1.

start-up cost incurred by a branch in the initial months of operations are appropriately deferred
and amortized in subsequent profitable accounting periods.
2. The home office capital account is less than the the investment in branch account when a the
home office received a remittance from a branch customer but has not yet notified the branch
True, true

1. The estimated deficiency to unsecured creditors is total unsecured liabilities less total free
assets.
2. The statement of Realizatin and liquidation reports actual liquidation results only at final
competions of the liquidation process False, False

1. In the preparation of schedule of safe payment it is assumed that partners with capital
deficiency has no capacity to make additional investment
2. During liquidation, partner with the largest capital account balance will receive the first
allocation of distribution. True, False

1. The document used by the trustee to report on the status of operation periodically is the
statement of affairs.
2. The beginning and ending balances of the accounts in the statement or realization and
liquidation are always stated at book values False, True

1. A CREDIT MEMO send by the branch to the home office signifies a decrease in investment
in branch account in the home office.
2. If the home office maintains several branches, transaction between or among these branches
need not be acknowledge at the home office, since each branches are given the authority to
transact directlly with each other False, False

1. One of the legitimate expenses of the partnership is the interest paid to partners base on the
amount of their invested capital
2. The admission of a new partner effected through purchase of interest in the partnership is not
recorded in its entirety since the transaction is personal between the selling and buying partner.
False, False

1. In case of retirement of a partner from the partnership, the ownership interest of which may
be acquired by the existing partners, or outside parties but not the partnership.
2. In a limited partnership, the entity may still operate in the absence of a general partner False,
False
1. The estimated recovery percentage mybe arrived by total amount of free assets divided by
total unsecured liabilities without priority.
2. In a statement of realization and liquidation, if the total debits exceeds the total credits it
signifies a loss incurred by the trustee during receivership False, True

1. PFRS allows recognition of goodwill arising from formation of partnership

2. Advances made by a partner to the partnership will be one of the items that decreases the
capital balance of a partner False, False

1. An expenses item being allocated by Branch 1 to branch 2, is recorded by the branch 2 by a

debit to expenses account and credit Branch 1.
2. A debit to Home office equity account and credit cash account in the accounting record of a
branch may indicate that the specific branch paid in advance an expense of other branch. False,
True

1. Since the investment in branch account on the book of home office represents the investment
of the home office in the branch, thus the home office equity account on the book branch office
represents the equity interest of branch office in the net assets of the home office
2. Reciprocal accounts on the internal transactions between the home office and a branch must be
eliminated in the preparation of the enterprise's financial statements that are presented in
accordance with GAAP. False, True

1. In the absence of agreement as to distribution of loss, the industrial partner shall be exempted
from partnership loss, while the capitalist partners shall be distributed in accoradance profit
agreement ratio
2. In the absence of agreement as to distribution of profit, the industrial partner shall receive a
just and equitable share and the remainder shall be distributed to the capitalist partners on the
basis of average capital contribution ratio. True, False

1.When bankruptcy was voluntary made by an organization it means the company is release
from past obligation and such release is applied to all forms of debt.
2. The going concern assumption which is primarily one of the principles underlying the
preparation of financial statements is abandoned when bankruptcy proceedings is the only
recourse of a corporation which is in financial trouble. False, True
1. The doctrine of marshallng the assets is applicable if either the partnership is insolvent or
individual partners are incolvent.
2. In a partnership liquidation, the final cash payment to the partners should be made in
accordance with the profit and loss ratio True, False

BUE THY AND FULL are partners dividing profits and losses in the ratio of 2:3:1 respectively.
their capital balances on December 31, 2020 were P428,000, P656,000 and P388,000 respectively.
FULL is retiring from the partnership as of April 30, 2021. Assume that the net income is
considered as having been realized evenly throughout the year during the year of a partner's
retirement. After retirement of the partner, remaining partners would divide profits and losses in
the remaining original ratio. The partnership reported net income of P540,000 for the year 2021.
Love was paid an amount which is 130% of his adjusted equity as of the date of retirement. On
April 2021, How much is the total capital of the partnership after the retirement of FULL? 1108600

Deadly corporation is in the process of being liquidated. After all the non cash assets have been
liquidated, P80,000 cash remains for the payment of the following claims:
a. Administrative expenses including trustee's fees P20,000
b. Salaries (including the President's salary of P16,000) P40,000
c. Property taxes P32,000
d. Claims between filing of the involuntary petition and appointment of the trustee P10,000
e.Unsecured Accounts Payable P30,000
f. Unsecured notes Payable P60,000
g. Accrued interest on unsecured notes P8,000
How much is the amount to be paid for unsecured priority debts in settlement of their claims?
80000

On June 1, 2020 ROYAL Enterprises established an agency in Cebu City, sending samples costing
P4,200,000 which are useful until May 31, 2021 and have a salvage value of 20% of cost. A
working fund of P3,412,500 is to be maintained using imprest basis. During 2020 the agency
submitted to the home office sales order amounting to P 35,437,500. Sales per invoice were
P27,562,500 which were duly approved by the home office. Collections during the year amounted
to P14,784,000 net of 4% sales discount. The cost of merchandise sold during the year is equal to
70% of gross selling price. Vouchers for expenses amounted to P1,837,500
How much net income would be reported by the agency on December 31, 2020? 3855250

The folowing data were taken from the statement of realization and liquidation of Release me
company
> Liabilities to be liquidated P1,425,000
> Supplementary charges P845,500
> Liabilities not liquidated P1,050,000
> Supplementary credits P962,500
> Assets Acquired P680,000
> Liabilities Liquidated P790,000
> Assets to be realized P537,500
> Assets realized P875,000
> Liabilities assumed P415,000
The beginning capital balances of ordinary shares and retained aernings are P510,000 and
P148,000 respectively. A net income of P437,000 for the period
How Much is the beginning balance of cash? 1545500
How much is the assets not realized balance? 662500

JACK AND JILL are partners of HAPPY PARTNERSHIP and begins its first year of operations
on May 31, 2020 with JACK Capital of P360,000 and JILL capital of P180,000. According to the
partnership agreement, all profits and losses will be distributed as follows:
a. An annual salary of P240,000 to JACK and P28,000 monthly to JILL
b. An interest of 15% of the capital balances as of the first day of the year will be provided.
c. JACK, being the manager will receive a bonus of 12% of net income after bonus.
d. The remainder will be divided equally
Each partner is allowed to withdrew up to P18,000 on the first year and up to P24,000 the following
year and for the next three years.
Assume the result of operations in 2020 from the date of formation was P140,000 net income and
P70,000 net loss the following year. How much is the decrease or increase in the capital of JACK
from the date of formation up to the end of 2021? 73268.75
Sky, Summer and Rain are partners who share profits and losses as follows: Sky 45%, Summer
15% and Rain 40%. The Statement of financial Position of SSR Partnership as of December 31,
2021 is given below: On january 1, 2022, the partners decided to liquidate. For the month of
January some assets were sold at a gain of P14,000. Payment to partner Summer from the initial
sale of assets was P45,350. Cash witheld for possible liquidation expenses and unrecognized
liabilities amounted to P36,700. How much is the book value of non-cash assets sold in January
2022? 146700

Light, Day and Fire of Sunshine Partnership with a profit and loss sharing ratio of 25%, 15% and
60% respectivelyhas the following account balances:
>DUring June, some non cash assets were sold that resulted to a loss of P20,000. Liquidation
expenses of P31,000 were paid and additional expenses amounting to P24,000 were expected to
be incurred through the following month of liquidating the partnership.
> Liabilities to outsiders amounting to P79,000 were paid.
> For Fire to receive P31,000 on the first distribution of cash, How much is the book value of the
unsold Non-cash assets ? 583000
Because of the inability to pay its debts, the UNLUCKY Company has been forced to bankruptcy
as of April 30, 2021. The balance sheet on that date shows the following:
AdditionL INFO:
a. Account receivables of P16,110 and notes receivables of P12,500 are expected to be collectible.
The good notes are pledged to PNB
b. Inventories are expected to bring in P45,100 when sold under banckruptcy condition.
c. Land and buildings have ap appraised value of P95,000, they serve as security on the bonds
d. The current value of the equipment, net of disposal cost P9,000
What is the total estimated payment to creditors? 180410

RED, WHITE AND BLUE have been partners throughout 2020. Their averages balances are
P48,750, P3650 and P2,125 to RED, WHITE AND BLUE respectively. and their Capital balances
as of December 31, 2020 before closing the nominal accounts were P35,000, P9,000 and (P850)
to RED, WHITE AND BLUE respectively.
The income for 2020 is P51,750 before charging partners' salary allowances and before payment
of interest on average balances at an agreed rate of 4% per annum. annual salary allocations were
P6,250 to RED , P4,375 WHITE and P3,125 to BLUE. The balance of the profits is to be allocated
at the rate of 60%, to RED, 10% to WHITE and 30% to BLUE
It is intended to distribute cash to the partners so that, after credits and allocations have been made
as indicated in the preceding paragraph, the balance in the partners'account will be Pr0portionate
to their residual profit-sharing ratios. None of the partners is to invest additional cash, but they
wish to distribute the lowest possible amount of cash. How much is the adjusted capital balance of
WHITE as of December 31, 2020? (roud off your final answer to the nearest Peso) 4368.50

On January 1, 2020 Diamond and Jade agreed to form a partnership. The following are their assets
and liabilities:
Diamond decided to pay-off his notes payable from his personal assets. It was agreed that Jade
inventories were overstated by P24,000 and Diamond Machinery was overstated by P20,000. Jade
is to invest/withdraw cash in order to receive a capital credit that is 20% more than Diamond's total
net investment in the partnership. How much is the total assets of the Partnership? 2206400

MAHDA and LHEE formed a partnership on September 1, 2020. MHADA invested 120,000
cash, inventory with a cost of 50,000 valued 45,000, and equipment with a cost of P78,160 valued
at 6/8 of its cost. LHEE on the other hand invested 150,000 cash and land with a cost of 98,000
valued at 150% of cost. The partnership did not assumed 40,000 mortgaged on the land. On August
30, 2021, the partnership reported a net loss of 24,000 which is earned proportionately during the
year. The partnership contract specified that net income and losses were to be allocated allowing
20% interest on the original capital investment, salaries of P15,000 to MAHDA and 21,000 to
LHEE and the remainder to be divided in the ratio 40:60 to MHADA and LHEE respectively. On
September 1, 2021, LHANG was admitted into the partnership with a 90,000 cash investment.
LHANG was given 35% interest in the partnership because of her special skills. The partners elect
to use the bonus method to record the admission. Any bonus should be divided in the old ratio of
40:60. On June 30, 2022, the partnership reported a net income of 150,000. The new partnership
contract stipulated that income and losses will be divided at a fixed ratio of 30:50:20 to MHADA,
LHEE and LHANG, respectively. On July 2, 2022 MHADA withdrew from the partnership for
personal reasons. MHADA was given 60,000 cash and 70,0000 note for hier capital interest. At
December 31, 2020, how much is the capital account of LHEE? 290975.20
How much is the capital of Mhada before her retirement? 216567.60

How much is the ending capital balance of Lhang as of July 2, 2022? 260050.60
RUBY, JADE AND DIAMOND are partners sharing Profit and losses of 5:3:2 respectively. As
of Dec., 31 2020, their capital balances were P498,750; P420,000; and P315,000 respectively. On
January 1, 2021, the partners decided to admit EMERALD as a new partner and will contribute
P420,000 in cash to the partnership and also pays P52,500 for 15% of JADE share. Thoy will be
given 20% shares in profits , while the original partners' share will be proportionately the same as
before. After admission of EMERALD, the total capital will be P1,732,500 and EMERALD capital
will be P367,500. How much is the capital account of JADE after the admission of EMERALD?
391279.41

On December 1, 2020 Beauty and phull are combining their separate business to form a
partnership. cash and non-cash assets are to be contributed. the non cash assets to be contributed
and liabilities to be assumed are as follows:
Beauty and Phull are to invest equal amounts of cash such that the contribution of BEAUTY would
be 10% more than the investmentof Phull. What is the total amount of capital of PHULL UPON
Formation? 3625000

The folowing data were available for a company to be liquidated:

> Income taxes , P10,000; Notes payable secured by land P100,000; Accounts Payable
P251,050; Salalries Payable P12,950; administrative expenses P 20,000
> The company has the followign assets:
* Current assets BV of P100,000 , FMV P95,000
* Land BV of P50,000; FMV of P75,000
* Building, BV of 150,000: FMV of 200,000
How much of the total claim of Notes Payable has been paid? (round off your answer to the
nearest Peso) 97826