PART II- PROBLEMS 4.

On January 2 upon the formation of the partnership, the balance in Jo’s

1. X and Y are the partners sharing profits and losses in the ratio of 3:2. The capital account should be:
capital balances are P50,000 and P75,000, respectively. If non cash assets A. 33500 B. 41050 C. 41850 D. Answer not given
worth 45,000 were realized for 38,000.How much is the loss on realization
to be distributed to the partners assuming liquidation expenses of 2,000 5. The balance in Mary’s Capital account as of January 2 should be
were also paid A. 32200 B. 38200 C. 41850 D. Answer not given
A. 9000 B. 8000 C. 7000 D. 6000
6. The total assets of the partnership should be:
2. D, E, and F are partners with capital balances of 50,000, 70,000 and A. 65700 B. 122200 C. 80050 D. Answer not given
80,000, share profits and losses in the ratio of 5:3:2 respectively. Assets with
a book value of 200,000 were realized for 80,000. How much will be the 7. The partnership of Justin, John and Joel divides profits in the ratio of
capital balance of D after the distribution of the loss on realization. 4:5:3. During 1996, the business earned 40,000. Joel’s share in income is
A.(20000) B.(15000) C.(13000) D.(10000) A. 10000 B. 13333 C. 16000 D. 16667 E. No Ans.

3. Assume the same data in no. 2 above, Partners E and F are solvent, while 8. Aris, Sorie and Amor have the following profit and loss agreement:
D the deficient parent is insolvent. How much will be the share of E and F in Partners Aris and Soria will receive salaries of 40000 each.
the cash distribution after the absorption of D’s capital deficiency  Partner Amor will get a bonus of 10% of net income after salaries and
A. E, 28000, F, 52000 C. E, 30000, F. 50000 Bonus
B. E, 34000, F, 56000 D. E, 25000, F, 55000  Remaining Profits are shared by Aris, Soria and Amor in the ratio of 3:4:3,
respectively
4-6 Pertain to the following data. On January 2, 1998, Jo and Mary decided The partnership had a net income of 91000. How much should be allocated
to pool their assets and form a partnership. The partnership will take over to Amor?
the business assets and assumes all liabilities. The capital of the partners will A. 4000 B. 4070 C. 9100 D. 27300
be based on the net assets transferred after adjusting the account balances
listed below: 9. If a partnership has income of 44000 and Partner Cunanan is to be
Jo Mary allocated a bonus of 10% of income after the bnus, Cunanan’s bonus would
Cash P8000 P6500 be
Accounts Receivable 19000 17000 A. 4400 B. 4000 C. 3600 D. Answer not given
Inventory 17000 16000
Equipment 6000 15500 10. Amy purchased an interest in the partnership of Benny and Carrie by
Accounts Payable 16500 22800 paying Benny 32000 for one half of his capital interest. At this time, Benny’s
Capital 33500 32200 Capital Balance was 24000 and Carrie’s Capital balance was 56000. Amy
should receive a credit to her capital account balance of
The partners agreed to adjust the following account balances: A. 16000 B. 12000 C. 20000 D. 26667
1. Mary’s inventory be adjusted to 22,500
2. An allowance for bad debts is to be set up at 5% of accounts receivable 11. Raffy and Mandy are partners sharing profits in the ratio of 3:2,
3. Equipment is to be recorded at its current market value of 14500 and respectively. On Jan. 1, Raffy and Mandy decided to admit Gary as a new
19500 for Jo and Mary respectively. partner upon her investment of 8000. On this date, their interests in the
4. The partnership will open a new set of books partnership are as follows: Raffy, 11500, Mandy 9300.
 Assuming that the new partner is given a 1/3 interest in the firm, 16. The partnership of A and B had a profit of 160000 for the year. They
with the bonus being allowed to the new partner, the new capital balances agreed to allow 20% bonus on net income after bonus, Remaining balance is
of Raffy, Mandy and Gary respectively would be to be divided equally. Based on their agreement, A’s share in the profits
A. 11500, 9300, 8000 C. 11520, 7680, 9600 would be
B. 12480, 8320, 8000 D. 10540, 8660, 9600 A. 64000 B. 96000 C. 128000 D. 32000

12. Partners Sam and Del share profits in the ratio of 6:4 respectively. On 17. Partners A and B have beginning capital of 400000 and 600000
Dec. 31,2004, their respective accounts were Sam, 120000 and Del 100000. respectively. Profits and loss ratio is 2:3 respectively after giving 20%
On that date, Gel was admitted as a partner with a 1/3 interest in capital interest on capital contributions and salary allowances of 100000 and 50000
and profits for an investment of 80,000. The new partnership began in 2005 respectively. If the firm earns 300000 profit at the end of the year, how
with a total capital 300000. Immediately after Gel’s admission, Sam’s Capital much will be the share of A in the net income?
should be A. 190000 B. 160000 C. 155000 D. 140000
A. 120000 B. 100000 C. 160000 D. 108000
18. Bascu and Samson have respective partnership capital balances of
13 After operating for 5 years, the books of the partnership of Lopez and 48000 and 24000 on Jan. 1. Basco withdrew 6000 on May 1 and 6000 on
Mendez showed the following balances: July 1. Samson invested an additional of 12000 on April 1 and withdrew
Net Assets 130 000 8000 on Oct. 1. The average capital for Basco for the year is
Lopez, Capital 85 000 A. 48000 B. 41000 C. 42000 D. 36000
Mendez, Capital 45 000
If liquidation takes place at this point and the net assets are realized 19. May and Bryan are partners with capital balances of 60000 and 20000
at book value, the partners are entitled to respectively. Profits and losses are divided in the ratio of 60:40. May and
A. Lopez to receive 90000 and Mendez to receive 40000 Bryan decided to admit Edward who invested land valued at 15000 for a
B. Lopez to receive 97500 and Mendez to receive 32500 20% capital interest in the new partnership. The partnership elected to use
C. Lopez to receive 85000 and Mendez to receive 45000 the bonus method to record the admission of Edward into the partnership.
D. Lopez to receive 65000 and Mendez to receive 65000 Edward’s capital account should be credited for
A. 12000 B. 15000 C. 19000 D. 16000
14. Partners, Aga and Vat have capital balances of 15000 and 12000,
respectively. They share profits and losses in a 2:1 ratio. They sold all the 20. Arzadon and Milado have shared profits and losses equally. Immediately
partnership assets for 60000, which resulted to a 6000 gain on realization. prior to the final cash disbursement in the liquidation of their partnership,
The amount that Val should receive as her share of cash upon liquidation of the books showed:
the partnership is Cash = Liabilities +Arzadon, Capital + Milado, Capital
A. 12000 B. 20000 C. 23000 D. 14000 100000 = 0 60000 40000
How much cash should Arzadon receive?
15. Nory, Candy and Sally are partners sharing profits and losses equally. A. 40000 B. 60000 C. 50000 D. 100000
The partnership is being liquidated and after all assets are converted to cash
and all liabilities are paid, there remained 52000 cash available for
distribution to the partners. Nory and Cory have balances of 40000 and
30000 respectively. Sally has a debit balance of 18000 in her capital account.
If Sally is personally insolvent, how much cash will be distributed to Nory?
A. 26000 B. 31000 C. 40000 D. 34000
21-22 A. 60000, 60000, 60000
The following condensed balance sheet was prepared for Binay, B. 63000, 57000, 60000
Nava, and Tadeo Partnership as of March 31, 2005: C. 63333, 56667, 60000
Cash 30 000 Liabilities 60 000 D. 70000, 60000, 50000
Other Assets 190 000 Binay, Capital 44 000
Nava, Capital 66 000 26. The equipment amounting to 50000 showed an accumulated
Tadeo, Capital 50 000 depreciation of 13500 as of December 31, 2007. If the estimated useful life
220 000 220 000 is ten years and scrap is 5000 the acquisition date was
The other assets were sold for 50 000. Profits are shared 4:4:2 for A. Jan. 1,2004 B. Jan. 1,2005 C. June 30,2004 D. June 30,2005
Binay, Nava, Tadeo respectively. Binay is insolvent
27. Land was acquired at a cost of 300000 in 2007. Its current market value
21. The amount of Cash received by Nava was is 500000 attached to the property is an outstanding mortgage payable of
A. 2000 B. 8000 C. 10000 D. 12000 100000. This property was invested by the owner in a real estate business. If
the mortgage is assumed by the business, the land will be debited for
22. The amount received by Tadeo was A. 500000 B. 300000 C. 400000 D. 600000
A. 8000 B. 12000 C. 18000 D. 22000
28. Refer to no. 27, if mortgage is assumed by the business, capital of the
23. A, B and C have the following profit and loss agreement: owner should be credited for
Partners A and B will receive salaries of 20000 each A. 500000 B. 300000 C. 400000 D. 600000
Partner C will get a bonus of 10% of net income after salaries and bonus.
Remaining Profits are shared by partners A, B and C in the ratio of 3:4:3, 29 Erica Diaz, owner of Doll Face Saloon, withdrew equipment, which cost
respectively 10000 but having a current market value of 4000. It is 40% depreciated.
The partnership had a net income of 95000, How much should be allocated Diaz, drawing should be credited for
to C? A. 10000 B. 4000 C. 6000 D. 14000
A. 27000 B. 20000 C. 25000 D. 28500
30. A truck was purchased from Bataan with a list price of 500000. Terms
24. Partner X retired from the partnership of X, Y and Z. The amount paid to offered are 450000 if paid in cash, 500000 if paid within 30 days. Legal fees
X is 50000 more than his capital balance. The partners share profits and paid by the buyer to transfer ownership was 7500. If the buyer chose to pay
losses in the ratio of 1:2:3 to X, Y and Z, respectively. Under the bonus after 30 days, how much should be debited to the truck account?
method, the share of Z in the excess to be deducted from his capital balance A. 507500 B. 500000 C. 450000 D. 457500
would be
A. 30000 B. 20000 C. 25000 D. 10000 31. The trial balance shows prepaid supplies of 1350. If 350 are on hand at
the end of the accounting period, the adjusting entry is.
25 On July 1, 2006, Partners Ric and Beth have capital balances of 70000 A. Supplies 350; Supplies Expense 350
and 60000 and share net income and losses in the ratio 7:3 respectively. B. Supplies 1000; Supplies Expense 1000
They have agreed to admit Ela as a partner with 1/3 interest in the C. Supplies Expense 350; Supplies 350
partnership capital and net income or losses for an investment of 50000. D. Supplies Expense 1000; Supplies 1000
The new partnership will begin with total capital of 180 000. Immediately
after Ela’s admission to the partnership, the capital account balances of Ric,
Beth and Ela, respectively, would be
32. Advertising Expense 7200 represents payment made on 24 monthly 36. The net sales is
magazine issues starting Oct. 1, 2007. The adjustment on December 31, A. 560000 B. 553500 C. 556500 D. 555500
2002 is
A. Advertising Expense 900; Prepaid Advertising 900 37. The Net Purchase is
B. Prepaid Advertising 900; Advertising Expense 900 A. 300000 B. 282000 C. 285000 D. 316000
C. Advertising Expense 6300; Prepaid Advertising 6300
D. Prepaid Advertising 6300; Advertising Expense 6300 38. The Cost of Goods Sold is
A. 255500 B. 252000 C. 315500 D. 225500
33.The Accounts Receivable has a debit balance at 200000 while the
allowance for bad debts has a credit balance of 5000. If the allowance is to 39. The Gross Income is
be increased by of the Account Receivable, what is the adjusting entry to A. 255500 B. 295000 C. 278000 D. 284500
record bad debts?
A. Bad Debts 10000; Allowance for bad debts 10000 40. The Net Profit is
B. Bad Debts 6000; Allowance for bad debts 6000 A. 148000 B. 134500 C. 128000 D. 448000
C. Bad Debts 5000; Allowance for bad debts 5000
D. Bad Debts 6000; Accounts Receivable 6000 41-42
The following are selected account balances of Cuarto Company as
34. During the year, Roy store purchased goods worth 300000. There were of December 31, 2007.
50000 unsold goods at the end of the year but all the stocks brought
forward from last year’s purchase was 40000. Cost of Sales were Accounts Receivable P 225 000
A. 140000 B. 120000 C. 290000 D. 310000 Allowance for Bad Debts 4 000
Sales 1 150 000
35.Rose Strom purchased merchandise worth 500 000. 50% of which were Sales Returns and Allowances 13 000
sold at a markup of 50%. Cost of Sales amounted to Sales Discount 25 000
A. 250000 B. 300000 C. 200000 D. 500000
41. If Bad Debts is estimated to be 2% of Gross Sales, What is the balance of
36-40 allowance for bad debts
The following facts presented below are about the operation of the A. 7500 B. 11500 C. 15500 D. 27000
Megaworld Company for the period ending December 31,2007
Sales 560 000 42. If the allowance for bad debts should be increased to 5% of accounts
Sales and Return Allowances 4 500 receivable, what is the balance of bad debts expense to be presented in the
Sales Discount 2 000 income.
Beginning Inventory 30 000 A. 11200 B. 15250 C. 4500 D. 7250
Purchases 300 000
Purchases Return and Allowances 14 000 43. The December 31, 2007 trial balance for Rouge Company included the
Purchase Discounts 4 000 following Purchases, 40000; Purchases Returns and Allowances, 2000;
Transportation In 3 500 Transportation In, 3000; Ending inventory was 8000. What was the cost of
Ending Inventory 50 000 goods sold to 2007?
Selling Expense 70 000 A. 39000 B. 33000 C. 38000 D. 33500
General and Administrative Expenses 80 000
44. An item selling 10000, subject to a trade discount of 25%, is paid for 49. Jimmy's Capital balance at the end of the year was
within the discount period on terms of 2/10, n/30, What is the amount of A. 240,000
payment? B. 225,000
A. 16000 B. 7500 C. 7400 D. 7350 C. 285,000
D. 195,000
45. A 90 days 6% notes of 10000 was received from a customer on
December 1, 2007. The adjusting entry to record accrued interest on 50. The net income reported by Jimmy's Car Repair Shop for the year was
December 31, 2007 will be A. 150,000
A. Interest Expense, 150; Interest Payable, 150 B. 195,000
B. Interest Receivable, 50; Interest Income 50 C. 90,000
C. Interest Expense, 50; Interest Payable, 50 D. 405,000
D. Interest Receivable, 150; Interest Income 150
51. Jimmy's Capital balance changed by what amount from the beginning of
46. Refer to the No. 45, the maturity value of the note is the year to the end of the year?
A. 10000 B. 10050 C. 10150 D. 10200 A. 45,000
B. 195,000
47. Partnership of Jack, Jill & John liquidated their business with the C. 90,000
following capital interest of 60000, 50000 and 40000 respectively. Profit and D. 150,000
Loss are shared equally. Non cash assets amounted to 120000 while
liabilities were at 45000. How much should be the total cash available for 52-53 Sheepskin Company had the following transactions during 2018
distribution to partners if the non-cash assets were realized at 90000? • Sales of 4,500 on account
A. 75000 B. 90000 C. 120000 D. 165000 • Collected 2,000 for services to be performed in 2019
• Paid 625 cash in salaries
48. Partners Ram, Rain and Rex share profits and losses in the ratio of 5:3:2, • Purchased airline tickets for 250 in December for a trip to take place
at the end of a very unprofitable year, they decided to liquidate the firm. in 2019
The partner’s capital account balances at this time are as follows:
Ram 66000, Rain 74700, Rex 45000 52. What is Sheepskin’s 2008 net income using accrual accounting?
The liabilities accumulate to 90000, including a loan of 30000 from Ram. The A. 3,875
cash balance is 18000. All partners are personally solvent. The partners plan B. 5,875
to sell their assets in installment. If Rain receives 10800 from the first C. 5,625
distribution of cash, how much did Rex receive at that time? D. 3,625
A. 6000 B. 2400 C. 3600 D. 6600
53. What is Sheepskin’s 2008 net income using cash basis accounting?
49-51 A. 5,875
Jimmy's Car Repair Shop started the year with total assets of 270,000 and B. 1,375
total liabilities of C. 5,625
180,000. During the year, the business recorded 450,000 in car repair D. 1,125
revenues, 255,000 in expenses, and Jimmy withdrew 45,000.
54. Thelman Company reported the following balances at June 30, 2018 freight-in 10,000. A physical count of inventory at the end of the period
revealed that 20,000 were still on hand. The cost of goods available for sale
Sales 10,800 was
Sales Returns and Allowances 400 A. 164,000
Sales Discounts 200 B. 156,000
Cost of Goods Sold 5,000 C. 176,000
D. 184,000
Net sales for the month is
A. 10,800 59. On October 1 Beta Company purchased 6,000 worth of goods on terms
B. 10,400 2/15, n/30.Freight of 500 was prepaid by the seller under FOB Shipping
C. 10,200 Point, goods worth 1,000 were returned and the account was paid on
D. 5,200 October 3. Discount received from the seller was
A. 110
55. The gross profit rate is computed by dividing gross profit by B. 100
A. Cost of goods sold C. 90
B. Net income D. 130
C. Sales E. 120
D. Operating Expense
60. X Company recorded a net loss of 40,000. Its net sale was 200,000 and
56-57 Financial information is presented below: gross profit was 40% of net sales. Operating expenses amounted To
Operating Expenses 45,000 A. 160,000
Sales Returns and Allowances 13,000 B. 60,000
Sales Discounts 6,000 C. 40,000
Sales 150,000 D. 120,000
Cost of Goods Sold 67,000
61. On May 1, 2018, JJ Company sold goods to DEF for 5,000 on terms 2/10,
56. Gross profit would be 1/20,n/30. Freight of 500 was prepaid under the Term FOB Destination. DEF
A. 77,000 Returned worth 1,000 To JJ and DEF paid the balance on May 15. Discount
B. 64,000 given to DEF was
C. 70,000 A. 80
D. 83,000 B. 40
C. 100
57. The gross profit rate would be D. 50
A. 0.535
B. 0.489 62. Refer to number 61. The net sale was
C. 0.511 A. 4,500
D. 0.553 B. 4,000
C. 3,960
58. Baden Shoe Store has a beginning merchandise inventory of 30,000. D. 3,920
During the period, purchases were 140,000; purchase returns, 4,000; and
63. Net Sales amounted to 50,000 with COS of sales representing 75% . If
Operating expense is 10% of net sales, the gross profit should be
A. 7,500
B. 12,500
C. 10,000
D. 11,000