Item Nos.

1 and 2 are based on the following information:

Ricky and Nelson formed a partnership with the following contributions:

Carrying Amount Market Value Agreed Value

Ricky
Equipment 25,000 24,000 20,000
Nelson
Furniture and Fixtures 30,000 35,000 35,000
Machinery 200,000 190,000 200,000

In addition, the partners invested cash of P 50,000 and P 20,000 for Ricky and Nelson, respectively.
The machinery is subject to a mortgage of P 80,000.

1. How much is the total capital of the partnership assuming that the mortgage will be assumed by the partnership?

a. P 245,000. c. P 325,000.
b. P 255,000. d. P 405,000.

May priority tayo ng amounts na dapat gamitin when it comes to non current assets in partnership formation by this order

Agreed Value > Market Value > Carrying Amount or Book Value

Basically kung may agreed value ayun ang gagamitin, kung wala edi yung market value,
kung wala ring market value yung book value ang gagamitin natin

Cash 70,000
Equipment 20,000
Furniture and Fixtures 35,000
Machinery 200,000
Mortgage Payable 80,000
Ricky Capital 70,000
Nelson Capital 175,000 175,000 + 70,000 = 245,000

2. If the mortgage will not be assumed by the partnership, how much higher is the capital of Nelson as compared to Ricky?

a. P 105,000. c. P 185,000.
b. P 175,000. d. P 255,000.

( 175,000 + 80,000 ) - 70,000 = P 185,000

hinahanap lang dito kung gaano kataas ang capital ni nelson if mortgaged is not assumed
Item Nos. 3 and 4 are based on the following information:

The balance sheet accounts of Jolina on December 31, 200A are shown below:

Cash 30,000
Accounts Receivable 25,000
Inventory 45,000 Jolina Capital 124,000
Furniture 32,000
Accounts Payable 8,000

The following adjustments are to be made:

> 3% impairment loss on accounts receivable should be provided;

> The fair value of the furniture is P 27,000;
> P5,000 of the inventory is obsolete but can still be sold for P 3,000.

Manny is to join Jolina and will invest P 20,000 cash in the new partnership

3. How much is the adjusted capital of Jolina?

a. P 115,250 c. P 124,000
b. P 116,250 d. P 132,250

Jolina Capital 750

Allowance for Impairment Loss 750
Jolina Capital 5,000
Accum. Depr. Furniture 5,000
Jolina Capital 2,000
Inventory 2,000
Cash 20,000
Manny Capital 20,000

124,000 - 750 - 5,000 - 2,000 = 116,250

4. How much are the total assets of the new partnership?

a. P 116,250 c. P 124,250
b. P 124,000 d. P 144,250

Cash 50,000
Accounts Receivable 25,000
Less: Allowance for Impairment Loss 750 24,250
Inventory 43,000
Furniture 32,000
Less: Accum. Depr. Furniture 5,000 27,000
TOTAL ASSETS 144,250
Item Nos. 5 and 6 are based on the following information:

Pedro and Gil will form a partnership by combining their assets and liabilities. Their ledger accounts on
June 30, 200C are as follows:
Pedro Gil
Cash 16,000 8,000
Accounts Receivable 38,000 4,000
Allowance for Impairment Loss -2,000 -500
Equipment 28,000 24,000
Accum. Depr. Equipment -6,000 -3,000
Accounts Payable 24,000 12,500

They agree on the following adjustments:

> Prepaid expenses of P 4,000 will be recorded by Pedro

> Accrued expenses of P 2,500 will be recorded by Gil
> Goodwill of P 8,000 and P 3,000 for Pedro and Gil respectively, will be recognized in the new books
of the partnership.

5. How much will be the total assets of the new partnership?

a. P 82,300 c. P 117,500
b. P 110,500 d. P 121,500

Cash 24,000
Accounts Receivable 42,000
Less: Allowance for Impairment Loss 2,500 39,500
Prepaid Expense 4,000
Equipment 52,000
Less: Accum. Depr. Equipment 9,000 43,000
Goodwill 11,000
TOTAL ASSETS 121,500

Accounts Payable 36,500

Accrued Expenses 2,500
TOTAL LIABILITIES 39,000

Pedro, Capital 62,000

Gil, Capital 20,500
TOTAL OWNER'S EQUITY 82,500
TOTAL LIABILITIES & OWNER'S EQUITY 121,500

6. How much will be the total capital of the new partnership?

a. P 71,500 c. P 82,500
b. P 79,000 d. P 85,000
Item Nos. 7 to 8 are based on the following information:

Fuenta invites Bella in her business and form a partnership. The capital of Fuenta is P 100,000. They agree that
Fuenta is to recognize goodwill of P 20,000. Bella is to invest cash so that her capital in the new partnership is equal to
40% of the total capitalization.

7. How much cash should Bella invest?

a. P 24,000 c. P 80,000
b. P 79,000 d. P 180,000

100,000 + 20,000 = Fuenta Capital 120,000/ .6 = 200,000

Capital + Goodwill = Agreed Capital 200,000 x.4 = 80,000 = Bella Capital

8. If the total liabilities of Fuenta are P 25,000, how much are the total assets of the new partnership?

a. P 100,000 c. P 225,000
b. P 200,000 d. P 300,000

A=L+C
Basic Accounting Equation
200,000 = L + 200,000
200,000 + 25,000 = 25,000 + 200,000
225,000 = 225,000
TOTAL ASSETS = P 225,000

Item Nos. 9 to 10 are based on the following information:

Lima and Hong are planning to form a partnership. Lima will invest P 20,000 for a 20% interest in the new
partnership. Hong will invest cash and equipment with a fair market value of P 50,000. They will share profits a losses equally.

9. How much cash should Hong invest?

a. P 30,000 c. P 60,000
b. P 50,000 d. P 80,000

20,000/ .2 = 100,000 (Total Capital)

100,000 x .8 = 80,000 (Hong Agreed Capital)
80,000 - 50,000 ( Equipment) = 30,000 ( Cash that Hong should invest)

10. How much is the total cash investment of the partners?

a. P 50,000 c. P 80,000
b. P 70,000 d. P 100,000

Lima Cash + Hong Cash = P 20,000 + P 30,000 = P 50,000 ( Total cash investment)
Item No 11 is based on the following information:

Philip and Morris decide to form a partnership. Philip will invest P 10,000 cash and his equipment costing P 70,000
with a fair market value P 50,000. Morris is to invest cash, which is equal to 70% of the t capitalization of the partnership.

11. How much cash should Morries invest?

a. P 100,000 c. P 140,000
b. P 120,000 d. P 200,000

60,000 /.3 = 200,000 ( Philip Capital ) 200,000 x .7 = 140,000 ( Morris Capital )

Item Nos. 12 and 13 are based on the following information:

Rico and Puno formed a partnership with an agreed capital of P 240,000 divided equally between them.
Their profit and loss sharing agreement provides that Rico will share 60% and Puno will share 40%.

12. If the partners decide to make their capital ratio proportionate to their profit and loss sharing ratio
without changing the agreed capital, what should be done?

a. Rico should make an additional investment of P 24,000.

b. Puno should make an additional investment of P 24,000.
c. The partners should divide the profits and losses equally.
d. The new capital ratio should be changed to 40% for Rico and 60% for Puno.

240,000 x.6 = 144,000 ( 60% ) 120,000 = initial agreed capital

144,000 - 120,000 = 24,000 ( Additional investment need to be 60% of total agreed capital )

13. If the partners decide to make their capital ratio proportionate to their profit and loss sharing ratio by
changing the agreed capital (use the profit sharing ratio of Rico), what should be done?

a. Rico should make an additional investment of P 20,000

b. Puno should make a withdrawal of P 40,000.
c. Rico should transfer P 40,000 of his capital to Puno.
d. Puno should transfer P 40,000 of his capital to Rico.

120,000 ./6 = 200,000 x.04 = 80,000 Initial Puno Capital = 120,000

200,000 = New Total Agreed Capital
120,000 - 80,000 = 40,000
Item No. 14 is based on the following information:

Rico and Yan will put up a repair shop and form a partnership. The initial investments of the partners
will include cash of P 120,000 for Rico and P 80,000 for Yan. Rico will transfer his office equipment with a carrying
amount of P 96,000 and a fair market value of P 84,000 to the partnership. Yan will transfer his land valued at P 1,000,000
and building valued at P 600,000. Yan has just bought these at a lump sum price of P 1,800,000. In addition, the partnership
will assume the mortgage of P400,000 on the building.
14. What will be the total capital of the partnership?
a. P 1,484,000 c. P 1,684,000
b. P 1,496,000 d. P 1,946,000

Cash 200,000
Office Equipment 84,000
Land 1,000,000
Building 600,000
Mortgage Payable 400,000
Rico Capital ( 120,000 + 84,000) 204,000
Yan Capital ( 80,000 1,000,000 + 600,000 - 400,000) 1,280,000

1,280,000 + 204,000 = 1,484,000 ( Total Capital of the Partnership)

Item No. 15 is based on the following information:

Al and Fred will pool their net assets to form a partnership with the new firm taking over the business assets
and assuming the liabilities. The capital of the new partnership will be the net assets to be transferred after the
following adjustments:

> Allowance for impairment loss on the accounts receivable of P 4,000 and P 2,500 are to be set
up in the books of Al and Fred, respectively;
> Fred's inventory is to be increased from P 28,000 to P 31,500; and
> Accounts payable of P 8,000 is to be recorded in the books of Al.

The net assets of the partners prior to the adjustments are:

Al Fred
Assets 420,000 600,000
Liabilities 180,000 120,000
Net Assets 240,000 480,000

15. How much will be the capital of the new partnership?

a. P 709,000 c. P 720,000
b. P 714,000 d. P 738,000

Al Fred
Assets 420,000 600,000
Allowance for Impairment Loss -4,000 -2,500
Inventory 3,500
Liabilities -180,000 -120,000
Accounts Payable -8,000
Net Assets 231,500 477,500
Net Assets = Capital 231,500 + 477,500 = 709,000
Item No. 16 is based on the following information:

Q and K will combine their businesses and form a partnership. The net assets prior to adjustments are as follows:

Q K
Assets 260,000 640,000
Liabilities 100,000 300,000
Net Assets 160,000 340,000

They agree on the following:

> Accounts receivable of P 5,000 in the books of Q is to be written off,

> Accrued expenses in the books of K are overstated by P 3,000
> The equipment in the books of K is undervalued by P 20,000.

16. If the partners' equity in the partnership will be equal to their adjusted net assets contributed,
the capitals of Q and K would be:

a. P 155,000 and P 363,000, respectively.

b. P 160,000 and P 340,000, respectively.
c. P 250,000 and P 250,000, respectively.
d. P 259,000 and P 259,000, respectively.

Q K
Assets 260,000 640,000
Accounts Receivable -5,000
Equipment 20,000
Liabilities -100,000 -300,000
Accrued Expenses 3,000
Net Assets 155,000 363,000

Item No. 17 is based on the following information:

Ping and Pong will pool their net assets and form a partnership, which will take over the assets and assume
the liabilities. The agreed capital of the new partnership is the total net assets to be transferred subject to the following
adjustments:

> Ping's inventory is to be increased by P 3,000;

> Accounts receivable of P 1,000 and P 1,500 for Ping and Pong respectively will be written off;
> Accrued expenses of P 4,000 are to be recognized in Ping's books.

The unadjusted capital of Ping is P 78,500 and Pong is P 70,000.

17. What is the capital balance of each partner assuming they agree to be equal partners

a. P 65,000 c. P 74,250
b. 72,500 d. P 80,000

Ping Pong
Initial Capital 78,500 70,000
Inventory 3,000
Accounts Receivable -1,000 -1,500
Accrued Expenses -4,000
Adjusted Capital 76,500 68,500

Equal partners are partners with the same capital

76,500 + 68,500 = 144,000
145,000 / 2 = 72,500

Item No. 18 is based on the following information:

On May 1 200C, the business assets and liabilities of Manang abd Biday apper below:

Manang Biday
Current Assets 120,000 862,000
Noncurrent Assets 652,000 538,000
Current Liabilities 380,000 600,000

They agree to form a partnership by contributing their net assets subject to the following adjustments

> Accounts Receivable of P 20,000 in Manang's books and P 40,000 in Biday's books are uncollectible;
> Inventories of P 6,000 and P 7,000 are worthless in the books of Manang and Biday, respectively;
> Other assets of P 5,000 are to be written off in Manang's books.
> Expenses of P 4,500 are to be accrued in Biday's books.

18. What will be the total assets of the new partnership?

a. P 2,094,000 c. P 1,141,000
b. P 2,089,500 d. P 1,114,000

Manang Biday
Current Assets 120,000 862,000
Accounts Receivable -20,000 -40,000
Inventory -6,000 -7,000
Noncurrent Assets 652,000 538,000
Other Assets -5,000
TOTAL ASSETS 741,000 1,353,000

TOTAL ASSETS OF THE PARTNERSHIP = 741,000 + 1,353,000 = 2,094,000

Item No. 19 is based on the following information:

Datu invites Puti to join his business as a partner. The capital account of Datu has a credit balance of P 300,000.
Puti will invest cash of P 120,000 and is to be given a capital credit of 30% of the total capital after making the following
adjustments in the books of Datu:

> The accumulated depreciation of the equipment is understated by P 7,500;

> Prepaid expenses are overstated by P 2,400.

19. The capital accounts of Datu and Puti immediately after the formation of the partnership are:

a. P 300,000 and P 120,000, respectively. c. P 287,070 and P 123,030, respectively.

b. P 290,100 and P 120,000, respectively. d. P 287,070 and P 40,000, respectively.

sabi dito naginvest daw si Puti ng 120,000 at magkakaroon daw siya ng capital credit na 30%
nung pinagadd na initial capital ni Puti at Adjusted Capital ni Datu. meaning hindi 30% ng total capital
yung 120,000 na investment.

Datu
Initial Capital 300,000 290,100 + 120,000 = 410,100
Accumulated Depreciation 7,500 410,000 x .3 = 123,030 ( 30%) PUTI
Prepaid Expenses -2,400 410,000 x .7 = 287,070 ( 70%) DATU
Adjusted Capital 290,100

so mapapansin niyo na bumaba yung capital ni Datu tapos tumaas naman kay PUTI ,may ginamit ditong method
na nasa chapter 4 ng book Partnership Dissolution using BONUS METHOD

Item No. 20 is based on the following information:

F, P, and J are forming a new partnership. F will invest cash of P 120,000 and his office equipment costing
P 144,000 but has a fair market value of P 60,000. P is to invest cash of P 192,000 and J is to contribute P 60,000 cash and
a brand new delivery van with a fair market value of P 144,000 although he bought it for only P 120,000. The partners
will share profits and losses in the ratio of 25:25:50 for F, P, and J, respectively.

20. The capital balances of the partners upon formation are:

a. F, P 180,000; P, P 192,000; and J, P 204,000. c. F, P 212,000; P, P 212,000; and J, P 211,200.

b. F, P 192,000; P, P 192,000; and J, P 192,000. d. F, P 264,000; P, P 192,000; and J, P 180,000.

F P J
Cash 120,000 192,000 60,000
Office Equipment 60,000
Delivery Van 144,000
TOTAL ASSETS 180,000 192,000 204,000
Item Nos. 21 to 25 are based on the following information:

Abraham, Bernardo, and Carlos are engaged in the same line of business. To eliminate competition and
to control the market, they decided to pool their net assets and form a partnership. After making adjustments in
their respective assets and liabilities, the net assets of the three partners amounted to P 450,000.

The adjusted liabilities transferred to the new partnership were P 15,000 and P 10,000 for Abraham and
Carlos, respectively. The adjusted capital of Bernardo is 2½ times the adjusted capital of Carlos and the adjusted
capital of Abraham is only 60% of the adjusted capital of Bernardo.

Sa problem na to need natin gumamit ng algebra HAHAHAH. Sabi dito 2.5 times daw yung capital ni Bernado
compared kay Carlos, at 60% naman ng Capital ni Bernarndo ang capital ni Abraham

Let's Assume:

Carlos Capital as x Bernardo Capital as 2.5x Abraham Capital as .6 (2.5) x

.6 (2.5)x + 2.5x + x = 450,000

1.5x + 2.5x + x = 450,000
5 x = 450,000
x = 90,000

Substitute na natin yung x

Carlos Capital = x Bernardo Capital = 2.5x Abraham Capital = 1.5x

Carlos Capital = 90,000 2.5 ( 90,000 ) 1.5 ( 90,000)
Bernardo Capital = 225,000 Abraham Capital = 135,000

90,000 + 225,000 + 135,000 = 450,000

Total Partnership Capital

Abraham Bernardo Carlos

Capital 135,000 225,000 90,000
Liability 15,000 10,000
Assets 150,000 225,000 100,000

A=L+C
475,000 = 25,000 + 450,000

21. How much are the total assets of the new partnership?

a. P 400,000. c. P 475,000.
b. P 450,000. d. P 500,000.
22. What is the adjusted capital of Abraham?

a. P 90,000. c. P 135,000.
b. P 100,000. d. P 150,000.

23. What is the adjusted capital of Bernardo?

a. P 100,000. c. P 150,000.
b. P 135,000. d. P225,000.

24. What is the adjusted capital of Carlos?

a. P 90,000. c. P 135,000.
b. P 100,000. d. P 150,000.

25. How much are the total assets of Abraham and Carlos?

a. P 225,000 c. P 300,000.
b. P 250,000. d. P 350,000.