AFST-Practice Set-01-Partnership (Part 1)

Acctg 32 - Accounting for Special Transactions
Name: ________________________
Class: ___________________ Date: __________
Partnership Formation and Operations
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. AA, BB, and CC are partners with average capital balances during 20x1 of P360,000, P180,000, and
P120,000, respectively. Partners receive 10% interest on their average capital balances. After deducting
salaries of P90,000 to AA and P60,000 to CC, the residual profit or loss is divided equally. In 20x1, the
partnership sustained a P99,000 loss before interest and salaries to partners. By what amount should AA’s
capital account change?
a. P21,000 increase c. P105,000 decrease
b. P33,000 decrease d. P126,000 decrease
____ 2. As of July 1, 20x1, FF and GG decided to form a partnership. Their balance balance sheets on this date are:
FF GG
Cash P 15,000 P 37,500
Accounts Receivable 540,000 225,000
Merchandise Inventory - 202,500
Machinery and Equipment 150,000 270,000
Accounts Payable 135,000 240,000
FF, Capital 570,000 -
GG, Capital 495,000
The new partners agreed that the machinery and equipment of FF is underdepreciated by P15,000, and
that of GG by P45,000. Allowance for doubtful accounts is to be set up amounting to P120,000 for FF and
P45,000 for GG. The partnership agreement calls for a P/L ratio of 60-40. The partners also agree to
share their formation interests based on the P/L ratio. How much cash must FF invest to meet the agreed
capital balance?
a. P52,560 c. P142,560
b. P102,500 d. P172,500
____ 3. On April 30, 20x1, XX, YY, and ZZ formed a partnership by combining their separate business
proprietorships. XX contributed cash of P75,000. YY contributed property with P54,000 carrying amount, a
P60,000 original cost, and P120,000 fair value. The partnership accepted responsibility for the P52,500
mortgage attached to the property. ZZ contributed equipment with a P45,000 carrying amount, a P112,500
original cost, and P82,500 fair value. The partnership agreement specifies that profits and losses are to be
shared equally. Which partner has the largest capital balance upon formation on April 30, 20x1?
a. XX c. ZZ
b. YY d. all capital balances are equal.
On January 1, 20x1, Paul, Jeremy, and Juan formed a partnership, agreeing to share profits and losses
equally. Juan contributed a building having an original cost of P290,000, accumulated depreciation of
P100,000, and market value of P400,000. The building was erroneously recorded at Juan’s book value.
The building has an expected remaining useful life of 5 years. On December 31, 20x2, the building was
sold and the partnership recorded a gain of P270,000. The books were not yet closed for 20x2.
____ 4. What is the correct gain/loss on the sale of the building?

a. P84,000 loss c. P114,000 loss
b. P190,000 gain d. P144,000 gain
____ 5. What was the selling price of the building on December 31, 20x2?
a. P460,000 c. P510,000
b. P384,000 d. P400,000
1
Name: ________________________ ID: A
____ 6. Assuming no other movements in capital happened for the past two periods, how much should Juan’s
capital balance be after closing the books on December 31, 20x2?
a. P346,667 c. P448,000
b. P394,667 d. P420,000
PQ Partnership has the following plan for the distribution of partnership net income (loss):
P Q
Salaries P80,000 P100,000
Bonus on net income 6% 12%
Interest on average capital balance 7% 7%
Remainder (if positive) 60% 40%
Remainder (if negative) 50% 50%
Assume that the average capital balances of P and Q are P140,000 and P240,000 respectively.
____ 7. If the net income of the partnership is P360,000, how much is allocated to P?
a. P164,650 c. P195,440
b. P164,560 d. P88,600
____ 8. If the net income of the partnership is P240,000, how much is allocated to Q?
a. P140,700 c. P141,680
b. P99,300 d. P98,320
____ 9. If the net loss of the partnership is P40,000, how much is allocated to P?
a. (P6,500) c. (P33,500)
b. P33,500 d. P6,500
____ 10. On Jan 2, 20x1, Bard and Pally formed a partnership. Bard contributed capital of P175,000 and Pally
P25,000. They agreed to share profits and losses 80-20 respectively. Pally is the general manager and
works in the partership full time and s given a salary of P5,000 a month. Other agreements as to the P/L
sharing is an interest of 5% on the beginning capital balances, and a bonus of 15% of net income before
the salary, interest, and the bonus. The profit and loss statement of the partnership for the year ended
20x1 shows:
Net Sales P 875,000
Cost of Sales 700,000
Gross Profit 175,000
Expenses (including partner salary, 143,000
interest on capital, and bonus)
Net income P 32,000
The amount of bonus to Pally is

a. -0- c. P20,700
b. P13,304 d. P18,000
2
ID: A
Partnership Formation and Operations

Answer Section
MULTIPLE CHOICE
1. ANS: A PTS: 1
2. ANS: D PTS: 1
3. ANS: C PTS: 1
4. ANS: D PTS: 1
5. ANS: D PTS: 1
6. ANS: B PTS: 1
7. ANS: B PTS: 1
8. ANS: A PTS: 1
9. ANS: C PTS: 1
10. ANS: D PTS: 1

AFST-Practice Set-01-Partnership (Part 1)

Uploaded by

Copyright:

Available Formats

AFST-Practice Set-01-Partnership (Part 1)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

AFST-Practice Set-01-Partnership (Part 1)

Uploaded by

Copyright:

Available Formats

Acctg 32 - Accounting for Special Transactions

Partnership Formation and Operations

____ 4. What is the correct gain/loss on the sale of the building?

The amount of bonus to Pally is

Partnership Formation and Operations

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.