PARCOR

1. Partners A and B have a profit and loss agreement with the following provisions: salaries of
P30,000and P45,000 for A and B, respectively; a bonus to A of 10% of net income after salaries
and bonus; and interest of 10% on of P20,000 and P35,000 for A and B, respectively. One-third
of any remaining profits are allocated to A and the balance to B. If the partnership had net
income of P53,000, how much should be allocated to partner A?
a. 18250
b. 22833
c. 21833
d. None
2. Mark and Jeff form a partnership. Mark contributes into the partnership personal equipment
that he used at home in business-related activities. He paid P10,000 for the equipment two
years ago. Mark claimed P1,250 depreciation expense each year on his personal tax return. Its
replacement cost (and fair market value) is P9,000. The partners, after reviewing BIR rules,
assigned the equipment a remaining life of six years. For financial reporting purposes, at what
amount should the equipment be recorded in the partnership's general ledger?
a. 6750
b. 9000
c. 7500
d. 10000
3. Max, Alfred and Waters shared profits and losses 20%, 40%, and 40% respectively and their
partnership capital balance is P10,000, P30,000 and P50,000 respectively. Max has decided to
withdraw from the partnership. An appraisal of the business and its property estimates the fair
value to be P 200,000. Land with a book value of P30,000 has a fair value of P45,000. Max has
agreed to receive P20,000 in exchange for her partnership interest. What amount should land
be recorded on the partnership books?
a. 20,000
b. 30,000
c. 45000
d. 50000
4. James, Aljohn, and Jane formed a partnership on January 1, 2013, with investments of P100,000,
P150,000, and P200,000, respectively. For division of income, they agreed to (1) interest of 10%
of the beginning capital balance each year, (2) annual compensation of P10,000 to Aljohn, and
(3) sharing the remainder of the income or loss in a ratio of 20% for James, and 40% each for
Aljohn and Jane. Net income was P150,000 in 2013 and P180,000 in 2014. Each partner
withdrew P1,000 for personal use every month during 2013 and 2014.

What was James's share of income for 2013?

a. 29K
b. 53K
c. 58K
d. 63K
 5. At the beginning of the current year, Sol Company declared a 10% stock dividend. The market
price of the entity’s 30,000 outstanding shares of 20par value was 90 per share on that date.
The stock dividend was distributed on July 1 when the market price was 100. What amount
should be credited to share premium?
a. 210K
b. 240K
c. 270K
d. 300K

10% x 30,000 = 3,000 x 90 = 270,000

3,000 x 20 = (60,000)

210,000

6. Rudd Company had 700K ordinary shares authorized and 300K shares outstanding on January 1,
2016
 Jan 31 – Declared 10% stock dividend
 June 30 – Purchased 100K shares
 Aug 1 – Reissued 50K shares
 Nov 30 – Declared 2-for-1 share split

On December 31, 2016, how many shares are outstanding?

a. 560K
b. 600K
c. 630K
d. 660K

300K + 30K (stock dividend) – 50K (TS) x 2 = 560K

7. Lime Company received a donation of 2K shares with 50 par value from a shareholder. On that
date, the share market value was 350. The shares were originally issued for 250 per share. What
is the decrease in shareholders’ equity as a result of the donation?
a. 700K
b. 500K
c. 200K
d. 0
8. Mara Company reported the following:
 Authorized Share Capital 5,000,000
 Unissued Share Capital 2,000,000
 Share Premium 500,000
 Retained Earnings appropriated 600,000
 Retained Earnings unappropriated 300,000
 Treasury Shares (at cost) 100,000
What is the total SHE?

a. 7,700,000
b. 8,500,000
c. 8,300,000
d. 4,300,000

5M – 2M + 500K + 600K + 300K – 100K = 4.3M

9. Arzadon, Ballada, and Castro are partners. Their contributions are as follows: Arzadon, 600K;
Ballada, 400K; and Castro, services. They agreed to divide profits and losses in the ratio of
35:25:40. How should a profit of 100K be shared by the partners?
a. A- 30K; B- 20K; C- 50K
b. A- 35K; B- 25K; C- 40K
c. A- 35K; B- 35K; C- 30K
d. A- 60K; B- 40K; C- none

10. Jose, Maria, and Jenny are in the process of liquidating their partnership. Jenny has agreed to
accept the inventory, which has a fair value of P60,000, as part of her settlement. A balance
sheet and the residual profit and loss sharing percentages are as follows:

Cash 198,000 Accounts payable 149,000

Inventory 80,000 Jose, capital (40%) 79,000

Plant assets 230,000 Maria, capital (40%) 140,000

Jenny, capital (20%) 140,000

Total assets 508,000 Total liab./equity 508,000

If the partners then distribute the available cash, Jenny will receive

a. 23,000
b. 34,000
c. 30,000
d. 29,000
 11. XX, YY and ZZ are partners who share profits and losses in the ratio of 5:3:2, respectively. They
agree to sell a 25% of their respective capital and profits and losses ratio for a toal payment
directly to the partners in the amount og P140,000. They agree that goodwill of P60,000 is to be
recorded prior to admission of AA. The condensed balance sheet of the XYZ partnership is as
follows:
Cash 60,000 Liabilities 100,000

Non cash assets 540,000 XX, capital 250,000

YY, capital 150,000

ZZ, capital 100,000

Total 600,000 Total 600,000

The capital of XX, YY and ZZ respectively after the payment and admission of AA are:

a. 280,000, 168,000 and 112,000

b. 250,000, 150,000 and 100,000
c. 187,500,112,500 and 75,000
d. 210,000, 126,000 and 84,000
 12. On June 30, 2006, the Garry, Michi, and George partnership had the following fiscal year-end
balance sheet:
Cash 4,000 Accounts payable 7,000

Accounts receivable 6,000 Loan from Michi 5,000

Inventory 14,000 Garry, capital(20%) 14,000

Plant assets-net 12,000 Michi, capital(30%) 10,000

Loan to Garry 6,000 George, capital(50%) 6,000

Total assets 42,000 Total liab./equity 42,000

The percentages shown are the residual profit and loss sharing ratios. The partners dissolved the
partnership on July 1, 2006,. and began the liquidation process. During July the following events
occurred:

A Receivables of P3,000 were collected.

B The inventory was sold for P4,000.

C All available cash was distributed on

D July 31, except for P2,000 that was set aside for contingent expenses.

How much cash would George receive from the cash that is available for distribution on July 31?

a. 1,000
b. 2,000
c. 600
d. 0
 13. The partnership of AA, BB and CC was dissolved on June 30, 2010 and account balances after
non cash assets were converted into cash on September 1, 2010 are:
Assets Liabilities

Cash 50,000 Accounts payable 120,000

AA, capital (30%) 90,000

BB, capital (30%) (60,000)

CC, capital (40%) (100,000)

Personal assets and liabilities of the partners at September 1, 2010 are:

Personal assets Personal liabilities

AA 80,000 90,000

BB 100,000 61,000

CC 192,000 80,000
If CC contributes P70,000 to the partnership to provide cash to pay the creditors, what amount of AA’s
P90,000 would appear would appear to be recoverable?

a. 81,000
b. 79,000
c. 90,000
d. None

14. Presented below is the condensed balance sheet of the partnership of KK, LL and MM who share
profits and losses in the ratio of 6:3:1, respectively:
Cash 85,000 Liabilities 80,000

Other assets 415,000 KK, capital 252,000

LL, capital 126,000

MM, capital 42,000

Total 500,000 Total 500,000

The partnership agree to sell NN 20% of their respective capital and profit and loss interest for a total
payment of P90,000. The payment by NN is to be made directly to the individual partners. The capital
balances of KK, LL and MM respectively after admission of NN are:

a. 216,000, 108,000, 36,000

b. 255,600, 127,800, 42,600
c. 198,000, 99,000, 33,000
d. 201,600, 100,800, 33,600
 15. On August 1, AA and BB pooled their assets to form a partnership, with the firm to take over
their business assets and assume the liabilities. Partners capitals are to based on net assets
transferred after the following adjustments. Profit & loss are allocated equally.
BB’s inventory is to be increased by P4,000, an allowance for doubtful account of P1,000 and
P1,500 are to be set up in books of AA and BB, respectively; and accounts payable of P4,000 is to
be recognized in AA’s books. The individual trial balances on August , before adjustments,
follow:
AA BB

Assets 75,000 113,000

Liabilities 5,000 34,500

What is the capital of AA and BB after the above adjustments?

a. AA (75,000); BB (81,000)
b. AA (65,000); BB (81,000)
c. AA (68,750); BB (77,250)
d. AA (65,000); BB (76,000)

16. On June 30, 2006, the Garry, Michi, and George partnership had the following fiscal year-end
balance sheet:
Cash 4,000 Accounts payable 7,000
Accounts receivable 6,000 Loan from Michi 5,000

Inventory 14,000 Garry, capital(20%) 14,000

Plant assets-net 12,000 Michi, capital(30%) 10,000

Loan to Garry 6,000 George, capital(50%) 6,000

Total assets 42,000 Total liab./equity 42,000

The percentages shown are the residual profit and loss sharing ratios. The partners dissolved the
partnership on July 1, 2006,. and began the liquidation process. During July the following events
occurred:

a Receivables of P3,000 were collected.

b The inventory was sold for P4,000.

c All available cash was distributed on

d July 31, except for P2,000 that was set aside for contingent expenses.

The cash available for distribution to the partners on July 31, 2006 is

a. 4,000
b. 2,000
c. 7,000
d. 11,000

17. Michael, Gabriel, and Raphael are partners sharing profits on a 5:3:2 ratio. On January 1, 2014,
Joshua was admitted into the partnership with a 20% share in profits. The old partners continue
to participate in profits in their original ratios.
For the year 2014, the partnership book showed a net income of P25,000. It was disclosed,
however, that the following errors were committed:
2013 2014

Accrued expenses not recorded at year-end 1,200

 Inventory overstated 3,100

Purchases not recorded, for which goods have been received 2,000
inventories

Income received in advance not adjusted 1,500

Unused supplies not taken up at year-end 900

The share of partners Michael in the 2014 corrected net income is:

a. 11,750
b. 10,000
c. 12,500
d. 9,400

18. NN, OO, PP and GG, partners to a law firm, shares profits at the ratio of 5:3:1:1. On June 30,
relevant partners’ accounts follow:
Advances (DR) Loans (CR) Capital (CR)

NN - 20,000 160,000

OO - 40,000 120,000

PP 18,000 - 60,000

GG 10,000 - 100,000

On this day, cash of P72,000 is declared as available for distribution to partners as profits. Who among
the partners will benefit from the P72,000 cash distribution?

a. OO and GG
b. NN and OO
c. PP and GG
d. All equally
19. PP, QQ and RR, partners to a firm, have capital balances of P11,200, P13,000 and
P5,800, respectively, and share profits in the ratio of 4:2:1. Prepare a schedule showing
how available cash will be given to the partners as it becomes available. Who among the
partners shall be paid first with an available cash of P1,400?
a. PP
b. QQ
c. RR
d. No one

20. A partner has a capital balance of 400,000 from Jan 1 – May 31, 500,000 from June 1 – Sept 30,
and 600,00 ‘til the end of December. The average capital balance is?
a. 483,333
 b. 485,000
c. 491,600
d. 500,000

(400K x 5/12) + (500K x 4/12) + (600K x 3/12) = 483,333

21. If a partnership has a profit of 44K and Partner Garcesa is to be allocated a bonus of 10% of
profit after bonus. His bonus would be?
a. 3,600
b. 4,400
c. 4,000
d. 0

44K / 110% x 10% = 4K

22. A 1:3:2 ratio is the same as

a. 10%;30%;20%
b. 1/10;3/10;2/10
c. 20%;50%30%
d. 1/5;3/5;2/5
23. Digao Corp. declared the regularly quarterly dividends of P2 per share. Digao issued 12K shares
and subsequently reacquired 2K shares. What is the amount of dividends?
a. 24K
b. 20K
c. 28K
d. 4K

12K – 2K x 2 = 20K

24. If Win Corporation has 80K ordinary shares authorized, 30K unissued ordinary shares, and holds
4K as treasury shares. What is the total number of shares outstanding?
a. 46,000
b. 26,000
c. 34,000
d. 30,000

80K – 30K – 4K = 46K

25. The partnership agreement of Flynn, Gant, and Hill allows Gant a bonus of 10% of income after
the bonus, salaries of P30,000 per partner and interest of 6% on average capital balances of
P120,000, P150,000, and P180,000 for Flynn, Gant, and Hill, respectively. The amount of Gant’s
bonus, assuming income before bonus, salaries, and interest of P315,000, is
a. 18K
b. 31.5K
c. 19.8K
d. 22K
26. Candice is trying to decide whether to accept a salary of P60,000 or a salary of P25,000 plus a
bonus of 20% of net income after the bonus as a means of allocating profit among the partners.
 What amount of income would be necessary so that Candice would consider the choices to be
equal?
a. 35K
b. 85K
c. 145K
d. 210K
27. Steve and Robby are partners operating an electronics repair shop. For 2014, net income was
P50,000. Steve and Robby have salary allowances of P90,000 and P60,000, respectively, and
remaining profits and losses are shared 4:6.
How much would Robby get
a. 20K
b. 30K
c. 25K
d. 0
28. A, B, and C decide to dissolve their partnership on May 31, 2013. On this date their capital
balances and profit percent were as follows:

A P150,000 40%

B P180,000 30%

C P60,000 30%

The net income from Jan. 1 to May 31, 2013 was P132,000. Also on May 31, 2013, the partnership cash
and liabilities, respectively, were P120,000 and P270,000. For A to receive P165,600 in full settlement of
his interest in the partnership., how much must be realized from the sale of the partnership's non cash
assets from the division of profits?

a. 579,000
b. 633,000
c. 243,000
d. 189,000

29. Partners Able, Joshua, and Diane have the following personal assets,
personal liabilities, and partnership capital balances:

Able Joshua Diane

Personal assets 30,000 80,000 60,000

Personal liabilities 25,000 50,000 72,000

Capital balances 50,000 (32,000) 70,000

Assume profits and losses are allocated equally. After applying the doctrine of marshaling of assets, the
capital balances for Able is
 a. 48K
b. 49K
c. 34K
d. 50K
30. The partnership contract for Josh and Alfred LLP provides that Josh is to receive a bonus of 20%
of net income (after the bonus) and that the remaining net income is to be divided equally. If
the partnership income before the bonus for the year is P57,600, Josh’ share of this pre-bonus
income is:
a. 34,560
b. 43,200
c. 28,800
d. 33,600

Bonus = .20(NI-Bonus) = .20NI – .20Bonus