QUIZ:

1. The following is the condensed balance sheet of the partnership Jo, Li and Bi who share
profits and losses in the ratio of 4:3:3.

Cash P 180,000 Accounts, payable P 420,000

Other assets 1,660,000 Bi, Loan 60,000
Jo, receivable 40,000 Jo, Capital 620,000
Li, Capital 400,000
__ Bi, Capital 380,000
Total P 1,880,000 Total P1,880,000

Assume that the assets and liabilities are fairly valued on the balance Sheet and the partnership
decides to admit Mac as a new partner, with a 20% interest. No goodwill or bonus is to be
recorded. How much Mac should contribute in cash or other assets?
a. P 350,000
b. P 280,000
c. P 355,000
d. P 284,000

2. Fernando and Jose are partners with capital balances of P30,000 and P70,000, respectively.
Fernando has a 30% interest in profits and losses. All assets of the partnership are at fair
market value except equipment with book value of P300,000 and fair market value of
P320,000.

At this time, the partnership has decided to admit Rosa and Linda as new partners. Rosa
contributes cash of P55,000 for a 20% interest in capital and a 30% interest in profits and losses.
Linda contributes cash of P10,000 and an equipment with a fair market value of P50,000 for a
25% interest in capital and a 35% interest in profits and losses. Linda is also bringing special
expertise and clients contact into the new partnership. Using the bonus method, what is the
amount of bonus?
a. P24,750
b. 18,250
c. 14,000
d. 7,500

3. The capital accounts of the partnership of Nakpil, Ortiz, and Perez on June 1, 2005 are
presented below with their respective profit and loss ratios:

Nakpil P 139,200 1/2

Ortiz 208,800 1/3
Perez 96,000 1/6
P 444,000

On June 1, 2005, Quizon is admitted to the partnership when he purchased, for P 132,000, a
proportionate interest from Nakpil and Ortiz in the net assets and profits of the partnership. As a
result of a transaction, Quizon acquired a one-fifth interest in the net assets and profits of the
firm. Assuming that implied goodwill is not to be recorded, what is the combined gain realized
by Nakpil and Ortiz upon the sale of a portion of their interest in the partnership to Quizon?
a. P 0
b. P 43,200
c. P 62,400
d. P 82,000

4. In the AAA-BBB partnership, AAA and BBB had a capital ratio of 3:1 and a profit and loss
ratio of 2:1, respectively. The bonus method was used to record CCC’s admittance as a new
partner. What ratio would be used to allocate, to AAA and BBB, the excess of Colter’s
contribution over the amount credited to Colter’s capital account?
a. AAA and BBB’s new relative capital ratio
b. AAA and BBB’s new relative capital profit and loss ratio
c. AAA and BBB’s old capital ratio
d. AAA and BBB’s old profit and loss ratio

5. When Mill retired from the partnership of Mill, Yale, and Lear, the final settlement of Mill's
interest exceeded Mill's capital balance. Under the bonus method, the excess
a. Was recorded as goodwill.
b. Was recorded as an expense.
c. Reduced the capital balances of Yale and Lear.
d. Had no effect on the capital balances of Yale and Lear.

6. C, D and E are partners with capital balances on December 31, 20x1 of P300,000 and
P200,000 respectively. Profit are shared equally. E wishes to withdraw and it is agreed that
she is to take certain furniture and fixtures with second hand value of P50,000 and note for
the balance of her interest. The furniture and fixtures are carried in the books at P65,000.
Brand new, the furniture and fixtures may cost P80,000. E’s acquisition of the second-hand
furniture will result to:
a. Reduction in capital of P15,000 each for C and D.
b. Reduction in capital of P10,000 for E.
c. Reduction in capital of P5,000 each for C and D and E.
d. Reduction in capital of P7,500 each for C and D.

7. In May 1998, Imelda, a partner of an accounting firm decided to withdraw when the partners’
capital balances were: Mikee, P600,000; Raul, P600,000; Imelda, P400,000. It was agreed
that Imelda is to take the partnership’s fully depreciated computer with a second hand value
of P24,000 that cost the partnership P36,000.

If profits and losses are shared equally, what would be the capital balances of the remaining
partners after the retirement of Imelda?
Mikee Raul__
a. P600,000 P600,000
b. 592,000 592,000
c. 608,000 608,000
d. 612,000 612,000

8. On June 30, 1998, the balance sheet for the partnership of Coll, Maduro, and Prieto, together
with their respective profit and loss ratios, was as follows:

Assets, at cost P 180,000

Coll, loan P 9,000

Coll, capital (20%) 42,000
Maduro, capital (20%) 39,000
Prieto, capital (60%) 90,000
Total P 180,000

Coll decided to retire from the partnership. By mutual agreement, the assets are to be adjusted to
their fair value of P 216,000 at June 30, 1998. It was agreed that the partnership would pay Coll
P 61,200 cash for Coll’s partnership interest, including Coll’s loan which is to be repaid in full.
No goodwill is to be recorded. After Coll’s retirement, what is the balance of Maduro’s capital
account?
a. P 36,450
b. 39,000
c. 45,450
d. 46,200

9. On June 30, 2009, the balance sheets of the partnership of AAA, BBB and CCC, together
with their respective profit and loss ratios, were as follows:
Assets, at cost P 180,000

AAA, loan P 9,000

AAA, capital (20%) 42,000
BBB. Capital (20%) 39,000
CCC , capital (60%) 90,000
Total P 180,000

AAA has decided to retire from the partnership. By mutual agreement, the assets are to be
adjusted to their fair value of P216,000 at June 30, 2009. It was agreed that the partnership
would pay AAA P61,200 cash for AAA’s partnership interest, including AAA’s loan which
is to be repaid in full. No goodwill is to be recorded. After AAA’s retirement, what is the
balance of BBB’s capital account?
a. P36,450 c. P45,450
b. P39,000 d. P46,200

10. On June 30, the balance sheet for the partnership of Williams, Brown and Lowe together
with their respective profit and loss ratios was as follows:

Assets, at cost P300,000

Williams, loan P 15,000
Williams, capital (20%) 70,000
Brown, capital (20%) 65,000
Lowe, capital (60%) 150,000
Total P300,000

Williams has decided to retire from the partnership and by mutual agreement the assets are to be
adjusted to their fair value of P360,000 at June 30. It was agreed that the partnership would pay
Williams P102,000 cash for his partnership interest exclusive of his loan which is to be repaid in
full. No goodwill is to be recorded in this transaction. After William's retirement what are the
capital account balances of Brown and Lowe, respectively?
a. P65,000 and P150,000.
b. P72,000 and P171,000.
c. P73,000 and P174,000.
d. P77,000 and P186,000.

“So do not fear, for I am with you; do not be dismayed, for I am your God. I will
strengthen you and help you; I will uphold you with my righteous right hand.”(Isaiah 41:10)

- END –
SOLUTIONS:

1. A620,000 + 400,000 + 380,000 = 1,400,000 x 80% = 1,750,000 x 20% = 350,000

2. BTotal equity = 100,000 not revalued; Rosa 55,000 for 20%; Linda 60,000 for 25%; for a
total of P215,000. P215,000 x 55% = 118,250 – 100,000 = 18,250.

3. B444,000 x 1/5 = 88,800; 132,000 – 88,800 = 43,200

4. D

5. C

6. C 65,000 – 50,000 = 15,000 impairment loss ÷ 3

7. C
Mikee Raul Imelda
600,000 600,000 400,000 1,600,000
8,000 8,000 8,000 24,000 fully depreciated
(408,000) (372,000)
608,000 608,000 - 1,252,000
1,216,000

8. C
C 20% M 20% P 60%
9,000 - - 9,000
42,000 39,000 90,000 171,000
51,000 39,000 90,000 180,000
7,200 7,200 21,600 36,000
58,200 46,200 111,600
(61,200)
(3,000) (750) (2,250.00)
45,450 109,350

9. C
A B C
51,000 39,000 90,000 180,000
7,200 7,200 21,600 36,000
58,200 46,200 111,600
(61,200)
(3,000) (750)
- 45,450

10. B
W B L
20% 20% 60%
85,000 65,000 150,000
12,000 12,000 36,000 60,000
97,000 77,000 186,000
117,000
(20,000) (5,000) (15,000)
72,000 171,000