Choose a letter and show your solution. 1. Merry is a single proprietor of a dressmaking business and agrees to make a partnership business with Jessa who is to contribute cash to give her a 1/3 interest in the business. On November 30, 2015, right before the partnership formation, Merry has a total business assets of P41,000 and a liability of P8,000. The two agreed that in order to establish Merry's interest in her business, an allowance for doubtful accounts of P426 and an increase in the inventory value of P3,000, be considered. How much cash should Jessa invest in the partnership business? a. P 14,787 C. P 17,787 b. P 15,213 d. P 18,213 2. Ben and Sam Jenkins formed a partnership. Ben contributed P8,000 cash and a used truck that originally cost P35,000 and had accumulated depreciation of P15,000. The truck's fair value was P16,000. Sam, a builder, contributed a new storage garage. His cost of construction was P40,000. The garage has a fair value of P55,000. What is the combined total capital that would be recorded on the partnership books for the two partners? a. P79,000 b. P60,000 C.P75,000 4. P90,000 3. The NBC Company reports net income of P50,000. If partners N, B, and C have an income ratio of 50%, 30%, and 20%, respectively, C's share of the net income is: a. P30,000 b. P12,000 c. P18,000 d. No correct answer is given. 4. PFW Co. reports net income of P45,000. Partner salary allowances are Pitts P15,000, Filbert P5,000, and Witten P5,000. Assuming the income ratio is 50:30-20, respectively, How much is the share of partner Written? a. P25,000 b. P9,000 c. 11,000 d. 20,000 5. McGill and Smyth have capital balances on January 1 of P50,000 and P40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of P22,000 for McGill and P13,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. If net income is 50,000, how much is the share of partner Symth? a. P31,000 b. P19,000 C.P17,000 d. P27,000 6. The NBC Company reports net income of P50,000. If partners N. B, and have an income ratio of 50%, 30%, and 20%, respectively. What is B's share of net income if the percentages are applicable after each partner receives a P10,000 salary allowance? a. P12,000 b. P20,000 c. P19,000 d. P21,000 7.Fred and Gary share profits and losses in a ratio of 2:3, respectively, after salary allowances, interest allowances and bonus allocations. Fred and Gary receive salary allowances of P30,000 and P60,000, respectively, and both partners receive 10% interest based upon the balance in their capital accounts on January 1. Partners' drawings are not used in determining the average capital balances. If net income after deducting the interest and salary allocations is more than P60,000, Gary receives a bonus of 5% of the original amount of net income. Fred Gary January 1 capital balances P 600,000 P 900,000 Yearly drawings (P3,000 a month) 36,000 36,000 a. C. If the partnership experiences a net loss of P50,000 for the year, what will be the final net amount of profit or loss) closed to each partner's capital account? (P90,000) to Fred and P30,000 to Gary b. (P30,000) to Fred and (P30,000) to Gary (P24,000) to Fred and (P36,000) to Gary d. (P30,000 to Fred and (P90,000) to Gary 8. A partnership began its first year of operations with the following capital balances: Y, Capital: P143,000 E, Capital: P104,000 T, Capital: P143,000. The Articles of Partnership stipulated that profits and losses be assigned in the following manner: Ywas to be awarded an annual salary of P26,000 with P13,000 salary assigned to T. 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 xea. What was the balance in T's Capital account at the end of the second year? AP 133, 380 C.P 105,690 B. P 84,760 D. P 132, 860 9. Louisa Santiago purchases 50% of Leo Lemon's capital interest in the K & L partnership for P22,000. If the capital balance of Kate Kildare and Leo Lemon are P40,000 and P30,000, respectively, Santiago's capital balance following the purchase is: a. P22,000. b. P35,000 C. P20,000 d. P15,000 10. Capital balances in the MEM partnership are Mary, Capital P60,000; Ellen, Capital P50,000, and Mills, Capital P40,000, and income ratios are 5:3-2, respectively. The MEMO partnership is formed by admitting Oleg to the firm with a cash investment of P60,000 for a 25% capital interest. The bonus to be credited to Mills, Capital in admitting Oleg is: a. P10,000 b. P7,500 C. P3,750 d. P1,500 11. Capital balances in the MURF partnership are Molly, Capital P50,000; Ursula, Capital P40,000; Ray, Capital P30,000; and Fred, Capital P20,000, and income ratios are 4:3 2:1, respectively. Fred withdraws from the firm following payment of P29,000 in cash from the partnership. Ursula's capital balance after recording the withdrawal of Fred is: a. P36,000 b. P37,000 C. P38,000. d. P40,000 12. The year-end balance sheet and residual profit and loss sharing percentages for the Glenn, Harry, and lan partnership on December 31, 2015, are as follows: Cash P 60,000 Accounts payable P 150,000 Loan to Glenn 50,000 Loan from Harry 50,000 Other assets 360,000 70,000 Glenn, capital (25%) Harry, capital (25%) 80,000 lan, capital 120,000 Total assets P 470.000 Total liab./equity P 470.000 The partners agree to liquidate the business and distribute cash when it becomes available. A cash distribution plan is developed with vulnerability rankings for the Glenn, Harry and lan partnership. After outside creditors are paid, the cash available will initially go to A Glenn in the amount of P20,000. C. Harry in the amount of P70,000 B. Harry in the amount of P50,000 D. lan in the amount of P40,000 Accounts 13. Income ratios are 244 for Harriet, Mike, and Ely, respectively. Assets Liabilities and Owners' Equity Cash P 9,000 Accounts payable P 21,000 Harriet, capital 23,000 receivable 22,000 Mike, capital 8,000 Inventory 73.000 Elly, capital 32.000 P104.000 DIMLAR Assume that as part of liquidation proceedings, Sastoille sells its noncash assets for Pas,000. The amount of cash that would ultimately be distributed to Elly would be: a. P52,000 P48,000 P34,000 d. P85,000 14. oh, Pe, and sy are in the process of liquidating their partnership. Sy 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 P 248,000 Accounts payable P180,000 Inventory 100,000 Oh, capital (40%) 98,000 Plantas 280,000 Pe, capital (40%) 175,000 sy, capital (2016) 175.000 Total assets P628.000 Total Gab./equity P21.00 if the partners then distribute the available cash using a safe payments schedule, sy will receive a. P 41,000 cash C.P 27,000 cash b. P 51,000 cash d. P 248,000 cash 15. On December 31, the capital balances and income ratios in TEP Company are as follows. Partner Capital Balance income Ratio TREPO,000 50% 40,000 SON Posada 30,000 20 Each of the continuing partners agrees to pay P18000 in cash from personal funds to purchase Posada's ownership cuity. Each receives of Posada's equity. How much is the capital bence of atter the dissolutions 75.000 b. 78,000 c. 55.000 d. 53,000