TRUE or FALSE

1. Salary and Interest Allowances in a partnership
agreement do not affect the measurement of total
partnership income.
2. Partnership drawings are withdrawals of the partners
that are closed to the capital accounts at the end of
the period.
9. It is illegal for a partnership to pay a partner’s personal
expenses out of partnership assets.
10. When an incoming partner purchases a partnership
interest by making a payment directly to the current
partner, no entry will be needed on the partnership
books.

3. When non-cash property is contributed to a
partnership, it is recorded in the books of the
partnership at its fair market value.
4. All property brought into the partnership or acquired
by the partnership is partnership property.
5. If an asset is contributed to the partnership subject to
the liability, the amount credited to the contributing
partner’s capital account is still equal to the full fair
market value of the asset.
6. It is possible to admit a new partner into the
partnership without said partner investing any assets
into the partnership.
7. If salary and interest allocation methods are being
used to allocate partnership profits, such methods
would not be applied in accounting periods when there
is a partnership loss.
8. All dissolutions are liquidations but not all liquidations
are dissolutions.
11. A partnership interest is considered a personal asset of
the partner and may be sold or gifted or conveyed to
others in any manner that is legal and acceptable to
the other partners.
12. Drawing accounts are debited for partners’ withdrawal
in anticipation of profits and for the partners’ personal
expenses paid by the partnership.
13. The amount of partnership profits and losses that are
allocated to the partners using salary and interest
allocation procedures also produce deductions to the
partnership for salary and interest expense.
14. It is highly unusual to find profit and loss sharing
agreements that would include salary allocations, and
bonus payments all in the same agreement.
15. If Partner A invested twice as much as Partner B, and
there are only two partners, the income must be
divided in a ratio of 2:1, respectively.

PARTNERSHIP FORMATION
3. Prepare the journal entry in the partnership books for
Xerox, Yves, and Zeus formed the XYZ Partnership on June the above assumption.
1, 2020, with the following assets and liabilities, measured
at book values in their respective records, contributed by 4. What is the capital balance for each partner at June 1,
each partner: instead, if the interest ratio is agreed at 4:3:3 to
Xerox, Yves. and Zeus, respectively?
Xerox Yves Zeus
5. Prepare the journal entry for the revised assumption.
Cash P160,000 P120,000 P120,000
Accounts 6. Explain why Partner Braulio was unaffected by the
receivable 28,180 30,800 55,120 bonus feature in the ownership agreement among the
Inventory 108,000 95,400 53,600 partners.

Plant, Property, &

Equipment (PPE) 360,000 288,000 304,000 MULTIPLE CHOICE.
Accounts payable (32,000) (40,000) 48,000
Long-term debt ( 80,000) (96,000) 104,000 Amer and Balgan have just formed a partnership. Amer
Net assets P544,180 P398,200 P380,720 contributed cash of P736,000 and office equipment that
costs P337,600. The equipment had been used in his sole
Except for the plant assets and the long term debts, the proprietorship and had been 70% depreciated. The current
partners have agreed that the proprietorship net assets value of the equipment is P236,000. Amer also contributed
are fairly valued. a note payable of P69,600 to be assumed by the
partnership. The partners agreed on a profit and loss ratio
The agreed fair valuation of net asset items where the of 50% each. Amer is to have a 70% interest in the
book value is not the fair value follows: partnership. Justine contributed only the merchandise
inventory from her sole proprietorship carried at P440,000
Xerox Yves Zeus on a first-in- first-out basis. The current fair value of the
PPE P404,000 P277,920 P260,100 merchandise is P420,000.
Long-term-debt 92,000 100,000 120.720 1. To consummate the formation of the partnership Amer
should make additional cash investment or
1. How much is the contribution of each partner? (withdrawal) of:
Calculate their contribution ratio. a. P179,200
b. P(24,000)
2. What is the capital balance for each partner at the c. P 77,600
opening of business on June 1 as per above d. P(64,000)
information?
EXCEL PROFESSIONAL SERVICES, INC.

In 2020, Sonia and Carla agreed to form a new MULTIPLE CHOICE

partnership under the following general agreements: CARA and JEREMY created a partnership to own and
(1) Partners’ CONTRIBUTIONS will be on a 5:4 ratio; (2) operate a health-food store. The partnership agreement
PROFIT & LOSS, 5:5, and (3) CAPITAL CREDITS, 6:4 provided that CARA receives an annual salary of P8,000
ratio, respectively to Sonia and Carla. Their respective and JEREMY a salary of P4,000 to recognize their relative
contributions will come from old proprietorships they time spent in operating the store. Remaining profits and
owned. losses were divided 60:40 to CARA and JEREMY,
respectively. Income of P10,400 for 2019, the first year of
Sonia contributed the following items and amounts: operations, was allocated P7,040 to CARA and P3,360 to
Cash P599,040 JEREMY. On January 1, 2020, the partnership agreement
Equipment (at book value per her was changed to reflect the fact that JEREMY could no
proprietorship records) 409,600 longer devote any time to the store’s operations. The new
agreement allows CARA a salary of P14,400, and the
Carla contributed the following items at their carrying remaining profits and losses are divided equally. In 2020
amounts in the proprietorship records: an error was discovered such that the 2019 reported
Accounts receivable 76,800 income was understated by P3.200. The partnership
Inventory 215,040 income of P20,000 for 2020 included this P3,200 related to
Furniture and fixtures 411,648 2019.
Intangibles 176,640 1. In the reported net income of P20,000 for the year
2020, CARA would have
All the non-cash contributions are not properly valued. The a. P17,520
two partners have agreed that (a) P6,144 of the accounts b. P0
receivable are uncollectible; (b) the inventories are c. P13,680
overstated by P15,360; (c) the furniture and fixtures are d. P10,000
understated by P9,216; and the intangibles include a
patent with a carrying value of P10,752, which must now DERHA, a senior partner in a law firm, has a 30%
be derecognized upon a court order. The rest of the participation in the firm’s profit and losses. During 2020,
intangible items are fairly valued. DERHA withdrew P104,000 against her capital but
contributed property with a fair value of P20,000. DERHA’s
2. How much is the total depreciable fixed asset recorded capital increased by P12,000 during 2020.
by the partnership? 2. The net income of the partnership for 2020 is
a. P 848,640 c. P 893,184 a. P120,000
b. P 322,560 d. P 833,184 b. P320,000
c. P280,000
3. What is the capital balance of Carla after the d. P440,000
formation of the partnership?
a. P 717,937 c. P 737,179 ERROL FLOR, and GAB invest P32,000, P24,000 and
b. P 797,173 d. P 771,379 P20,000 respectively, in a partnership on June 30, 2020.
They agree to divide net income or loss as follows:
a. Interest at 10% on beginning capital account
PARTNERSHIP OPERATIONS balances
On January 1, 2020, Chris and Nikki formed a partnership b. Salaries of P8,000, P6,400 and P4,800, respectively
by initially contributing cash of P 280,000 and P176,000, to ERROL, FLOR, and GAB, respectively.
respectively. The changes in their capital balances during c. Remaining net income or loss is divided equally
2020 are summarized as follows: d. A minimum of P14,400 of income is guaranteed to
GAB regardless of the results of operation.
CHRIS NIKKI
Balances, January 1 P280,000 P 176,000 3. If the net income for the year ended June 30,2020
Investment, April 1 25,600 before interest and salary allowances to partners was
Withdrawal July, 1 (40,000) P35,200, the amount of the net income credited to
Investment, September 1 74,400 ERROL is:
Withdrawal, October 1 (3,200) a. P17,500
Investment, December 31 6,400 b. P16,000
Balances, December 31 P 302,400 P 216,800 c. P14,667.20
d. P11,600
The partnership reported a net income of P324,960 in
2020 and the profit and loss agreement are as follows: Abner, Blanche and Donna are partners with average
a. Interest at 5% is allowed on average capital capital balances during 2020 of P96,000, P48,000, and
balances; P32,000, respectively. Partners receive 10% interest on
b. Salaries of P2,000 per month to each partner; their average capital balances. After deducting salaries of
c. Bonus to Chris of 10% of net income after interest, P24,000 to X and P16,000 to Y, the residual profit or loss
salaries, and bonus; and is divided equally. In 2020 the partnership sustained a
d. Balance to be divided in the ratio of 6:4 to Chris and P26,400 loss before interest and salaries to partners.
Nikki, respectively. 4. By what amount should X’s capital account change?
a. P5,600 increase c. P 8,800 decrease
Both partners withdrew one-fourth of their salary b. P28,000 decrease d. P33,600 increase
allowances in 2020.
Partners JOYCE and MARIE share profits 3:1 after annual
Required: salary allowances of P3,200 and P4,800 respectively;
1. Prepare a schedule for the division of net profit for however, if profits are not adequate to meet the salary
2020 with supporting computations when appropriate. allowances, the entire profit is to be divided in the salary
2. Prepare a statement of the partners’ capital balances ratio. Profits of P7,200 were reported for the year 2019. In
for 2020. 2020, it is ascertained that in calculating net income for
the year ended December 31, 2019, depreciation was
EXCEL PROFESSIONAL SERVICES, INC.

overstated by P2,880 and the ending inventory was 2. Assume Tina is admitted by investing the P80,000 into
understated by P640. the partnership for a 40% interest, how much is the
5. The amount of the net adjustments in the books of ending capital balance of Opel after admission and the
JOYCE and MARIE are: bonus (given)/received to/from Tina?
JOYCE MARIE a. P55,000; (P 5,000)
a. P(2,959) P(14,505) b. P63,250.40; (P10,500)
b. P 2,360 P 1,160 c. P71,250.40; P 4,250.40
c. P 6,550 P 6,850 d. P47,300; (P 6,200)
d. P 1,840 P 2,780
Albert, Berto, Carlo, and Dindo have become partners in
the ABCD Partnership under the following circumstances:
PARTNERSHIP DISSOLUTION
A. ADMISSION OF A NEW PARTNER On August 1, 2020 Partners Albert and Berto had the
Elmo and Lito are partners sharing profits and losses in following ownership balances in the AB Partnership:
the ratio of 60% and 40%, respectively. The partnership ALBERT BERTO
balance sheet at April 30, 2020 follows: Capital P250,000 P200,000
Loan (30,000) 10,000
Cash P 40,000 Accounts Payable P 90,800 Total P220,000 P210,000
Inventory 60,000 Elmo, Loan 4,400 In the morning of this date, Carlo was admitted as a
Land 64,000 Elmo, capital 380,000 partner with an investment of P150,000 for 20% interest
Buildings 404,000 Lito, capital 104,800 in capital and in profits or losses.
Lito, Loan 12,000
Total P 580,000 Total P580,000 In the afternoon of the same day, over snacks, Dindo
learned about the nature and objectives of the ABC
The partners agreed to admit Romy for a one-tenth Partnership and insisted that he became a partner and was
interest for a P56,000 consideration. At the time of willing to contribute P120,000 under acceptable terms
admission, the fair market value of the land is appraised at determined by the old partners.
P144,000 and the market value of the inventory is
P120,000. The old partners, in a caucus, have agreed to allocate 15%
of existing total capital, as well as 15% of profits or losses
1. Assume Romy is admitted by purchase of each of the to Dindo. Over dinner, Dindo accepted the admission
original partners’ interest and paid the partners : arrangement without any change. On the other hand, the
A. Prepare the journal entries on the revaluation of old partners will each transfer 15% of their respective
assets and the admission of Romy interest to Dindo. Under the old AB Partnership, profit or
B. Calculate the capital balances of the partners after loss was 60% and 40% to Albert and Berto, respectively.
the admission of Romy.
C. Calculate the amounts received by Elmo and by 3. Determine the capital balance of Carlo upon his
Lito for their respective partnership interest admission to the AB Partnership on August 1.
transferred to Romy a. P116,000 c. P120,000
D. Explain why no amount of bonus was recognized
b.P122,000 d. P118,000
despite the difference between Romy’s investment
and his acquired partnership interest.
4. Determine the capital balance of Blanche under the
2. Now assume Romy is admitted by investing the ABCD Partnership in the late evening of August 1, 2020.
P56,000 to the partnership for a 10% interest a. P 27,800 c. P108,000
b.P180,200 d. P 90,000
A. Calculate the partners’ capital balances after the
admission of Romy. The following are the capital balances of ABC Partnership
B. Prepare the journal entry for the admission of
at August 30, 2020:
Romy.
Alfie (40% P&L) P 176,000
MULTIPLE CHOICE Bar (40% P&L) 128,000
Carl (20% P&L) 88,000
The capital accounts of the Sarah and Opel partnership on Dick invests P216,000 in cash for a 30% partnership
January 1, 2020, were: interest. The payment goes to the original partners.
Sarah, capital (75% profit percentage) P 112,000 Revaluation in asset is to be recognized upon Dick’s
Opel, capital (25% profit percentage) 48,000
admission.
Total capital P 160,000
5. How much adjustment in net assets is to be recorded
On October 1, Tina was admitted for a 40 percent interest and what is the new partner’s beginning capital?
in the partnership when she purchased 40 percent of each a. P328,000 & P216,000 c. P112,000 & P151,200
existing partner’s capital for P80,000, paid directly to b. P112,000 & P216,000 d. P 328,000 & P151,200
Sarah and Opel. The partnership’s net income for the year
is P66,000 and 2/3 of it was earned in the last quarter of
The following is the condensed balance sheet of G & N
the year.
1. What are the capital balances of Sarah, Opel and Tina partnership at August 30, 2020, at which date Ella is to be
after Tina’s admission to the partnership? admitted with a 30% interest in capital and in profits for
a. P 84,000; P36,000; P 80,000 an investment of P44,000.
b. P108,700; P44,250.40; P102,000 Book Value Fair Value
c. P 77,100; P32,100; P 72,800 Cash P 16,000 P 16,000
d. P 90,000; P 40,000; P 70,000 Other assets 402,400 333,600
Current liabilities (43,200) (43,200)
Non current liabilities (215,200) (220,000)
EXCEL PROFESSIONAL SERVICES, INC.

Greg, capital ( 96,000) 2. Determine the capital balances of A and B, respectively, as

Nick, capital ( 64,000) of December 31, 2019.
a. P 94,000 & P194,000 c. P 194,000 & P115,000
Greg and Nick share profits and losses 60% and 40%,
b. P 115,000 & P215,000 d. P 165,000 & P215,000
respectively.
6. What will be the capital balances of Greg and Nick after 3. Determine the capital balances of A, B, and D, respectively
Ella’s admission? on December 31, 2020.
a. P54,768 and P36,512 c. P36,512 and P54,768 a. P 98,500, P 75,720 & P 113,840
b. P 93,640, P 70,820 & P 109,640
b. P39,120 and P52,512 d. P51,888 and P39,392 c. P100,990.40 78,170.40 & P 120,140
d. P104,000, P204,000 & P 203,000

B. RETIREMENT OF A PARTNER On June 30, 2020, the balance sheet for the partnership of
D, E and F, together with their respective profit and loss
The following balances as at October 31, 2020 for the ratios, is summarized as follows:
Partnership of Tony, Liza, and Cory were as follows: Assets, at cost P300,000 D, loan P 15,000
Cash P 66,000 Liabilities P 65,000 D, capital (20%) 70,000
Liza, Loan 19,000 Tony, loan 20,500 E, capital (20%) 65,000
Other Assets 500,000 Tony, capital 167,000 F, capital (60%) 150,000
Liza, capital 107,500 P300,000
Cory, capital 225,000 D has decided to retire from the partnership, and by
Totals P585,000 Totals P585,000 mutual agreement the assets are to be adjusted to their
fair value of P360,000 at June 30, 2020. It is agreed that
Tony has decided to retire from the partnership on October the partnership will pay D P102,000 cash for his
31. Partners agreed to adjust the non-cash assets to their partnership interest exclusive of his loan, which is to be
fair market value of P620,000. The estimated profit to repaid in full.
October 31 is P120 ,000. Tony will be paid P252,500 for 4. After D’s retirement, what are the capital account
his partnership interest exclusive of his loan which is balances of partners E and F, respectively?
repaid in full. Their profit and loss ratio is 4:2:4 to Tony, a. P65,000 and P150,000 c. P 97,000 and P246,000
Liza and Cory, respectively. b. P72,000 and P171,000 d. P 77,000 and P186,000
1. Prepare entries for the retirement of Tony from the
partnership. B. INCORPORATION
2. What will be the balance of Liza’s capital account after Partners Boba and Tess, who share profits and losses equally,
the retirement of Tony? have decided to incorporate the partnership at December 31,
2020. The partnership net assets after the following
adjustments will be contributed in exchange for shares of
stocks from the corporation.
MULTIPLE CHOICE i. provision of allowance for doubtful accounts, P6,250.
ii. adjustment of overstated equipment by 2,500
The balance sheet at December 31, 2020, for the Beth, Daisy, iii. adjustment of understated inventory by P20,000 and
and Maya partnership is summarized as follows: iv. recognition of additional depreciation of P5,000.

Assets P 800,,000 Liabilities P200,000 The corporation’s ordinary shares is to have a par value of
Loan to Daisy 100,000 Beth capital (50%) 300,000 P312.50 each and the partners are to be issued corresponding
Daisy capital (40%) 300,000 shares equivalent to 70% of their adjusted capital balances.
Maya capital (10% 100,000 The partnership balance sheet at December 31, 2020
P 900,000 P900,000 follows:
Daisy is retiring from the partnership. The partners agree that Cash P 112,500 Liabilities P 107,500
partnership assets, excluding Daisy’s loan, should be adjusted Accts rec 62,500 Acc. Dep 5,000
to their fair value of P1,000,000 and that Daisy should receive Inventory 87,500 Boba, cap. 106,250
P304,000 for her capital balance net of the P100,000 loan. Equipment 50,000 Tess, cap. 93,750
1. How much are the capital balances of Beth and Maya Total P 312,500 Total P 312,500
immediately after Daisy’s retirement. 1. Determine the total credit to APIC upon incorporation of
a. P380,000; P116,000 the partnership
b. P400,000; P120,000 a. P 61,875 c. P 60,000
c. P385,000 P117,000 b. P 144,375 d. P 140,000
d. P308,333 P101,667
2. The number of ordinary shares issued to Partner Tess is
a. 210 c. 238
A, B, and C formed a partnership on January 2, 2019 with the b. 245 d. 217
following contributions:
A P100,000
Lexy and ACE partnership’s balance sheet at December 31,
B 200,000
2019 reported the following balances.
C 300,000
The partners agreed on a capital ratio of 1:2:3 upon formation Total assets P187,500
and P&L ratio of 3:3:4, respectively. The partnership reported Total liabilities 37,500
a net loss of P20,000 for 2019. Also, at the end of 2019, C has Lexy, capital 75,000
decided to withdraw from the firm and was paid P250,000 Ace, capital 75,000
from partnership cash.
On January 2, 2020, LEXY and ACE dissolved their
On April 1, 2020, D was admitted as a partner with an partnership and transferred all assets and liabilities to a
investment of P160,000. He is given a share in capital of newly formed corporation. At the date of incorporation, the
40%and in profits, 30% the old partners have agreed to retain fair value of the net assets was P22,500 more than the
their old ratio over the remaining profit and loss share of carrying amount on the partnership’s books. Of which
70%. The partnership reported a net profit of P21,000 for P12,500 was assigned to tangible assets and P10,000 was
2020, one-third of which is deemed earned as of the end of assigned to patent. LEXY and ACE were each issued 5,000
the year’s first quarter’s operation. shares of the corporation’s P12.50 par common stock.
EXCEL PROFESSIONAL SERVICES, INC.

3. Immediately following incorporation, additional paid-in b. P37,600; P18,400 d. P20,500; P20,500

capital in excess of par should be credited fo
3 a. P160,000 c. P 25,000 The accounts of the Partnership of R, S, and T at the end of its
b. P 47,500 d. P137,500 fiscal year on November 30, 2020 are as follows:
Cash P 106,240 Loan from S P 20,480
Other non-cash R, capital (30%) 272,640
PARTNERSHIP LIQUIDATION. assets 724,480
1. LUMP-SUM Loan to R 15,360 S, Capital (50%) 139,520
Liabilities 268,800 T, capital (20%) 144,640
DONNA, JANICE and ELLERY plan to liquidate their 3. If in the first cash distribution, S received P51,200, which
partnership. They have always shared losses and gains in a of the following statements is incorrect?
2:3:5 ratio, and on the day of the liquidation their balance a. Total amount distributed to partners is P344,320.
b. Total amount paid to creditors is P268,800.
sheet appeared as follows:
c. Total amount realized from the non-cash assets is
P613,120
DONNA, JANICE, and ELLERY
d. R received an amount equal to 192,000.
Balance Sheet
December 31, 2020
Assets Liabilities and Capital The partnership ABC is currently liquidating and on
Cash P68,750 Accounts payable P130,370 February 15, 2020, their balances in capital and their
ELLERY, loan 5,000 profit and loss (P&L) ratios are shown below:
Other assets 451,250 DONNA, Capital 76,250
JANICE, loan 50,000 JANICE, capital 250,880 Apple, capital (P&L 40%) P17,600
_______ ELLERY, capital 107,500 Bryan, capital (P&L 20%) 11,200
Total assets P570,000 Total equities P570,000 Cecile, capital (P&L 40%) ( 9,600)
Assume non-cash assets have been all disposed and Cecile
The other assets are sold for P212,500, and assume the has promised to pay his deficiency in a week’s time,
following information on partners’ net assets, exclusive of
their respective partnership interests at that point. 4, Calculate the amount to be received by one of the partners
if cash is paid immediately on February 15, 2020.
DONNA JANICE ELLERY a. Apple, P22,000 c. Bryan, P 8,000
Assets P687,500 P375,000 P 167,000 b. Bryan, P12,000 d. Apple, 12,000
Liabilities 562,500 350,000 161,875

Required: Prepare general journal entries to record the sale 2. BY INSTALLMENT

of the other assets and the distribution of the cash to the On December 31, 2020, the balance sheet of CDO Partnership
proper parties. Show supporting computations in good form. is as follows:
Assets Liabilities
Cash P 15,360 Account Payable P51,200
SlryPyble, Celia 10,240
Noncash assets 271,360 Dave, Loan 20,480
MULTIPLE CHOICE Loan to Oleg 10,240 Celia, Capital 38,912
Partners EDMAN, SALLY and ZARAH decided to liquidate their Dave, Capital 73,728
partnership on November 30, 2020. Their capital balances _______ Oleg, Capital 102,400
and profit and loss ratio are as follows: P296,960 P 296,960
Capitals P & L Ratio
Edman P 480,000 40% Profit and losses were shared as follows; Celia, 30%; Dave,
Sally 627,200 40% 30%; Oleg, 40%. It was decided to liquidate the business.
Zarah 192,000 20% The following is a summary of the realization and liquidation
activities.
The net income from January 1, 2020 to November 30, 2020 Book
is P524,800. On November 30, 2020, the cash balance is Value Cash Paid
P416,000, and that of liabilities is P928,000.. of Asset Cash Expense Liabiliti to
Realized Collected s es Partners
Edman is to receive P565,248 in the settlement of his interest. Paid Paid
1. Calculate: (1) The loss on realization, and (2) the amount 1st
to be realized from the sale of non-cash assets? Period 133,120 81,920 4,100 40,000 41,980
a. (1) P311,680; (2) P2,024,320 2nd
b. (1) 248,000; (2) 5,100,000 Period 76,800 51,200 4,800 11,200 40,000
c. (1) 620,000; (2) 3,860,000 3rd
d. (1) 552,000; (2) 3,860,000 Period 61,440 35,840 3,600 - 38,640
Total 271,360 168,960 12,500 51,200 120,620
The partnership of MIKEE and ROSA is in the process of
liquidation. On January 1, 2020, the ledger shows account Required:
balances as follows: 1. Prepare a statement of liquidation for each period.
Cash P 6,400 Accounts payable P 9,600 2. Prepare a program to show how cash is to be distributed
Accounts receivable 16,000 MIKEE capital 25,600 to partners.
Lumber inventory 25,600 ROSA capital 12,800
MULTIPLE CHOICE
The balance sheet for CHESTER, JOANA and JOHN
On January 10, 2020, the lumber inventory is sold for
Partnership, who share profits and losses in the ratio of
P16,000, and during January, accounts receivable of
50%, 25%, and 25%, respectively, shows the following
P13,440 are collected. No further collections on the
balances just before liquidation.
receivables are expected and the partners have incurred
Cash P 19,200
P2,560 of liquidation expenses. Profits are shared 60
Other assets 95,200
percent to Mikee and 40 percent to Rosa.
Liabilities 32,000
2. How much cash will partner Mikee and Rosa receive
Chester, capital 35,200
upon liquidation?
a. P18,304; P7,936 c. P20,960; P 8,640
Joana, capital 24,800
John, capital 22,400
EXCEL PROFESSIONAL SERVICES, INC.

On the first month of liquidation, certain assets are sold for

P51,200. Liquidation expenses of P1,600 are paid, and 4. Determine the amount payable to Partner A if cash is
additional liquidation expenses are anticipated. Liabilities paid just before the start of liquidation on December
are paid amounting to P8,640 and sufficient cash is 31, 2020.
retained to insure the payment to creditors before making a. P 22,628.80 c. P 28,285.60
payments to partners. On the first payment to partners, b. P 28,240 d. P 28,096
Chester receives P10,000.
1. Determine the amount of cash withheld for anticipated A condensed balance sheet with profit sharing percentages
liquidation expenses. for the E, F, and G partnership on January 1, 2020, shows
a. P35,200 c. P33,200 the following:
b. P29,200 d. P 4,800
Cash P 80,000 Liabilities P 64,000
The following balance sheet for the partnership of A, B, Other assets 400,000 E, capital (40%) 80,000
and C was taken from the books on December 31, 2020. F, capital (40%) 200,000
Assets Liabilities and Capital G, capital (20%) 136,000
Cash P 32,000 Liabilities P 80,000 P480,000 P480,000
Other Assets 288,000 A, Capital (40%) 59,200
B, Capital (40%) 104,000 On January 2, 2020, the partners decide to liquidate the
C, Capital (20%) 76,800 business, and during January they sell assets with a book
Total Assets P 320,000 Total Liab & Cap P 320,000 value of P240,000 for P136,000.

2. If the firm is dissolved and liquidates by installment,

the first sale of the other assets having book value of 5. How much cash will the partners receive if all available
P144,000 realized P64,000 and all cash available are cash, except for a P8,000 contingency fund, is
distributed, the amount to be received by A, B, and C distributed immediately after the sale.
respectively would be a. All partners will receive P60,000
b. Partners F and G will both receive P72,000
A B C
c. Partner F will receive P96,667 and partner G will
a. P 0 P18,000 P40,000
receive P93,333
b.P 0 P80,000 P20,000
d. Partner F will receive P190,000
c. P20,000 P 0 P 0
d.P 0 P 0 P16,000
Claudia, Petra, Mona, and Hilda are partners who share
3. If the firm is dissolved and liquidates and A receives a profits and losses at 40%, 30%, 20%, and 10%,
total of P2,400 in full settlement of his interest, then C respectively. Since two of them have given intention to
would have received a total of withdraw, they have decided to liquidate the partnership
a. P56,000 c. P 48,400 instead. At this point, the capital balances of the partners
b. P 31,000 d. P 59,000 are as follows:
Claudia P40,800
Petra 17,280
The accounts of the partnership of PBA at December 31, 2020 Mona 27,520
are as follows:
Hilda 13,600
Cash P 105,600 Liabilities P 80,000
6. Which of the following statement is true?
Non-cash assets 932,800 Loan from B 25,600
a. The first available P1,920 will go to Claudia..
Loan to P 19,200 P, capital 264,000
B, capital 468,800 b. Hilda will be the last to receive cash
A, capital 219,200 c. The first available P320 will go to Mona.
Total P1,057,600 Total P1,057,600 d. Petra will collect a portion of any available cash
before Hilda receives anything.
They divide profits and losses 3:5:2 to P, B, and A
respectively. They have decided to liquidate the
partnership at this date.