that the partnership generated Net Income of P 320,009 for the first year and 200,000 for the second year. s 2}. Vihat is the share of Han in the net income for the first year? 'b)_ What Is the share of Gee in the net income for the second year? , ‘© How much is the adjusted capital of Han at the end of second year? Prepared by: Marilgy E. Malquisto, CPA, RCA Page tof 4# The profit and loss sharing. Partner receive a bonus ofS%n the of 25,000, Sealy and Teske réceive asa an average capital balance of 260; Which his average capital account balance exceeds to Sealy, Teske, and Ubank in their res for the year of P 88,000, and receives a How much is the share of Ubank in the partnership net income? On March 1, 2001, Z. Roxas and 8, The balance sheet of Roxas and Roxas Solomon Cash P 9,000 P3,750 Accounts Receivable 18,500 13,500 Inventories 30,000 19,500 Furniture’s and Fixtures (net) 30,000 9,000 Office Equipment (net) 11,500 2,750 Prepaid Expense 6,375 3,000 105.375 151,500 Accounts Payable 45,750 18,000 2. Roxas, Capital 59,625 B. Solomon, Capital 33,500 105,375 51,500 Teske, and Ubank partnership provides that each iginal amount of partnership net income if net income is above allowance of P7, 300 sh 710508, 0% interest allocation on the amcunt by = is P200,000. Residual profits and losses are allocated spective ratios of 7:5;8. The partnership reported a net income respectively. Ubank has Solomon decided to combine thelr business and forin a partnership. Solomon on March 1, before adjustments is presented below: They agreed to 3% for the doubtful accounts on their accounts receivables and found Solamon’s furniture to be under depreciated by P900, lf the partner's share in equity isto be equal to the net assets invested, the capital accounts of Iloxas and Solomen would be Ram, Ulie and Rocco have been partners sharing net income and losses in a 3:5:2 ratio. On Octaber 31, the date Rocco retires from the partnership, the equities of the partners are Ram, P 104,000; Lilie, P 160,000; and Rocco, P 40,000. The partners have appropriately decided to adjust the understated ‘assets to fair value by 20,000, | 4) What Is the capital of Ram after the retirement of Rocco assuming Rocco is pald P 56,000 i+ partnership cash for his equity? 'b) What is the capital of Ullie after the retirement of Rocco assuming Rocco is paid P 68,000 I partnership cash for his equity and total goodwi cash Other Assets Trital Assets 110,000 Part ners incurre 4 10, ABILITIES Accounts Payable 4,Capital k, Capital capital Total Liabilities 20,000 90,000 used? The balan ce sheet of the firm of JKL partnership shows the following? AS'SETS 25,000 27,000 23,000 35,000 10,000 in relation to the liquidation process. tan. Ho 4 ” Po M4 24 7 The partners eis an the partnership after selling the other assets for P 20,000. The 2) How much cash is available for distribution to partners upon liquidation? b}, How much wl be received by partner L upon liquidation? Prepared by: Marilo.s E. Malqulsto, CPA, RCA * page 2 of &‘The following Balance Sheets fr the partnership of lice, Bety, and Clara, before the admision of Diana: cash P 20,000 abilities 50,000 Other assets 180,000 ‘Alice, Capital (405) 37,000 pep, > , 24774 Totai 200,000 Betty, Capital (40%) 65,000 e Clara, Capital (20%) 88.000" = 1 HOE KML Total 200,000 It the assets are farty valued on the above balance sheet and the partnership wishes to admis Diane ts a neweane-sith interest partner without recording goodwill or bonus, Diana should contribute cash of " -ash of my 40K do gan Caner » 9. &8) 8 €B)andOBare partners sharing profits and losses inthe ratio fsa yap 23 soa 623) “he belances of theireaptal accounts on December 31,2039 are 2s follows 28 P 8,000 Bc 200,000 © 200,000- De 72,000 The partners decided to liquidate, and they accordingly convert the noncash assets into, 485,600 Ite paving the tables amounting to 24,000, they have P177,600 to divide. Assume that a debi balance of any partner's capital is uncollectIbe. 2), Determine the book value ofthe noncash assets sold . 1) Determine the cash received by each partner upon liquidation —— a 10, Hecbert and Marighave capita account balances at the beginning of 2019 of? 240,000;and P270,009, respectively, They share net income and losses as follows EGE) ET ‘a}- 8 percent interest o@ beginning capital balances _b}- Salary allowance of P15,000 to Herbert and P7,500 to Marie ) Remainder in 3:2 ratio The partnership reported net oss of P:100,000 for the year 2019. Each partner withdraws P1,000 jn cash from the business every month in anticipation of their share in profits.» On January 1, 2020, Joy}was admitted as a partner with a 1/3 interest in capital and ¥ share in profits for an investment of 480,000 Determine the capital balance of Herbert immediately after the admission of Joy in the partnership. 11. On tanuary 1, 2617; Orange and Bu formed a partnership by contributing cash of 46,000 and 24,000, respectively. ue was givens 60% interest recorded under the bonus method, — ‘On Februcry-1, 2017, Partner Orange contributed an additional P12,000 to the partnership and on ‘ugust. 1, 2017 partrer Orange withdrew 6,000,)0n. May 1, 2017, Partner Blue contributed equipment with a fair market value of 8,000. Partner Blue had originally purchased the equipment for P12,000 and it had a net book value of 6,000 when contributed. On November 1, 2017, Partner Blue contributed an additional 24.000 }ash ‘to the partnership. — ‘The partnership agreement has the following provisions for the allocation of net profit or loss to the partners (2), Interest of 12% on the beginning capital balances during the year (2). Salaries of P2,400 per month to each partner (3). Bonus to Orange equal to 10% of net income after the salaries & bonus (4), Residua! profit divided equally The partnership “eported net income of P286,000 during the year. Determine the capital balance of Partner Orange at the end of 2017. Prepared by: Marilc u €. Malquisto, CPA, RCA Page 3 of 412. Dansalan, Evangelista and Floresca share partnership profits in the ratio of 2:3:5. On September 30, Floresca opted to retire from the partnership. The capital balances on this date follow: LDansalan 25,000 M.Evangelista 40,000 ° N.Floresca 35,000 How much is to be debited from Dansalan, assuming Floresca Is paid P39,000 in full settlement of his partnership interest? 13. Baden provided the following data taken from its 2019 unadjusted trial balance. Debit Saude , Cash P 30,000 Accounts receivable: 20,000 Allow. for doubtful accounts Food Merchandise Inventory 40,000 land 100,000 Building 250,000 Accumulated depreciation 200,000 Accounts payable 25,000 Notes payable ~ 10% 0,000 Baden and Mae agreed to form a partnership with the following agreement: The Allowance for doubtful accounts should be increased to P 5,000. Merchandise inventory has a market value of P 38,000. Accrued interest expense on notes payable should be recognized for 6 months. Mae is to contribute cash and non-cash assets to have a 40% interest in the partnersmip. The following non-cash contributions to be made by Mae have been agreed Cost Market Equipment P 60,000 P 70,000 Merchandise 30,000 20,000 aoge a) What is the adjusted capital of Baden? b) How much cash will be contributed by Mae to the partnership? c) Compute the total assets of the partnership after formation.