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Quiz 1

The document summarizes the financial transactions and positions of ABC Partnership from December 31, 2018 to February 28, 2019 as it liquidated. On January 31, 2019, available cash was distributed to the partners according to their profit sharing ratios of 5:3:2. Partner C's capital was $400,000 so they received $300,000 in cash distributions on January 31, 2019.

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42 views

Quiz 1

The document summarizes the financial transactions and positions of ABC Partnership from December 31, 2018 to February 28, 2019 as it liquidated. On January 31, 2019, available cash was distributed to the partners according to their profit sharing ratios of 5:3:2. Partner C's capital was $400,000 so they received $300,000 in cash distributions on January 31, 2019.

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On December 31, 2018, the Statement of Financial Position of ABC Partnership with profit or

loss ratio of 5:3:2 of respective partners A, B and C. showed the following information:

Cash 1,600,000 Total Liabilities 2,000,000


Noncash assets 1,400,000 A, Capital 100,000
B, Capital 500,000
C, Capital 400,000

On January 1, 2019, the partners decided to liquidate the partnership in installment. All partners
are legally declared to be personally insolvent.

As of January 31, 2019, the following transactions occurred:


 Noncash assets with a carrying amount P1,000,000 were sold at a gain of P100,000.
 Liquidation expenses for the month of January amounting to P50,000 were paid.
 It is estimated that liquidation expenses amounting to P150,000 will be incurred for the
month of February, 2019.
 20% of the liabilities to third persons were settled.
 Available cash was distributed to the partners.

As of February 28, 2019, the following transactions occurred:


 Remaining noncash assets were sold at a loss of P100,000.
 The final liquidation expenses for the month of February amounted to P100,000.
 The remaining liabilities to third persons were settled at a compromise amount of
P1,500,000.
 Remaining cash was finally distributed to the partners.

What is the amount of cash received by partner C on January 31, 2019?


A. 260,000
B. 240,000
C. 300,000
D. 350,000

On January 1, 2018, A, B and C formed ABC Partnership with original capital contribution of
P300,000, P500,000 and P200,000. A is appointed as managing partner.

During 2018, A, B and C made additional investments of P500,000, P200,000 and P300,000,
respectively. At the end of 2018, A, B and C made drawings of P200,000, P100,000 and
P400,000, respectively. At the end of 2018, the capital balance of C is reported at P320,000. The
profit or loss agreement of the partners is as follows:

 10% interest on original capital contribution of the partners.


 Quarterly salary of P40,000 and P10,000 for A and B, respectively.
 Bonus to A equivalent to 20% of Net Income after interest and salary to all partners
 Remainder is to be distributed equally among the partners.

What is the partnership profit for the year ended December 31, 2018?
A. 900,000
B. 1,020,000
C. 1,050,000
D. 960,000

What is B’s share in partnership profit for 2018?


A. 200,000
B. 290,000
C. 50,000
D. 90,000

On December 31, 2018, ABC Partnership’s Statement of Financial Position shows that A, B and
C have capital balances of P400,000, P300,000 and P100,000 with profit or loss ratio of 1:4:5.
On January 1, 2019, C retired from the partnership and received P80,000. At the time of C’s
retirement, the assets and liabilities of the partnership are properly valued.

What is the capital balance of B after the retirement of C?


A. 284,000
B. 308,000
C. 316,000
D. 320,000

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