1. The BeBe Co.

, a partnership, was formed on Jan 1 2012 with four partners,

Kris, Charry, Jimeno and Peña. Capital contributions were as follows:

Kris ₱100,000
Charry 50,000
Jimeno 50,000
Peña 40,000

The partnership agreement provides that each partner shall receive 5% interest
on the amount of his capital contribution. In addition, Kris is to receive a
salary of ₱10,000 and Charry a salary of ₱6,000 per annum which are to be
charged as expenses of the business.
The agreement further provides that Jimeno shall receive a minimum of ₱5,000
per annum from the partnership and Peña a minimum of ₱12,000 per annum,
both including amounts allowed as interest on capital and their respective
share of profits. The balance of the profits is to be distributed in the following
proportions: 30%, 30%, 20% and 20%, respectively.

The amount that must be earned by the partnership during 2011, before any
charge for the interest on capital on partners’ salaries in order that Kris may
receive an aggregate of ₱25,000, including interest, salary and share of profits
would be: (Disregard income tax)

a. 64,666 c. 74,666
b. 66,468 d. 75,000

2. Using the information in no.1, the total earnings of Charry would be:

a. 16,400
b. 16,900
c. 18,500
d. 20,000

3.Using the info in no.1, the total earnings of Jimeno would be:

a. 7,666
b. 9,167
c. 10,468
d. 12,000

4. Jose and Andres are partners with capital balances of ₱30,000 and ₱40,000
and sharing profits and losses 40% and 60%, respectively. If Alberto is
admitted as partner paying ₱20,000 in exchange for 50% of Jose’s equity. The
entry in the partnership books should be as follows
a. Jose, Capital 15,000
Alberto, Capital 15,000
b. Cash 20,000
Alberto, Capital 20,000
c. Cash 20,000
Goodwill 5,000
Alberto, Capital 25,000
d.Cash 20,000
Jose, Capital 5,000
Alberto, Capital 15,000

5. The capital accounts of the partnership of Silang, Pilar and Agudo are
presented below with their respective profit and loss ratio:

Silang ₱ 278,000 (1/2)

Pilar 418,000 (1/3)
Agudo 192,000 (1/6)

Jacinto was admitted to the partnership when he purchased directly, for

₱264,000, a proportionate interest from Silang and Pilar in the net assets and
profits of the partnership. As a result, Jacinto acquired a one-fifth interest in
the net assets and profits of the firm.

Assuming no assets revaluation is to be recorded, what is the combined

gain realized by Silang and Pilar upon the sale of a portion of their interests in
the partnership to Jacinto?
a. ₱0 c. 122,800
b. 86,400 d. 164,000

6. As of July 1, 2019, FF and GG decided to form a partnership. Their balance sheets on this date are

FF GG

Cash P 15,000 P 37,500

Accounts Receivable 540,000 225,000

Merchandise Inventory ------- 202,500

Machinery and Equipment 150,000 270,000

Total P 705,000 P 735,000

Accounts Payable P 135,000 P 240,000

FF Capital 570,000

GG Capital 495,000

Total P 705,000 P 735,000

The partners agreed that the machinery and equipment of FF is underdepreciated by 15,000 and that of
GG by 45,000. Allowance for doubtful accounts is to be set up amounting to 120,000 for FF and 45,00 for
GG. The partners agreement provides for a profit and loss ratio and capital interest of 60% to FF and 40%
to GG. How much cash must FF invest to bring the partners capital balance proportionate to their profit
and loss ratio?

a. P 142,500 c. 172,500

b. P 52,000 d. 102,500

7. CC admits DD as a partner in business. Accounts in the ledger for CC on November 30, 2018, just
before the admission of DD, show the following balances:

Cash P 6,800

Accounts receivable 14,200

Merchandise Inventory 20,000

Accounts payable 8,000

CC, Capital 33,000

It's agreed that for purpose of establishing CC's interest, the following adjustment shall be made:

(a) An allowance for doubtful accounts of 3% of accounts receivable is to be established

(b) The merchandise Inventory is to be valued at 23,000

(c) Prepaid salary expenses of 600 and accrued rent expense of 800 are to be recognized.

DD is to invest sufficient cash to obtain a 1/3 interest in the partnership.

Compute for (1): CC's adjusted capital before the admission of DD; and (2) the amount of cash
investment by DD.
a. (1) P 35, 347 ; (2) P 11,971 c. (1) P 35,374 ; (2) P 17,687

b. (1) P 36,374 ; (2) P 18,487 d. (1) P 28,174 ; (2) P 14,087

8. On March 1, 2019, II and JJ formed a partnership with each contributing the following assets:

II JJ

Cash P 300,000 P 700,000

Machinery and equipment 250,000 750,000

Building ----- 2,250,000

Furnitures and Fixtures 100,000 -----

The building is subject to a mortgage loan of 800,000 which is to be assumed by the partnership
agreement provides that II and JJ share profits and losses 30% and 70% respectively.On March 1, 2019
the balance in JJ's capital account should be:

a. 3,700,000 c. 3,050,000

b. 3,140,000 d. 2,900,000

9. The same information in number 3, except that the mortgage loan Isa not assumed by the
partnership. On March 1, 2019 the balance in JJ's capital account should be:

a. 3,700,000 c. 3,050,000

b. 3,140,000 d. 2,900,000

10.The partnership agreement of XX, YY and ZZ provides for the year-end allocation of net income in the
following order:

(a) First, XX is to receive 10% of net income up to 200,000 and 20% over 200,000

(b) Second, YY and ZZ each are to receive 5% of the remaining income over 300,000

(c) The balance of income is to be allocated equally among the three partners.

The partnership's 2019 net income was 500,000 before any allocations to partners. What amount should
be allocated to XX?

a. 202,000 c. 206,000

b. 216,000 d. 220,000

11. Lima and Mitra are partners with a profit and loss ratio of 75:25 and capital
balances of ₱100,000 and ₱50,000 respectively. Nova is to be admitted into the
partnership by purchasing a 20% interest in the capital, profits and losses for
₱60,000. Assuming that no asset revaluation is to be made, the capital
balances of Lima and Mitra after admission of Nova are
a. Lima ₱ 80,000 and Mitra ₱40,000
b. Lima ₱120,000 and Mitra ₱60,000
c. Lima ₱112,000 and Mitra ₱38,000
d. Lima ₱100,000 and Mitra ₱50,000

12. Using the information in #4 and assuming that asset revaluation is to be

made, the capital balances of Lima, Mitra and Nova are
a. ₱170,000; ₱70,000; ₱60,000
b. ₱800,000; ₱40,000; ₱30,000
c. ₱192,500; ₱77,000; ₱30,000
d.₱100,000; ₱50,000; ₱60,000

13. Voltaire and Asuncion are partners having capital balances of 150,000 and
180,000, respectively and sharing profits and losses equally. They admit
Leonor to a one-third interest in partnership capital and profits for an
investment of 195,000. If the asset revaluation method is used in recording the
admission of Leonor to the partnership

a. Leonor capital will be 175,000

b. Total capital will be 525,000

c. Asuncion capital will be 210,000

d. Asset revaluation will be recorded at 45,000

14. Using the information in #13 and assuming that the bonus approach is use
in recording the admission of Leonor to the partnership

Leonor capital will be 195,000

Total capital will be 585,000

Asuncion capital will be 210,000

Voltaire will receive a bonus of 10,000

15. The partnership agreement of RR and SS provides that interest at 10% per year is to be credited to
each partner on basis of average capital balances. A summary of the capital account of SS for the year
ended December 31, 2018, is as follows:

Balance, January 1 P 420,000

Additional investment, July 1 120,000

Withdrawal, August 1 45,000

Balance, December 31 495,000

What amount of interest should be credited to SS's capital account for 2018?

a. 45,750 c. 46,125

b. 49,500 d. 51,750

16. AA, BB and CC are partners with average capital balances during 2018 of 360,000 to AA, 180,000 to
BB, and 120,000 to CC. Partners receive 10% interest on their average capital balances. After deducting
salaries of 90,000 to AA and 60,000 to CC the residual profit or loss is divided equally. In 2018 the
partnership have a 99,000 loss before interest and salaries to partners. By what amount should AA's
capital account change?

a. 21,000 increase c. 105,000 decrease

b. 33,000 decrease d. 126,000 increase

17. On January 1, 2018, A, B, C, and D formed Bakya Trading Co., a partnership with a capital
contributions as follow: A, 50,000; B, 25,00; C, 25,000; and D, 20,000. The partnership contract provided
that each partner shall receive a 5% interest on contributed capital, and that A and B shall receive
salaries of 15,000 and 3,000 respectively. The contract also provided that C shall receive a minimum of
2,500 per annum, and D a minimum of 6,000 per annum, which is inclusive of amounts representing
interest and share of remaining profits. The balance of profits shall be distributed to A,B,C, and D in a
3:3:2:2 ratio.

What amount must be earned by the partnership, before any charge for interest and salaries, so that A
may receive an aggregate of 12,500 including interest, salary and share of profits?

a. 16,667 c. 30,667

b. 30,000 d. 32,333

18. Legarda, Madrigal and Sotto are partners sharing profits on a 5:3:2 ratio. On
January 1, 2012, Pimentel was admitted into partnership with a 20% share in
the profits. The old partners continue to participate in profits proportionate to
their original ratios.
For the year 2012, the partnership books showed a net profit of ₱25,000. It was
disclosed, however, that the following errors were made.

2011 2012

Accrued expenses not recorded at year-end ₱2,500

Inventory overstated ₱1,000

Purchases not recorded, for which goods have 3,500

been received and inventoried

Income received in advance not adjusted 1,800

Unused supplies not taken up at year-end 600

The new profit and loss ratio of Legarda, Madrigal, Sotto and Pimentel,
respectively, for 2011 is

a. 40%, 25%, 15%, and 20%

b. 50%, 20%, 10% and 20%
c. 45%, 30%, 15% and 20%
d. 40%, 24%, 16% and 20%

19. With income tax rate at 30% the share of Legarda in the 2012 corrected net
profit is
a. ₱ 10,112
b. ₱ 9,580
c. ₱ 9,610
d. ₱ 10,000

20. Ordan, Quizon and Dizon are partners with capital balances of 224,000,
260,000 and 116,000 respectively, sharing profits and losses in the ratio of
3:2:1. Sison is admitted as a new partner bringing with him expertise and
reputation. He is to invest cash for a 25% interest in the assets of the
partnership which includes a credit of 37,500 for bonus upon his admission.
How much cash should Sison contribute?
a. 130,000

b. 150,000

c. 185,000

d. 200,000