COLEGIO DE DAGUPAN

Arellano Street, Dagupan City

School of Business and Accountancy

FUNDAMENTALS OF ACCOUNTING 2
Summer, AY 2017-2018
Final Examination (Set C)

I. Problem Solving. Show all necessary solutions.

PROBLEM 1
The balance sheet of the Jody, Kane, and Lark partnership on April 30, 2016 (before commencement of
partnership liquidation) was as follows:

Cash P 54,000 Accounts payable P 28,000

Inventory 60,000 Notes payable 60,000
Accounts Receivable 10,000 Jody, capital (30%) 32,000
Notes Receivable 16,000 Kane, capital (45%) 90,000
Plant assets-net 110,000 Lark, capital (25%) 40,000

Total assets P 250,000 Total liab./equity P 250,000

Liquidation events in May were as follows:

- The inventory was sold for P50,000;
- Plant assets with a book value of P50,000 were sold for P55,000.
Determine how the available cash on April 30, 2016 should be distributed.

PROBLEM 2
Use the same data in problem 1 except that the assets were sold in instalment. Below is the schedule of
the sales.

Month Proceeds BV of Assets Liabilities paid Liquidation Reserve

Sold Expense for
Liquidation
May 2016 90,000 100,000 60,000 3,000 2,000
June 2016 62,000 66,000 28,000 1,500 1,000
July 2016 28,000 30,000 1,000

Determine how the available cash on May, June and Jjuly, 2016 should be distributed.

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II. True or False. Write TRUE or FALSE. Not T or F.

_____________ 1. The legal characteristic of a partnership whereby each partner is an agent of the
partnership and is able to bind the partnership to contracts within the normal scope of the partnership
business is known as mutual agency.
_____________ 2. Partnerships pay income taxes.
_____________ 3. Partners in limited partnerships have unlimited liability.
_____________ 4. An industrialist partner is one who contributes money or property while a capitalist
partner is one who contributes service.
_____________ 5. A dormant partner is one who takes active participation in the management of the
partnership but is not known to others as a partner.
_____________ 6. Partnership at will means the partnership is held for a fixed term.
_____________ 7. A silent partner is one who does not take active participation in the management of
the partnership but is known to others as a partner.
_____________ 8. One partner of the limited partnership must be a general partner.
_____________ 9. A general partner's liability will be limited to his/her investment.
_____________ 10. The intention of forming a partnership is to earn profit which the partners will
eventually divide among themselves.
_____________ 11. A corporation is an artificial being created by operation of law with rights of
succession and having properties, attributes and power incident to its existence.
_____________ 12. Subscribed capital is the maximum number of shares that a corporation can issue.
_____________ 13. A corporation is required to have shares with par value.
_____________ 14.For non-par shares, stated value should be no less than P10.
_____________ 15. The owners of a non-profit corporation are called members.
_____________ 16. A corporation can have as many as 1,000 shareholders.
_____________ 17. There should be at least five incorporators to form a corporation.
_____________ 18. A corporation can exist for as long as fifty years.
_____________ 19. Preferred shareholders have priority as to voting rights.
_____________ 20. If only one kind of shares will be issued, it should be the preferred shares.

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