Accounting Midterm Exam (Partnership up to Dissolution)

Edna Ursal and cleofe who shared profits and losses in the ratio of 3:7 admitted Dandan Cal by letting
the latter invest cash in the partnership. The respective capital balances of the partners were p 240,000
for Ursal and 300,000 for Rosales, Cal invest cash of 210,000 for a 40% interest in the new firm interest
of 750,000.

Required: Assuming that Cal invest cash of P450,000 for a 35% interest new firm capital of P990,000,
how much is the amount of bonus____________________

Answer: 103,500

Agreed Capital______346,500.

6. The total share of Mr. Diego in the distribution of net income__________

Answer: 254,240

Noted: the Following data is used for seven (7) requirements.

Francis and Dominic are partners who share profits and losses in the ratio of 6:4, On January 1, 2003,
their capital accounts are:

Francis P80,000

Dominic P20,000

Total 100,000

a. book value of Francis and Dominic interest acquired by John.

Francis______________

Answer: 12,000

4. The basis for distribution of Profits or Losses is a matter of Agreement among the partners. It may
based on their capital contribution ratio.

A. True

B. False

Answer: A. True
5. Using average Capital balances as a basis for distribution is preferable because it reflects the capital
actually available for use by the partnership during the year. Temporary withdrawals should be
considered even when they are within allowable limits.

True

False

Answer: A. True

6. The equity of a partner in the net assets of the partnership is different from the partners share in
profits or losses.

Answer: B. False.

7. Required:

Adjusted Capital balance of Daval_________

Cash to be Contributed by Silorio Upon admission___________

Answer: 2. Cash to be Contributed by Silorio Upon admission___________

Answer: 516,150

8. Mr. Kho and Mr. Diego. 3 The total interest allowed to partners is____________

Answer: 64,000

9. Khalyl Dionne formed a partnership with khyle Lorenz on a business dealing with motorcycle parts in
Mandaue City. Their capital balances as of this date, follows:

How much is the book value of partnership interest acquired by Mosqueda?_____________

Answer: 225,000

10. The capital accounts for the partnership of Joselito villarta and Rene Cason at October 2009 are as
follows:

Villarta, Capital P240,000

Cason, Capital 120,000

Total P360,000
The partners shared profits and losses in the ratio of 6:4 respectively.

The partnership is desperately in need of cash and the partners agree to admit Maria cruz as a partner
with ⅓ in the capital and profits and losses upon in investment of P30,000.

Required: Capital account balance after admission of Cruz.?

Answer: 80,000; Villarta- 180,000; Cason- 80,000

11. When beginning Capital balances are used in allocating profits, year-end investment are
discouraged.

Answer: A. True

12. The assets invested into the partnership and not given to the individual partners increase the total
assets of the partnership.

Answer: A. True

13. When salary and interest allocation exceed profit, a loss has occurred.

Answer: B. False.

14. Partners Lusterio and Advincula receive a salary of P150,000 and P300,000, respectively, and share
profit and losses in a 2:1, respectively. If the partnership suffered a P 150,000 loss in 2018, by how much
would lusterio’s account decrease.?

Answer: P250,000

15. Francis and Dominic.

b. How should the P30,000 cash be divided between Francis and Dominic?

Dominic________________

Answer: 4,000

16. Bonus is the amount of capital or equity transferred by one partner to another partner.

Answer: B. False.
17. (Mr. kho and Mr. Diego.)

5. The amount of bonus that Mr. Kho will receive_____________

Answer: 41,600

18. (Francis and dominic).

c. determine each partner capital balance after the admission of John.

Dominic__________

Answer: 12,000

19. (Khalyl Dionne and Kyle Lorenz).

2. How much is the gain or loss on the sales transaction? _____________

Answer: None or 0

20. Salaries and interest allowance are not reported in the income statement as salaries and interest
expenses.

Answer: B. False

21. Partner Francis has a P15,000.00 credit balance in his capital accounts in the frim of Francis and Dale.
If Grea purchased Francis equity interest in the firm of P20,000, the entry on the partnership books to
record the transfer would credit grea’s capital account for P10,000.

Answer: A. True

22. Mr. Jackie Chan and Mr. James Bond are partners who shared profit and losses on an arbitrary ratio
of 3:2.

Determine each the partners’ capital balances after the admission assuming Jet Lee pays P20,000.

Chan_______________

Answer: Chan-150,000; Bond- 125,000; Lee- 175,000v

Answer: B. False.

24. The basis on which profits or losses are shared is a matter of agreement among the partners and
may not necessarily be the same as their capital contributions.

Answer: true

25. Partnership profits and losses are divided among partners according to their agreement. If no
sharing agreement exorcist, profits or losses are divided according to their capital contributions.

Answer: A. True

26. Mr. Kho and Mr. Diego

4. The partners total beginning capital balance is__________________

Answer: 600,000

27. When ending capital balances are used, additional investment during the year are encouraged.

Answer: false

28. Mar, Dom and San are partners with the following capital balances: Mar,P60,000; Dom,50,000; and
San P40,000.

The capital balances of the partnership after the withdrawal of Dom_____________

Answer: 100,000

29. The asset invested into the partnership and not given to the individual partners increase the total
assets of the partnership.

Answer: A. True
30. (Khalyl Dionne and Khyle Lorenz)

How much is the book value of partnership interest acquired by Mosqueda? _______

Answer: 225,000

31. (Mr. Kho and Mr. Diego)

5. The amount of bonus that Mr. Kho will receive__________

Answer: 41,600

32. 2. The capital balance of the partnership after the withdrawal of Dom__________________

Answer: 100,000

33. 4. Assuming that the firm pays Dom P60,000, how much is the capital of Mar after the withdrawal of
Dom______________

Answer: 56,250

34. Khyle and Lorenz.

1. Capital balances of the partners after admission. Lorenz__________________

Answer: 314,000; Khyle- 391,000; Khalyl- 235,000

35. 1. The capital balance of the partnership before the withdrawal of Dom______________

Answer: 150,000

36. 1. Determine each of the partners capital balances after the admission assuming Jet Lee pays
P20,000. Chan___________________

Answer: 150,000

37. The use of salaries in the allocation of profit or loss allows for the differences in the services that
partners provide the business.

Answer: True