Red and White formed a partnership in 2010.

The partnership agreement provides

for annual salary allowances of P55,000 for Red and P45,000 for White. The partners
share profits equally and losses in a 60/40 ratio. The partnership had earnings of
P80,000 for 2006 before any allowance to partners. What amount of these earnings
should be credited to each partner's capital account?
Red white
40,000**40,000
###43,000*37,000
44,000**36,000
45,000**35,000

Fox, Greg and Howe are partners wit average capital balances during 2010 of
P120,000, P60,000 and P40,000, respectively. Partners receive 10% interest on their
average capital balances . after deducting salaries of P30,000 to Fox and P20,000 to
How's , the residual profit or loss is divided equally. In 2010, the partnership
sustained a P33,000 loss before interest and salaries to partners. By what amount
should Fox capital account change?
###7,000 increase
11,000 decrease
35,000 decrease
42,000 increase

The partnership agreement of Donna, Eddy, and Farr provides for annual distribution
of profit and loss in the following sequence:
*Donna ,the managing partner receives a bonus of 10% profit
*Each partner receives 6% interest on average capital investment
*Residual profit or loss is divided equally
*Average capital investment for 2010 were:
Donna 80,000

Eddy 50,000
Farr 30,000
What portion should be allocated to ___?
Donna 41,600
Eddy 29,800
Farr 28,600
35,133
33,3333

The Articles of Partnership of Adam and Eve the following provisions were
stipulated:
*annual salary of P60,000 each
*Bonus to Adam of 20% of the net income after partnes' salaries , the bonus being
treated as an expense.
*balance to be divided equally
The partnership reported a net income of P360,000 after partners' salaries but
before bonus. How much is the share of ___ in the profit?
Adam 270,000
Eve 210,000
60,000
90,000
150,000

Partners AA and BB have profit and loss agreement with the following provisions :
salaries of P30,000 and P45,000 for AA and BB, respectively; a bonus to AA of 10%
of the net income after salaries and bonus ; and interest of 10% on average capital
balances of P20,000 for AA and P35,000 for BB. One-third of any remaining profits
will be allocated to AA and the balance to BB. If the partnership had net income of
P102,500, how much should be allocated to Partner AA?

AA 41,000 (44,250**47,500**41,167)
BB 61,500

A partnership has the following accounting amounts:

Sales 700,000
Cost of goods sold 400,000
Operating expense 100,000
Salary allocations to partners 130,000
Interest paid to banks 20,000
Partners' drawings 80,000
What is the partnership net income (loss)?

200,000
##180,000
50,000
(30,000)

Mitz, Marc and Mart are partners sharing profits in the ratio of 5:3:2, respectively. As
of December 31, 2009, their capital balances were P95,000 for Mitz, P80,000 for
Marc , and P60,000 for Mart. On January 1, 2010, the partners admitted Vince as a
new partner and according to their agreement, Vince will contribute P80,000 in cash
to the partnership and also pay P10,000 for 15% of Marc's share. Vince will be given
a 20% share in profits, while the original partners' share will be proportionately the
same as before. After the admission of Vince, the total capital will be P330,000 and
Vince's capital will be P70,000.

*The total amount of goodwill to the old partners , upon the admission of Vince
would be :
7,000
#15,000
22,000
37,000
*The balance of Marc's capital,after the admission of Vince would be:
72,600
74,600
#79,100
81,100

The following condensed balance sheet is presented for the partnership of Alfa and
Veda, who share profits and losses in the ratio of 60:40, respectively:
Cash..................45,000
Other assets...625,000
Veda, loan.........30,000
TOTAL------------700,000

accounts payable ........120,000

Alfa, capital...................348,000
Veda, capital.................232,000
TOTAL-------------------------700,000
*The assets and liabilities are fairly valued on the balance sheet. Alfa and Beds
decide to admit Capp as a new partner with a 20% interest. No goodwill or bonus is
to be recorded. What amount should Call contribute in cash or other assets?

110,000
116,000
140,000
##145,000

*Instead of admitting a new partner, Alfa and Veda decide to liquidate the
partnership. If the other assets are sold for P500,000, what amount of the available
CA's should be distributed to Alfa?
255,000
##273,000
327,000
348,000

N, X and Y are partners sharing profits and losses in the ratio 4:3:3, respectively.
The condensed balance sheet of NXY Partnership as of December 31, 2006 is:
Cash....................50,000
Other assets.....130,000
TOTAL--------------180,000

Liabilities............40,000
N capital.............60,000
X capital.............40,000
Y capital.............40,000
TOTAL-------------180,000
*All the partners agree to admit Z as a 1/5 partner in the partnership without any
goodwill or bonus. Z shall contribute assets amounting to

28,000
10,000
#35,000
60,000
*The NXY Partnership is dissolved and liquidated by installments. The first
realization of P40,000 cash is on the sale of other assets with book value of
P80,000. After payment of the liabilities, the cash available is distributed to N, X and
Y respectively as follows:
36,000**27,000**27,000
44,000**28,000**28,000
16,000**12,000**12,000
##24,000**13,000**13,000

The following condensed balance sheet is presented for the partnership of Smith
and Jones, who share profits and losses in the ratio of 60:40, respectively.

Other assets...............450,000
Smith loan....................20,000
TOTAL-----------------------470,000

accounts payable..... 120,000

Smith capital............. 195,000
Jones capital............ 155,000
TOTAL--------------------- 470,000
The partners decided to liquidate the partnership. If the other assets are sold for
P385,000.

*What amount of the available cash should be distributed to ___?

Smith 136,000
Jones 129,000
156,000
159,000
195,000

Partner Morgan is personally insolvent, owing P600,00. Personal assets will only
bring P200,000 when liquidated. At the same time, Morgan has a credit capital
balance in the partnership of P120,000. The capital amounts of the other partners
total a credit balance of P250,000. Under the doctrine of marshalling of assets, how
much the personal creditors of Morgan can collect?
120,000
200,000
#320,000
570,000

As of December 31, the books of AME partnership showed a capital balances of: AP40,000; M-P25,000 and E-5,000. The partner's profit and loss ratio was 3:2:1,
respectively. The partners decided to dissolve and liquidate. They sold all the
noncash assets for P37,000 cash. After settlement of all liabilities amounting to
P12,000, they still have P28,000 cash left for distribution.

*The loss on the realization of the noncash assets was

40,000
#42,000
44,000
45,000
*Assuming that any partner's capital balance is uncollectible, the share of A in the
P28,000 cash for distribution would be
19,000
18,000
#17,800
40,000

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

Mac and Jolly, in a joint venture , contributed P150,000 each in order to purchase
canned goods which are sold by lots at a "closing-out" sale. They agreed to divide

their profits equally and each shall record his purchases, sales, and expenses in his
own books. After selling almost all of the canned goods; they wind up their venture.
The following data relate to the venture transactions:
--Joint venture credit balance of Mac was P120,000 and Jolly was P105,000
-- Expenses paid from the joint venture cash was P15,000 by Mac and P19,500 by
Jolly
-- Cost of unsold canned goods, which Mac and Jolly agreed to assume were P4,500
and P7,000, respectively.
* What was the total sales of the joint venture?
#559,500
536,500
525,000
334,500
* What was the joint venture gain or loss?
202,000
213,500
224,000
#236,500

*In the final settlement, what was the total amount due to Marc including his
investment?
256,500
258,000
263,750
#268,250

It is the contractually agreed sharing of control over an economic activity, and

exists only when the strategic financial and operating decisions relating to the
activity require the unanimous consent of the parties sharing control.
Control
# Joint control
Significant Influence
Controlling interest

It is a party to a joint venture and does not have joint control over that joint venture
Venturer
# Investor in a joint venture
Investor with a power to govern the financial and operating policies
None of these

On October 1, 2010, A, B and C entered into a joint venture business. They were to
market a special alarm device. The venture profits and losses were to be shared into
5:3:2 ratio, respectively. On December 31, 2010 while the joint venture is still
uncompleted, the three participants decided to recognize the profits or losses for
three months period. The inventory is listed at 25% above cost at P50,000. The joint

venture account has a debit balance of P24,000. No separate books are maintained
for the joint venture.
*What was the joint venture profits (losses) for the three months period?
#16,000
26,000
(24,000)
13,5000
*What were the shares of A, B, and C in the profits (losses)?
A.,..B...C
(12,000) *(7200)*(4,800)
##8,000*4,800*3,200
13,000*7,800*5,200
6,750*4,050*2,700

The following were found in your examination of the interplant accounts between
the Home Office and the Butuan Branch:
1. Transfer of fixed assets from Home Office amounting to P53,960 was not booked
by the branch
2. P10,000 covering marketing expense of another branch was charged by Home
Office to Butuan.
3. Butuan recorded a debit note on inventory transfers from Home Office of P75,000
twice.
4. Home Office recorded cash transfer of P65,700 from Butuan Branch as coming
from Davao Branch

5. Butuan reversed a previous debit memo from Cagayan de Oro Branch amounting
to P10,500. Home Office decided that this charge is appropriately Davao Branch's
cost.
6. Butuan recorded a debit memo from Home Office of P4,650 as P4560
* The net adjustment in the home office books related to the Butuan Branch Current
account is:
#75,700
65,700
86,200
94,820
*The net adjustment in Butuan's books related to the Home Office account is:
33,335
31,450
#20,950
10,450
*Before the above discrepancies were given effect,the balance in the home office
books of its Butuan Branch Current account was debit balance of P165,920. The
unadjusted balance in the Butuan Branch books of its Home Office Current accounts
must be:
92,336
98,230
104,500
#111,170
*The adjusted balance of the reciprocal accounts is:
84,807
#90,220
99,200
109,120

At the end of 2008, the branch reported an inventory of P15,625. The home office
bills this branch at 125% of cost. During 2009, goods costing P300,000 were
shipped to the branch. The account "allowance for overvaluation of branch
inventory" after adjustment, shows a balance of P16,250 at the end of the year.
*What was the amount of inventory at January 1, 2009 at cost?
#12,500
15,625
19,531
28,125
*What was the amount of ending inventory at billed price?
309,375
247,500
#81,250
65,000
*What was the amount of allowance for overvaluation before adjustments?
61,875
###78,125
20,312
20,000
*What was the amount of ending inventory at cost?
#65,000
81,250
61,875

15,625

New Era Corp. bills its newly established branch for merchandise at 104% of cost. At
the end of its first month, the branch reported, among other things, the following:
Merchandise from Home Office (at billed price)...................................28,000
Merchandise purchased locally by branch...........................10,000
Inventory, September 30, of which P2,000 are of local purchases...9,000
Net sales for month.................................43,500
*The branch inventory at cost should be recorded at
38,000
#7,000
9,000
None of the above
*The gross profit of the branch in so far as the Home Office is concerned was
22,500
14,500
22,790
#20,500

It is the entity that has the controlling financial interests

Investor
#parent

Associate
Affiliate

Poe, Inc. acquired 100% of Shaw Co. in a business combination on September 30,
2009. During 2009, Poet declared quarterly dividends of P25,000 and Shaw declared
quarterly dividends of P10,000. Under the purchase method of accounting for the
business combination, what amount should be reported as dividends declared in the
December 31, 2009 consolidated statement of retained earnings?
#100,000
105,000
130,000
140,000

Red Corp. has a 90% interest in White Co.; while the latter has an 80% interest in
Sol Corp. For the year ended December 31, 2009, the net income from own
operations of these three companies were: Red P1,000,000 ; White P500,000 ; and
Sol P250,000. What is the amount of minority interest (Noncontrolling interest) in
net income for 2009?
120,000
100,000
#70,000
50,000