NAME: PRO 4. SECTION: Multiple Choice 1. Ceradoy, Manongsong and Anuran are partners sharing residual profits in the ratio of 3:2:1. The partnership agreement provides for 8% interest on capital and a salary for Manongsong of P80,000 per annum. Profit for 2019 was P840,000 and the year- end balances on partners' capital accounts are as follows: Ceradoy, P200,000; What was Anuran's share of Manongsong, P150,000 and Anuran, P120,000. residual profits for 2019? a. P120,400 b. P126,670 C. P130,000 d. P140,000 2. Malaluan and Baral are in partnership. They share profits in the ratio 3:2 and close their accounts on June 30 each year. On Jan. 1, 2019, Castro joined the partnership. The profit-sharing ratio was revised to become Malaluan 50%, Baral 25% and Castro 25%, after providing for annual salaries as follows: Baral, P20,000 and Castro, P12,000. The partnership profit for the year ended June 30, 2019 was P480,000, accruing evenly over the year. What are the partners' total share in profits for the year ended June 30, 2019? a. b. Malaluan P256,000 P248,000 P264,000 P264,000 Baral P162,000 P168,000 P166,000 P156,000 Castro P62,000 P64,000 P66,000 P60,000 C. d. 3. Refozar, Martinez and Magsino formed a partnership. It's on a calendar year basis. The profit-sharing arrangements are as follows: Until June 30, 2019, the annual salaries are provided as follows: Martinez, P40,000 and Magsino, P20,000. The residual profit will be shared in the ratio of 6:2:2. From July 1, 2019, the salaries will be discontinued and the profit to be divided in the revised ratio of 5:3:2. Profit for the year ended Dec. 31, 2019 was P400,000 before charging partners salaries, accruing evenly through the year, and after charging an expense of P40,000, which it was agreed related wholly to the first six months of the year. How should the profit for the year be divided among the partners? Refozar Martinez Magsino P182,000 P130,000 P88,000 b. P200,000 P116,000 P84,000 a. C. d. P198,000 P118,000 P88,000 P180,000 P132,000 P88,000 4. Rubio and Bisana established a trading partnership. They share profits equally after allowing salaries of P40,000 per year for Rubio and interest on partner's capital at 5% per year. On Jan. 1, 2019, their capital balances are as follows: Rubio, P200,000 and Bisana, P100,000. On July 1, 2019, Bisana invested an additional P100,000 and Rubio's salary was discontinued. The partnership profit for the year ended Dec. 31, 2019 was P337,500. What was Rubio's total profit share for the year ended Dec. 31, 2019? P182,500 b. P178,750 P180,000 d. P190,000 a. C. 5. Villanueva and Mulles are partners sharing profits in the ratio 3:2. On Jan. 1, 2019, Lucena joined the partnership and the new profit sharing ratio is as follows: Villanueva 40%, Mulles 30% and Lucena 30%. Profits for the year ended June 30, 2019 were: 6 months ended Dec. 31, 2018 6 months ended June 30, 2019 P300,000 P450,000 An irrecoverable debt of P50,000 was written off in the six months to June 30 in computing the P450,000 profit. It was agreed that this expense should be borne by Villanueva and Mulles only. What is Villanueva's total profit share for the year ended June 30, 2019? a. P330,000 b. P310,000 C. P340,000 d. P350,000 6. Figueroa and Aguhob are partners in a CPA Review School. They share profits in the ratio of 2:1. On July 1, 2019 they admitted Figueroa's son Doblas as a partner. Figueroa guaranteed that Doblas' profit share would not be less than P25,000 for the six months to Dec. 31, 2019. The profit sharing arrangements after Doblas' admission is as follows: Figueroa 50%, Aguhob 30% and Doblas 20%. The profit for the year ended Dec.31, 2019 was P240,000 accruing evenly over the year. What should Figueroa's total profit share be for the year ended Dec. 31, 2019? a. P140,000 b. P139,000 c. P114,000 d. P139,375 21. Pozon, Ventic and Biore are partners. Pozon is an industrial partner. During the first year of operation, the firm realized a profit of P60,000. During the second year, the firm sustained a loss of P30,000. So, the total profit for the two years of operations was only P30,000. In the Articles of Partnership, it was agreed that Pozon, the industrial partner would get one-third of the profit but would not share in the losses. How much will Pozon, the industrial partner get? Pozon will get only P10,000 which is one-third of the profit. a. b. Pozon will get only P20,000 in the first year and none in the second year. C. Pozon will share in the loss in the second year. d. Pozon will get only P20,000 which is 1/3 of the profit of the first year of operations. 22. Which of the following is not considered a legitimate expense of a partnership? a. Supplies used in the partners' offices. b. Salaries for management hired to run the business. C. Depreciation on assets contributed to the partnership by the partners. d. Interest paid to partners based on the amount of their invested capital. 23. Opiso, Bombeo and Palatino are partners. Their contributions are as follows: Opiso P600,000; Bombeo, P400,000 and Palatino, services. The partners agreed to divide profits or losses in the following percentages: Opiso, 35%; Bombeo, 25% and Palatino, 40%. If there is a profit of P100,000, how should the profit be distribute among the partners? a. Opiso, P35,000; Bombeo, P35,000 and Palatino, P30,000. b. Opiso, P30,000; Bombeo, P20,000 and Palatino, P50,000. C. Opiso, P35,000; Bombeo, P25,000 and Palatino, P40,000. d. Opiso, P60,000; Bombeo, P40,000 and Palatino, nothing. The most equitable distribution of partnership profit based on capital contributio uses which of the following capital concept? a. Equally b. Ending capital C. Beginning capital d. Average capital c. Salary allowances. d. Interest on capital balances. 16. A partner who contributes money or property as well as his work or industry to the capital of the partnership is called a. Industrial partner b. Capitalist partner Managing partner d. Capitalist-industrial partner C. a. 17. Closing entries of a partnership include entries to record distribution of cash to the partners. b. eliminate the capital accounts and record the distribution of assets to partners to effect the partnership termination and liquidation. close income and expense accounts to the income summary account; and then close the profits or losses to the drawing accounts. d. close the profits or losses and dividends declared accounts to retained earnings. C. 18. Arzadon, Ballada and Castro are partners. Their contributions are as follows: Arzadon, P600,000; Ballada, P400,000 and Castro, services. The partners did not agree on how to divide profits or losses. If there is a loss of P100,000, how should the loss be shared by the partners? a. Arzadon, P60,000; Ballada, P40,000 and Castro, nothing. b. Arzadon, P35,000; Ballada, P25,000 and Castro, P40,000. C. Arzadon, P35,000; Ballada, P35,000 and Castro, P30,000. d. Arzadon, P30,000; Ballada, P20,000 and Castro, P50,000. 19. A 1:3:2 ratio is the same as a. 10%:30%:20%. b. 1/10:3/10:2/10. C. 1/6:1/2:1/3. d. 20%:50%:30%. 20. Periodic withdrawals by partners are best viewed as a. expense of doing business. b. taxable income to the partners. C. distribution of partnership assets to the partners. d. payment for partners' personal services to the partnership. 10 a. P30,000 decrease b. P40,000 increase C. P50,000 increase d. P90,000 increase 1 11. Parducho had a P500,000 capital balance for eight months and a P650,000 balance for four months. Burgos had a P380,000 capital balance for five months and a Parducho receive if profits and losses are distributed based on the ratio of their P500,000 balance for seven months. How much of the year's P800,000 profit should average capital balances? a. P360,000 b. P387,500 C. P440,000 d. P453,200 12. Which of the following is not a component of the formula used to distribute profit? After all other allocations, the remainder divided according to the profit and loss a. C. sharing ratio. b. Salary allowances to the managing partners. Interest on the average capital investments. d. Interest on notes to partners. 13. A partner has a capital balance of P400,000 for five months, P500,000 for four months, and P600,000 for three months. The average capital balance is a. P483,333. b. P485,000. C. P491,680. d. P500,000 14. Arzadon, Ballada and Castro are partners. Their contributions are as follows: Arzadon, P600,000; Ballada, P400,000 and Castro, services. Partners Arzadon, Ballada and Castro agreed to divide profits or losses in the ratio of 35:25:40, respectively. How should a loss of P100,000 be shared by the partners? a. Arzadon, P30,000; Ballada, P20,000 and Castro, P50,000. b. Arzadon, P35,000; Ballada, P25,000 and Castro, P40,000. c. Arzadon, P35,000; Ballada, P35,000 and Castro, P30,000. d. Arzadon, P60,000; Ballada, P40,000 and Castro, nothing. 15. Which of the following distributions would be made last in dividing profits to the partners when interest on capital balances and salary allowances are involved? a. Equally. b. Specified ratio