Easy Level (ParCor)

1. Marco, a partner in the Marco and Guel partnership, is entitled to 40% of the profits and losses.
During 2013, Marco contributes land to the partnership that cost her P50,000 but has a current
value of P60,000. Also during 2013, Marco has drawings of P80,000. The balance in Marco's
capital account was P120,000 at the beginning of the year and is P150,000 at the end of the
year. What are the partnership's earnings for 2013?
a. 125,000
b. (50,000)
c. 150,000
d. (75,000)

2. James, Aljohn, and Jane formed a partnership on January 1, 2013, with investments of P100,000,
P150,000, and P200,000, respectively. For division of income, they agreed to (1) interest of 10%
of the beginning capital balance each year, (2) annual compensation of P10,000 to Aljohn, and
(3) sharing the remainder of the income or loss in a ratio of 20% for James, and 40% each for
Aljohn and Jane. Net income was P150,000 in 2013 and P180,000 in 2014. Each partner
withdrew P1,000 for personal use every month during 2013 and 2014.

What was Aljohn's share of income for 2013?

a. 29,000
b. 53,000
c. 58,000
d. 63,000

3. Max, Alfred and Waters shared profits and losses 20%, 40%, and 40% respectively and their
partnership capital balance is P10,000, P30,000 and P50,000 respectively. Max has decided to
withdraw from the partnership. An appraisal of the business and its property estimates the fair
value to be P 200,000. Land with a book value of P30,000 has a fair value of P45,000. Max has
agreed to receive P20,000 in exchange for her partnership interest. What amount should land
be recorded on the partnership books?
a. 50,000
b. 45,000
c. 20,000
d. 30,000

4. Partners A and B have a profit and loss agreement with the following provisions: salaries of
P30,000and P45,000 for A and B, respectively; a bonus to A of 10% of net income after salaries
and bonus; and interest of 10% on of P20,000 and P35,000 for A and B, respectively. One-third
of any remaining profits are allocated to A and the balance to B. If the partnership had net
income of P53,000, how much should be allocated to partner A?
 a. 21,833
b. 22,833
c. 18,250
d. None of the above

5. A partnership began its first year of operations with the following capital balances:
 Neil, Capital – 143,000
 Matthew, Capital – 104,000
 Vino, Capital – 143,000

The Articles of Partnership stipulated that profits and losses be assigned in the following manner:

 Neil was to be awarded an annual salary of P26,000 with P13,000 salary assigned to Vino.
 Each partner was to be attributed with interest equal to 10% of the capital balance as of the first
day of the year.
 The remainder was to be assigned on a 5:2:3 basis, respectively.
 Each partner was allowed to withdraw up to P13,000 per year.

Assume that the net loss for the first year of operations was P26,000 with net income of P52,000 in the
second year. Assume further that each partner withdrew the maximum amount from the business each
year.

What was the balance in Vino's Capital account at the end of the first year?

a. 118,300
b. 126,100
c. 120,900
d. 80,600

6. James, Aljohn, and Jane formed a partnership on January 1, 2013, with investments of P100,000,
P150,000, and P200,000, respectively. For division of income, they agreed to (1) interest of 10%
of the beginning capital balance each year, (2) annual compensation of P10,000 to Aljohn, and
(3) sharing the remainder of the income or loss in a ratio of 20% for James, and 40% each for
Aljohn and Jane. Net income was P150,000 in 2013 and P180,000 in 2014. Each partner
withdrew P1,000 for personal use every month during 2013 and 2014.

What was James's share of income for 2013?

a. 63,000
b. 53,000
c. 58,000
d. 29,000

Average Level (ParCor)

 1. Candice is a partner and has an annual salary of P30,000 per year, but he actually draws P3,000
per month. The other partner in the partnership has an annual salary of P40,000 and draws
P4,000 per month. What is the total annual salary that should be used to allocate annual net
income among the partners?
a. 15,000
b. 14,000
c. 84,000
d. 70,000

2. Gerry, Rio, and Dianne are partners sharing profits on a 5:3:2 ratio. On January 1, 2013, Jojo was
admitted into the partnership with a 20% share in profits. The old partners continue to
participate in profits in their original ratios.
For the year 2013, the partnership book showed a net income of P25,000. It was disclosed,
however, that the following errors were committed:

2010 2013

Accrued expenses not recorded at year-end 1,200 -

Inventory overstated - 3,100

Purchases not recorded, for which goods have -

been received and inventories 2,000

Income received in advance not adjusted 1,500 -

Unused supplies not taken up at year-end - 900

The new profit and loss ratio of Gerry, Rio, Dianne, and Jojo, respectively for 2013 is:

a. 50%, 20%, 10% and 20%

b. 40%, 25%, 15%, and 20%
c. 40%, 24%, 16%, and 20%
d. 45%, 30%, 15%, and 20%

3. The ABC partnership has the following capital accounts on its books at December 31, 2011:

A, Capital 400,000

B, Capital 240,000

C, Capital 80,000

All liabilities have been liquidated and the cash balance is zero. None of the partners have personal
assets in excess of his personal liabilities. The partners share profits and losses in the ratio of 3:2:5. If the
noncash assets are sold for P400,000, B should receive as a final payment:
 a. 144,000
b. 196,000
c. 80,000
d. 176,000

4. A, B, and C decide to dissolve their partnership on May 31, 2013. On this date their capital
balances and profit percent were as follows:

A P150,000 40%

B P180,000 30%

C P60,000 30%

The net income from Jan. 1 to May 31, 2013 was P132,000. Also on May 31, 2013, the partnership cash
and liabilities, respectively, were P120,000 and P270,000. For A to receive P165,600 in full settlement of
his interest in the partnership., how much must be realized from the sale of the partnership's non cash
assets?

a. 243,000
b. 633,000
c. 189,000
d. 579,000

5. Partners Rick and Rafa share profits and losses of their partnership equally after 1) annual salary
allowances of P25,000 for Rick and P20,000 for Rafa and 2) 10% interest is provided on average
capital balances. During 20X1, the partnership had earnings of P50,000; Rick's average capital
balance was P60,000 and Rafa's average capital balance was P90,000.
How much of the P50,000 will Rafa receive?
a. 27,500
b. 25,000
c. 24,000
d. 23,000

6. Steve and Robby are partners operating an electronics repair shop. For 2014, net income was
P50,000. Steve and Robby have salary allowances of P90,000 and P60,000, respectively, and
remaining profits and losses are shared 4:6.
How much would Robby get from the division of profits?
a. 25,000
b. 20,000
c. 30,000
d. 0
 7. Partners Able, Joshua, and Diane have the following personal assets,
personal liabilities, and partnership capital balances:

Able Joshua Diane

Personal assets 30,000 80,000 60,000

Personal liabilities 25,000 50,000 72,000

Capital balances 50,000 (32,000) 70,000

Assume profits and losses are allocated equally. After applying the doctrine of marshaling of assets, the
capital balances for Able is

a. 48,000
b. 50,000
c. 34,000
d. 49,000

8. The following balance sheet information is for the partnership of Abel, Ball, and Catt:

Cash 210,000 Liabilities 510,000

Other assets 1,500,000 Abel, Capital (40%) 300,000

Ball Capital (40%) 480,000

Catt, Capital (20%) 420,000

1,710,000 1,710,000

Figures shown parenthetically reflect agreed profit and loss sharing percentages.
If assets on the initial balance sheet are fairly valued, Abel and Ball consent and Dent pays Catt P225,000
for his interest; the revised capital balances of Abel would be

a. 300,000
b. 305,000
c. 320,000
d. 315,000

A partnership has the following accounting amounts:

1 Sales 70,000

2 Cost of Goods Sold 40,000

3 Operating Expenses 10,000

 4 Salary allocations to partners 13,000

5 Interest paid to banks 2,000

6 Partners' withdrawals 8,000

Partnership net income (loss) is

a. (3,000)
b. 18,000
c. 5,000
d. 20,000

9. James, Aljohn, and Jane formed a partnership on January 1, 2013, with investments of P100,000,
P150,000, and P200,000, respectively. For division of income, they agreed to (1) interest of 10%
of the beginning capital balance each year, (2) annual compensation of P10,000 to Aljohn, and
(3) sharing the remainder of the income or loss in a ratio of 20% for James, and 40% each for
Aljohn and Jane. Net income was P150,000 in 2013 and P180,000 in 2014. Each partner
withdrew P1,000 for personal use every month during 2013 and 2014.

What was Jane's capital balance at the end of 2013?

a. 238,000
b. 200,000
c. 224,000
d. 246,000

Difficult Level (ParCor)

1. Jose, Maria, and Jenny are in the process of liquidating their partnership. Jenny has agreed to
accept the inventory, which has a fair value of P60,000, as part of her settlement. A balance
sheet and the residual profit and loss sharing percentages are as follows:

Cash 198,000 Accounts payable 149,000

Inventory 80,000 Jose, capital (40%) 79,000

Plant assets 230,000 Maria, capital (40%) 140,000

Jenny, capital (20%) 140,000

Total assets 508,000 Total liab./equity 508,000

If the partners then distribute the available cash, Jenny will receive

a. 23,000
b. 34,000
c. 30,000
 d. 29,000

2. Adamle, Boyer, and Clay are partners with a profit and loss ratio of 4:3:3. The partnership was
liquidated and, prior to the liquidation process, the partnership balance sheet was as follows:

Cash 60,000 Adamle, Capital 216,000

Other assets 540,000 Boyer, Capital 240,000

Clay, Capital 144,000

Total assets 600,000 Total liabilities & capital 600,000

After the partnership was liquidated and the cash was distributed, Boyer received P96,000 in cash in full
settlement of his interest.
The liquidation loss must have been:

a. 144,000
b. 360,000
c. 504,000
d. 480,000

3. XX, YY and ZZ are partners who share profits and losses in the ratio of 5:3:2, respectively. They
agree to sell a 25% of their respective capital and profits and losses ratio for a toal payment
directly to the partners in the amount og P140,000. They agree that goodwill of P60,000 is to be
recorded prior to admission of AA. The condensed balance sheet of the XYZ partnership is as
follows:

Cash 60,000 Liabilities 100,000

Non cash assets 540,000 XX, capital 250,000

YY, capital 150,000

ZZ, capital 100,000

Total 600,000 Total 600,000

The capital of XX, YY and ZZ respectively after the payment and admission of AA are:

a. 280,000, 168,000 and 112,000

b. 250,000, 150,000 and 100,000
c. 187,500,112,500 and 75,000
d. 210,000, 126,000 and 84,000
 4. Assume that a partnership had assets with a book value of P240,000 and a market value of
P195,000, outside liabilities of P70,000, loans payable to partner Able of P20,000, and capital
balances for partners Able, Joshua, and Diane of P70,000, P30,000, and P50,000. How would the
first P100,000 of available assets be distributed assuming profits and losses are allocated
equally?
a. P70,000 to outside liabilities, P20,000 to Able, and the balance equally among the partners
b. P70,000 to outside liabilities and P30,000 to Able
c. P70,000 to outside liabilities, P25,000 to Able, and P5,000 to Diane
d. P40,000 to Able, P20,000 to Diane, and the balance equally among the partners

5. On June 30, 2006, the Garry, Michi, and George partnership had the following fiscal year-end
balance sheet:

Cash 4,000 Accounts payable 7,000

Accounts receivable 6,000 Loan from Michi 5,000

Inventory 14,000 Garry, capital(20%) 14,000

Plant assets-net 12,000 Michi, capital(30%) 10,000

Loan to Garry 6,000 George, capital(50%) 6,000

Total assets 42,000 Total liab./equity 42,000

The percentages shown are the residual profit and loss sharing ratios. The partners dissolved the
partnership on July 1, 2006,. and began the liquidation process. During July the following events
occurred:

A Receivables of P3,000 were collected.

B The inventory was sold for P4,000.

C All available cash was distributed on

D July 31, except for P2,000 that was set aside for contingent expenses.

How much cash would George receive from the cash that is available for distribution on July 31?

a. 1,000
b. 2,000
c. 600
d. 0

6. The following condensed balance sheet is presented for the partnership of Jim, Bill, and Fred
who share profits and losses in the ratio of 4:3:3, respectively:
 Cash 180,000

Other assets 1,940,000

Jim, receivable 60,000

2,180,000

Accounts payable 480,000

Bill, loan 80,000

Jim, capital 720,000

Bill, capital 440,000

Fred, capital 460,000

2,180,000

Assume that the assets and liabilities are fairly valued on the balance sheet and that the partnership
decides to admit Tom as a new partner, with a 25% interest. How much should Tom contribute in cash
or other assets?

a. 270,000
b. 540,000
c. 405,000
d. 520,000

7. The partnership of AA, BB and CC was dissolved on June 30, 2010 and account balances after
non cash assets were converted into cash on September 1, 2010 are:

Assets Liabilities

Cash 50,000 Accounts payable 120,000

AA, capital (30%) 90,000

BB, capital (30%) (60,000)

CC, capital (40%) (100,000)

Personal assets and liabilities of the partners at September 1, 2010 are:

Personal assets Personal liabilities

AA 80,000 90,000
 BB 100,000 61,000

CC 192,000 80,000

If CC contributes P70,000 to the partnership to provide cash to pay the creditors, what amount of AA’s
P90,000 would appear would appear to be recoverable?

a. 81,000
b. 79,000
c. 90,000
d. None

8. Presented below is the condensed balance sheet of the partnership of KK, LL and MM who share
profits and losses in the ratio of 6:3:1, respectively:

Cash 85,000 Liabilities 80,000

Other assets 415,000 KK, capital 252,000

LL, capital 126,000

MM, capital 42,000

Total 500,000 Total 500,000

The partnership agree to sell NN 20% of their respective capital and profit and loss interest for a total
payment of P90,000. The payment by NN is to be made directly to the individual partners. The capital
balances of KK, LL and MM respectively after admission of NN are:

a. 216,000, 108,000, 36,000

b. 255,600, 127,800, 42,600
c. 198,000, 99,000, 33,000
d. 201,600, 100,800, 33,600

9. The partnership of Carr, Eddy, and Howe had total capital of P1,140,000 on December 31, 2014,
as follows:

Carr, Capital (30%) 360,000

Eddy, Capital (45%) 510,000

Howe, Capital (25%) 270,000

Total 1,140,000

Profit and loss sharing percentages are shown in parentheses.

Assume that Klein became a partner by investing P300,000 in the Carr, Eddy, and Howe partnership for a
25 percent interest in the capital and profits, and the partnership assets are revalued. Under this
assumption

a. net assets of the partnership will increase by P380,000 including Klein interest
b. total partnership capital after Klein’s admission to the partnership will be P1,200,000
c. Carr’s capital will be increased to P394,000
d. Klein’s capital credit will be P300,000

10. On August 1, AA and BB pooled their assets to form a partnership, with the firm to take over
their business assets and assume the liabilities. Partners capitals are to based on net assets
transferred after the following adjustments. Profit & loss are allocated equally.
BB’s inventory is to be increased by P4,000, an allowance for doubtful account of P1,000 and
P1,500 are to be set up in books of AA and BB, respectively; and accounts payable of P4,000 is to
be recognized in AA’s books. The individual trial balances on August , before adjustments,
follow:

AA BB

Assets 75,000 113,000

Liabilities 5,000 34,500

What is the capital of AA and BB after the above adjustments?

a. AA (75,000); BB (81,000)
b. AA (65,000); BB (81,000)
c. AA (68,750); BB (77,250)
d. AA (65,000); BB (76,000)

11. On June 30, 2006, the Garry, Michi, and George partnership had the following fiscal year-end
balance sheet:

Cash 4,000 Accounts payable 7,000

Accounts receivable 6,000 Loan from Michi 5,000

Inventory 14,000 Garry, capital(20%) 14,000

Plant assets-net 12,000 Michi, capital(30%) 10,000

Loan to Garry 6,000 George, capital(50%) 6,000

Total assets 42,000 Total liab./equity 42,000

The percentages shown are the residual profit and loss sharing ratios. The partners dissolved the
partnership on July 1, 2006,. and began the liquidation process. During July the following events
occurred:
 a Receivables of P3,000 were collected.

b The inventory was sold for P4,000.

c All available cash was distributed on

d July 31, except for P2,000 that was set aside for contingent expenses.

The cash available for distribution to the partners on July 31, 2006 is

a. 4,000
b. 2,000
c. 7,000
d. 11,000

12. Michael, Gabriel, and Raphael are partners sharing profits on a 5:3:2 ratio. On January 1, 2014,
Joshua was admitted into the partnership with a 20% share in profits. The old partners continue
to participate in profits in their original ratios.
For the year 2014, the partnership book showed a net income of P25,000. It was disclosed,
however, that the following errors were committed:

2013 2014

Accrued expenses not recorded at year-end 1,200

Inventory overstated 3,100

Purchases not recorded, for which goods have been received 2,000
inventories

Income received in advance not adjusted 1,500

Unused supplies not taken up at year-end 900

The share of partners Michael in the 2014 corrected net income is:

a. 11,750
b. 10,000
c. 12,500
d. 9,400

13. NN, OO, PP and GG, partners to a law firm, shares profits at the ratio of 5:3:1:1. On June 30,
relevant partners’ accounts follow:

Advances (DR) Loans (CR) Capital (CR)

NN - 20,000 160,000
 OO - 40,000 120,000

PP 18,000 - 60,000

GG 10,000 - 100,000

On this day, cash of P72,000 is declared as available for distribution to partners as profits. Who among
the partners will benefit from the P72,000 cash distribution?

a. OO and GG
b. NN and OO
c. PP and GG
d. All equally