P2 COMPREHENSIVE QUIZZER 2015

A.F.
On May 1, 2015, Annie and Vinnie decide to combine their businesses and form a partnership.
Their balance sheets on March 1, before adjustments, showed the following:
Annie
Vinnie
Cash
P9,000
P3,750
Accounts Receivable
18,500
13,500
Inventories
30,000
19,500
Furniture and fixture (net)
30,000
9,000
Office equipment (net)
11,500
2,750
Prepaid expenses
6,375
3,000
TOTAL
P105,375
P51,500
Accounts Payable
Capital
TOTAL

P45,750
P18,000
59,625
33,500
P105,375
P51,500

They agreed to have the following items recorded in their books:

Provide 2% allowance for doubtful accounts.

Annie's furniture and fixtures should be P31,000, while Vinnie's office equipment is
under depreciated by P250.
Rent expense incurred previously by Annie was not yet recorded amounting to 1,000,
while salary expense incurred by Vinnie was not also recorded amounting to 800.
The fair market value of inventory amounted to: For Annie: P29,500 and for Vinnie:
P21,000.

1. Compute the net (debit) credit adjustment for Annie and Vinnie respectively:
a. 2,870; 2,820
b. (2,870); (2,820)
c. (870); 180
d. 870; (180)
2. Compute the total liabilities after formation:
a. 61,950
b. 63,750
c. 65,550
d. 63,950
3. Compute the total assets after formation:
a. 157,985
b. 156,875
c. 160,765
d. 152,985

P2 COMPREHENSIVE QUIZZER 2015

A.F.
The GOT Partnership shows the following profit and loss ratios and capital balances:
Girly
Owen
Tippy

60%
30%
10%

P252,000
126,000
42,000

The partners decide to sell Frank 20% of their respective capital and profit and loss interests for a
total payment of P90,000. Frank will pay the money directly to the other partners. The other
partners agree that goodwill is not to be recorded.
4. What amount should be credited to Frank capital?
a. 84,000
b. 90,000
c. 96,000
d. 108,000
5. What are the capital balances of the partners after admission to the partnership?
Girly
Owen
Tippy
a. 198,000
99,000
33,000
b. 210,600
100,800
33,600
c. 210,000
108,000
36,000
d. 255,600
127,800
42,600

P2 COMPREHENSIVE QUIZZER 2015

A.F.
The partnership of Cindy and Oliver was formed on February 29, 2015. At that date the
following assets were invested:
Cindy
Oliver
Cash
P 120,000
P 200,000
Merchandise
-0320,000
Building
-0840,000
Furniture and equipment
200,000
-0The building is subject to a mortgage loan of P280,000, which is to be assumed by the
partnership. The partnership agreement provides that Cindy and Oliver share profits or losses
30% and 70%, respectively. Olivers capital account at February 29, 2015, should be
a. P 1,080,000.
b. P 1,360,000.
c. P 1,176,000.
d. P 952,000.

P2 COMPREHENSIVE QUIZZER 2015

A.F.
The partnership of Maria, Imelda, and Carlo had total capital of P570,000 on December 31, 2015
as follows:
Maria, Capital (30%) P180,000
Imelda, Capital (45%)
255,000
Carlo, Capital (25%) 135,000
Total
P570,000
Profit and loss sharing percentages are shown in parentheses. Assume that Alex became a partner
by investing P150,000 in the Maria, Imelda, and Carlo partnership for a 25 percent interest in
capital and profits and that partnership net assets are not revalued. Alexs capital credit should be
a. P180,000.
b. P142,500.
c. P150,000.
d. P190,000.

P2 COMPREHENSIVE QUIZZER 2015

A.F.
Partners Rachel, Cecil, and Arlene share profits and losses 5:3:2, respectively, and their balance
sheet on October 31, 2015 follows:
Cash
P 240,000
Accounts
P 600,000
Payable
Other Assets
2,160,000
Rachel, Capital 444,000
Cecil, Capital
780,000
Arlene, Capital 576,000
P 2,400,000
P 2,400,000
The assets and liabilities are recorded at their current fair value. Lark is to be admitted as a
new partner with a 1/5 interest in capital and earnings. Rachel was credited a bonus of P15,000.
How much should Lark contribute?
a. P456,000
b. P450,000
c. P480,000
d. P487,500

On December 1, 2015, Teddy and Sabrina formed a partnership with each contributing the
following assets at fair market values:
Teddy
Sabrina
Cash.. P 5,200
Machinery and Equipment 12,550
---Land . ---Building.. ---Office furniture.
18,250

P 22,375
81,250
31,375
----

The land and building are subject to a mortgage loan of P54, 000 that the partnership will
assume. The partnership agreement provides that Teddy and Sabrina share profits and losses,
40% and 60% respectively and partners agreed to bring their capital balances in proportion to the
profit and loss ratio and using the capital balance of Sabrina as the basis. The additional cash
investment made by Teddy should be:
a P18,000
b P85,500
c P134,100
d P166,250

P2 COMPREHENSIVE QUIZZER 2015

A.F.
The capital accounts of the partnership of Nakpil, Ortiz and Perez on June 1, 2015, are: Nakpil: P
139,200; Ortiz: P208,800; Perez: P96,000. Their profit and loss ratios are: 1/2 : 1/3 : 1/6,
respectively.
On June 1, 2015, Quizon was admitted to the partnership when he purchased, for P132,000, a
proportionate interest from Nakpil and Ortiz in the net assets and profits of the partnership. As a
result of this transaction, Quizon acquired a one-fifth interest in the net assets and profits of the
firm. Assuming that implied goodwill is not to be recorded, what is the combined gain realized
by Nakpil and Ortiz upon the sale of a portion of their interest in the partnership to Quizon?
a. P0
b. P43,200
c. P62,400
d. P82,000

Presented below is the condensed balance sheet of the partnership of Go, Lee, and Mao who
share profits and losses in the ration of 6:3:1, respectively:
Cash
Other assets

P85,000
415,000
P500,000

Liabilities
Go, Capital
Lee, Capital
Mao, Capital

P80,000
252,000
126,000
42,000
P500,000

The partners agree to sell Gaw 20% of their respective capital and profit and loss interests for a
total payment of P90,000. The payment by Gaw is to be made directly to the individual partners.
The partners agree that implied goodwill is to be recorded prior to the acquisition by Gaw. What
are the capital balances of Go, Lee and Mao, respectively, after the acquisitions by Gaw?
a. P198,000 ; P99,000 ; P33,000
b. P201,600 ; P100,800 ; P33,600
c. P216,000 ; P108,000 ; P36,000
d. P255,600 ; P127,800 ; P42,600

P2 COMPREHENSIVE QUIZZER 2015

A.F.
A summary balance sheet for the Lee, Sy, and Go partnership appears below. Lee, Sy, and Go
share profits and losses in a ratio of 2:3:5, respectively.
Assets
Cash
Inventory
Marketable securities
Land
Building-net
Total assets

P 50,000
62,500
100,000
50,000
250,000
P 512,500

Equities
Lee, capital
P 212,500
Sy, capital
200,000
Go, capital
100,000
Total equities
P 512,500
The partners agree to admit Han for a one-fifth interest. The fair market value of partnership land
is appraised at 100,000 and the fair market value of inventory is 87,500. The assets are to be
revalued prior to the admission of Han and there is 15,000 of goodwill that attaches to the old
partnership.
By how much will the capital accounts of Lee, Sy, and Go increase, respectively, due to the
revaluation of the assets and the recognition of goodwill?
a. The capital accounts will increase by 25,000 each.
b. The capital accounts will increase by 30,000 each.
c. 18,000, 27,000, and 45,000
d. 20,000, 25,000, and 30,000

What is the total agreed capital after admission?

a. 735,150
b. 753,150
c. 573,510
d. 751,350

How much cash must Han invest to acquire a one-fifth interest?

a. 117,500
b. 120,500
c. 146,875
d. 150,625

P2 COMPREHENSIVE QUIZZER 2015

A.F.
What will the profit and loss sharing ratios be after Han investment?
a. 1:2:4:2
b. 2:3:5:2
c. 3:4:6:2
d. 4:6:10:5

Cesar and Damon share partnership profits and losses at 60% and 40%, respectively. The
partners agree to admit Egan into the partnership for a 50% interest in capital and earnings.
Capital accounts immediately before the admission of Egan are:
Cesar (60%) P300,000
Damon
(40%) P300,000
Assume that Egan invested P400,000 for the ownership interest. Egan paid the money directly to
Cesar and to Damon for 50% of each of their respective capital interests. The partnership records
goodwill.
What is the amount of goodwill to be recorded?
a. 100,000
b. 200,000
c. 600,000
d. 800,000
Assume that Egan invested P400,000 for the ownership interest. Egan paid the money directly to
Cesar and to Damon for 50% of each of their respective capital interests. The partnership records
goodwill.
What would be the capital balances of Cesar and Damon after the admission?
a. 420,000; 380,000
b. 190,000; 420,000
c. 380,000; 210,000
d. 210,000; 190,000

Assume that Egan invested $500,000 for the ownership interest. Egan paid the money to the
partnership for a 50% interest in capital and earnings. The partnership records goodwill.
The journal entry for the admission of Egan would include;
a. Credit to Goodwill for 100,000
b. Credit to Cash for 500,000
c. Debit to Goodwill for 100,000
d. Debit to Egan, Capital for 600,000

P2 COMPREHENSIVE QUIZZER 2015

A.F.
Assume that Egan invested $700,000 for the ownership interest. Egan paid the money to the
partnership for a 50% interest in capital and earnings. The partnership records goodwill.
What is the amount of goodwill to be recorded?
a. 100,000
b. 200,000
c. 700,000
d. 1,300,000
Assume that Egan invested $700,000 for the ownership interest. Egan paid the money to the
partnership for a 50% interest in capital and earnings. The partnership records goodwill.
What should be the total agreed capital?
a. 1,300,000
b. 1,400,000
c. 1,500,000
d. 650,000
Assume that Egan invested $700,000 for the ownership interest. Egan paid the money to the
partnership for a 50% interest in capital and earnings. The partnership records goodwill.
What would be the capital balances of Cesar and Damon after the admission?
a. 300,000; 300,000
b. 360,000; 340,000
c. 340,000; 360,000
d. 700,000; 700,000

Sydney and Michael are partners who share profits and losses in the ratio of 7:3, respectively. On
October 5, 2016, their respective capital accounts were as follows: Sydney: P35,000; Michael:
30,000.
On that date they agreed to admit Vic as a partner with a 1/3 interest in the capital and profits and
losses, and upon his investment of P25,000. The new partnership will begin with a total capital of
P90,000. Immediately after Vics admission, what are the capital balances of Sydney, Michael,
and Vic, respectively?
a. P30,000 ; P30,000 ; P30,000
b. P31,500 ; P28,500 ; P30,000
c. P31,667 ; P28,333 ; P30,000
d. P30,000 ; P30,000 ; P25,000

P2 COMPREHENSIVE QUIZZER 2015

A.F.
On March 21, 2015, the partnership of Julius and Arci was formed. At that date, Julius invested
P50,000 cash and office equipment valued at 30,000. Arci invested 70,000 cash, merchandise
valued at 110,000 and furniture valued at 100,000, subject to a note payable of 50,000(which the
partnership assumes). The partnership agreement provides that Julius and Arci share profits and
losses 25:75, respectively. The agreement further provides that the partners should initially have,
an equal interest in the partnership capital.
Under the bonus method, what is the total capital of the partners after the formation?
a. P310,000
b. P360,000
c. P300,000
d. P350,000
Under the goodwill method, what is the total capital of the partners after the formation?
a. P400,000
b. P510,000
c. P410,000
d. P460,000

Theories:
1. When a partner retires and withdraws assets in excess of his book value, the remaining
partners absorb the excess
a. equally.
b. in their profit-sharing ratio.
c. based on their average capital balances.
d. based on their ending capital balances.
2. When the goodwill method is used to record the admission of a new partner, total partnership
capital increases by an amount

P2 COMPREHENSIVE QUIZZER 2015

A.F.
a. equal to the new partners investment.
b. greater than the new partners investment.
c. less than the new partners investment.
d. that may be more or less than the new partners investment.
3. The bonus and goodwill methods of recording the admission of a new partner will produce the
same result if the:
1. new partners profit-sharing ratio equals his capital interest
2. old partners profit-sharing ratio in the new partnership is the same relatively as it was in the
old partnership.
a. 1
b. 2
c. both 1 and 2 are met.
d. none of these.
4. When the goodwill method is used and the book value acquired is less than the value of the
assets invested, total implied capital is computed by
a. multiplying the new partners capital interest by the capital balances of existing partners.
b. dividing the total capital balances of existing partners by their collective capital interest.
c. dividing the new partners investment by his (her) capital interest.
d. dividing the new partners investment by the existing partners collective capital interest.
5. The partnership of Suarez, Casio, and Ballada had total capital of P570,000 on December 31,
2015 as follows:
Suarez, Capital (30%)
P180,000
Casio, Capital (45%)
255,000
Ballada, Capital (25%)
135,000
Total
P570,000
Profit and loss sharing percentages are shown in parentheses. If Valix purchases a 25 percent
interest from each of the old partners for a total payment of P270,000 directly to the old partners
a. total partnership net assets can logically be revalued to P1,080,000 on the basis of
the price paid by Valix.
b. the payment of Valix does not constitute a basis for revaluation of partnership net assets
because the capital and income interests of the old partnership were not aligned.
c. total capital of the new partnership should be P760,000.
d. total capital of the new partnership will be P840,000 assuming no revaluation.
6. Michael, Ron, and Ronnie are partners with capital balances of P135,000, P90,000, and
P60,000, respectively. The partners share profits and losses equally. For an investment of
P120,000 cash, Cristina is to be admitted as a partner with a one-fourth interest in capital and

P2 COMPREHENSIVE QUIZZER 2015

A.F.
profits. Based on this information, the amount of Cristinas investment can best be justified by
which of the following?
a. Cristina will receive a bonus from the other partners upon his admission to the partnership.
b. Assets of the partnership were overvalued immediately prior to Cristinas investment.
c. The book value of the partnerships net assets were less than their fair value immediately
prior to Cristinas investment.
d. Cristina is apparently bringing goodwill into the partnership and her capital account will be
credited for the appropriate amount.
7. The profit and loss sharing ratio should be
a. in the same ratio as the percentage interest owned by each partner.
b. based on relative effort contributed to the firm by the partners.
c. a weighted average of capital and effort contributions.
d. based on any formula that the partners choose.