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SCORE: NAME: PROFESSOR: SECTION: Multiple Choice 1. Aristorenas, Soriano and Filamor have the following profit and loss agreement. Partners Aristorenas and Soriano will receive salaries of P40,000 each. Partner Filamor will get a bonus of 10% of profit after salaries and bonus. Remaining profits are shared by Aristorenas, Soriano and Filamor in the ratio of respectively. The partnership had a profit of P91,000. How much should be allocated to Filamon a. P 4,000 c. P 9,100 b. P 4,070 d. P27,300 2. A partnership showed the following account balances: sales, P70,000; cost of sales P40,000; operating expenses, P10,000; partners' salaries, P13,000; interest paid to banks, P2,000 and partners' drawings, P8,000. The partnership profit is a. P20,000. c. P 5,000. b. P18,000. d. P(3,000). 3. Villena, a partner in the Dulay, Villena & Co., has a 30% participation in partnership profits and losses. Villena's capital account has a net decrease of P120,000 during the calendar year 2018. During 2018, Villena withdrew P260,000 (charged against his capital account) and contributed property valued at P50,000 to the partnership. What was the profit of the Dulay, Villena & Co. for year 2018? a. P1,100,000 C. P700,000 b. P466,667 d. P300,000 4. Marasigan, Cabance and Cequina formed a partnership on Jan. 1, 2018. Each contributed P120,000. Salaries were to be allocated as follows: Marasigan, P30,000; Cabance, P30,000; Cequina, P45,000. Drawings were equal to salaries and to be taken out evenly throughout the year. With sufficient partnership profit Marasigan and Cabance could split a bonus equal to 25% of partnership profit after salaries and bonus (in no event could the bonus go below zero). Remaining profits were to be split as follows: 30% for Marasigan; 30% for Cabance and 40% for Cequina. For the year, partnership profit was P120,000. Compute the ending capital for each partner: a. Marasigan, P125,100; Cabance, P125,100, Cequina, P124,800 b . Marasigan, P126,000; Cabance, P126,000, Cequina, P124,500 C. Marasigan, P125,500; Cabance, P125,500, Cequina, P124,000 d. Marasigan, P155,100; Cabance, P155,100; Cequina, P169,800 112 | Partnership and Corporation Accounting5. Del Mundo, Ballada and Mendoza are partners sharing profit on a 7:2:1 ratio. Burgos was admitted into the partnership with 15% share in profit on Jan. 1, 2018. The old partners continue to share profit in their original ratios. For the year, 2018, the partnership. showed a profit of P15,000. However, it was discovered that the following items were omitted in the firm's books: Unrecorded at year-end: 2017 2018 Accrued Expense P1,050 Accrued Income 875 Prepaid Expense P1,400 Unearned Income 1,225 The share of Ballada in the 2018 profit is a. P2,197.50. c. P2,490.50. b. P2,637.00. d. P3,149.75. 6. The partnership of Ronzales, Adalem and Bio divides profits or losses in the ratio of 4:5:3. During 2018, the business earned P80,000. Bio's share of this profit is a. P33,334. c. P32,000. b. P26,667. d. P20,000. 7. Kwong and Morales entered into a partnership as at Mar. 1, 2018 by the investing P125,000 and P75,000, respectively. They agreed that Kwong, as the managing partner, was to receive a salary of P30,000 per year and a bonus computed at 10% of the profit after adjustment for the salary; the balance of the profit was to be distributed in the ratio of their original capital balances. On Dec. 31, 2018, normal account balances were as follows: Cash P70,000 Accounts Payable P 60,000 Accounts Receivable 67,000 Kwong, Capital 125,000 Furniture & Fixtures 45,000 Morales, Capital 75,000 Sales Returns 5,000 Kwong, Drawing 20,000 Purchases 196,000 Morales, Drawing 30,000 Operating Expenses 60,000 Sales 233,000 Inventories on Dec. 31, 2018 were as follows: supplies, P2,500, merchandise, P73,000. Prepaid insurance was P950 while accrued expenses were P1,550. Depreciation rate was 20% per year. The partners' capital balances on Dec. 31, 2018, after closing the profit and drawing accounts, were: Kwong Morales Kwong Morales a, P135,940 P47,960 C. P139,680 P48,680 P139,540 P49,860 d. . P142,350 P47,670 Partnership Operations and Financial Reporting | 1138. The Soliman and Palaganas Partnership agreement provides for Soliman to rece a 20% bonus on profits before the bonus. Remaining profits and losses are divin between Soliman and Palaganas in the ratio of 2:3, respectively. Which partner had a greater advantage when partnership has a profit or when it has a loss? Profit Loss a. Soliman Palaganas b. Soliman Soliman C . Palaganas Soliman Palaganas Palaganas 9. At the beginning of 2018, the statement of financial position for EasyPage Company showed the following balances in the partners' capital accounts: Rivera, P24,000 and Rosario, P26,000. Rivera and Rosario share profits and losses in a 3:7 ratio. During 2018, EasyPage experienced a P40,000 loss. Rivera withdrew P10,000 from the partnership during the year and Rosario withdrew P18,000. What will be the balance in Rivera's capital on Dec. 31, 2018? a. P 3,600 c. P12,000 b. P 2,000 d. P26,000 10. On Jan. 1, 2018, Demafiles and Barbosa decided to form a partnership. At the end of the year, the partnership made a profit of P120,000. The capital accounts of the partnership showed the following transactions: Demafiles, Capital Barbosa, Capital Dr. Cr. Dr. Cr. Jan. 1 P40,000 P25,000 Apr. 1 P5,000 June 1 10,000 Aug. 1 10,000 Sept. 1 P3,000 Oct. 1 5,000 1,000 Dec. 1 4,000 5,000 Assuming that an interest of 20% per annum is given on average capital and the balance of the profits is allocated equally, the allocation of profits should be 3. Demafiles, P60,000; Barbosa, P59,400. C. Demafiles, P67,200; Barbosa, P52,800 b . Demafiles, P61,200; Barbosa, P58,800. d. Demafiles, P68,800; Barbosa, P51,200 11. Barbo is a partner and has an annual salary of P24,000 but actually draws P3,000 per month. The other partner has an annual salary of P35,000 and draws P2,000 per month. What is the total annual salary that should be used to allocate profit between the partners? . P119,000 b. P 71,000 114 | Partnership and Corporation AccountingC. P 60,000 d. P 59,000 12. The partnership agreement of Zuniga, Armenta & Galang provided for the year-end allocation of profit in the following order: First, Zuniga is to receive 10% of profit up to P200,000 and 20% over P200,000. Y P300,000. Second, Armenta and Galang each are to receive 5% of the remaining profit over The balance of profit is to be allocated equally among the three partners. The partnership's 2018 profit was P500,000 before any allocations to partners. What amount should be allocated to Zuniga? a. P202,000 b. P216,000 C. P206,000 d. P220,000 13. Bacalso and Tenajeros have respective partnership capital balances of P48,000 and P24,000 on Jan. 1. Bacalso withdrew P6,000 on May 1 and P6,000 on July 1. Tenajeros invested an additional P12,000 on April 1 and withdrew P8,000 on Oct. 1. The average capital balances for Bacalso and Tenajeros for the year are a. Bacalso, P48,000; Tenajeros, P24,000. b. Bacalso, P42,000; Tenajeros, P26,000. C. Bacalso, P41,000; Tenajeros, P31,000. Bacalso, P36,000; Tenajeros, P28,000. 14. On Jan. 1, 2018, Anatalio, Yecyec, Guzon and Calimpusan formed Butuan Trading Co., a partnership, with contributions as follows: Anatalio, P50,000; Yecyec, P25,000; Guzon, P25,000 and Calimpusan, P20,000. The partnership contract provided that each partner shall receive a 5% interest on contributed capital, and that Anatalio and Yecyec shall receive salaries of P5,000 and P3,000, respectively. The contract also provided that Guzon shall receive a minimum of P2,500 per annum, and Calimpusan a minimum of P6,000 per annum, which is inclusive of amounts representing interest and share of remaining profits. The balance of the profits shall be distributed to Anatalio, Yecyec, Guzon and Calimpusan in a ratio 3:3:2:2. What amount must be earned by the partnership, before any charge for interest and salaries, so that Anatalio may receive an aggregate of P12,500 including interest, salary and share of profits? C. P30,667 a. P32,333 d. P16,667 b. P30,000 15. Garachico, Perez, and Burgos formed a partnership on Jan. 1, 2018, and contributed P150,000, P200,000, and P250,000, respectively. Their articles of co-partnership Partnership Operations and Financial Reporting | 115provided that the operating profit be shared among the partners as follows: salary, P24,000 for Garachico, P18,000 for Perez, and P12,000 for Burgos; inter & Of 12% on the average capital during 2018 of the three partners; and the balancest the ratio of 2:4:4, respectively. The operating profit for the year ended Dec. 31, 2018 amounted to P176.00 Garachico contributed additional capital of P30,000 on July 1 and made ; withdrawal of P10,000 on Oct. 1; Perez contributed additional capital of P20,000 Aug. 1 and made a withdrawal of P10,000 on Oct. 1; and, Burgos made a withdraws of P30,000 on Nov. 1. The partners' capital balances on Dec. 31, 2018 are a. Garachico, P179,680; Perez, P229,360; and, Burgos, P239,360. b. Garachico, P223,180; Perez, P272,060; and, Burgos, P280,760. C. Garachico, P189,680; Perez, P239,360; and, Burgos, P269,360. d. Garachico, P179,760; Perez, P229,520; and, Burgos, P239,520. 16. Castillo, Labasan and Hollanes are partners with average capital balances during 2018 of P472,500, P238,650, and P162,350, respectively. The partners receive 10% interest on their average capital balances; after deducting salaries of P122,325 to Castillo and P82,625 to Hollanes, the residual profits or loss is divided equally. In 2018, the partnership had a loss of P125,624 before the interest and salaries to partners. By what amount should Castillo's and Hollanes' capital account change - increase (decrease)? Castillo Hollanes Castillo Hollanes a. P30,267 P(40,448) C. P(40,844) P31,235 b. P29,476 P 17,536 d. P 28,358 P32,458 17. The partnership agreement of Carlos, Niza and Usop provided for the following terms on distribution of profits and losses: Carlos is to receive 10% of the profit up to P1,000,000 and 20% on the amount of excess; * Niza and Usop each, are to receive 5% of the remaining profit in excess of P1,500,000 after Carlos' share as per above; * The balance to be divided equally. For the year just ended, the partnership realized a profit of P2,500,000 before distribution to partners. The share of Carlos is a. P1,080,000. c. P1,300,000. b. P1,000,000. d. P1,100,000. 116 | Partnership and Corporation Accounting18. Onate, Guillermo and Cumagun are partners sharing profits on a 5:3:2 ratio. On Jan. 1, 2018, Aglugob was admitted into the partnership with a 10% share in profits. The old partners continue to participate in profits in their original ratio. For 2018, the profit of the partnership was reported as P12,500. However, it was discovered that the following items were omitted in the firm's books: Unrecorded at year-end 2017 2018 Prepaid Expense P800 Accrued Expense P600 Unearned Income 700 Accrued Income 500 The new profit and loss ratio for Guillermo, and the share of partner Cumagun in the 2018 profit would be a. 30% and P2,214. C. 27% and P2,286. b. 27% and P2,214. d. 30% and P2,286. 19. Perez, Yuzon and Mercado formed a partnership on Jan. 1, 2018 with the following initial investments: Perez P100,000 Yuzon 150,000 Mercado 225,000 The partnership agreement states that profits and losses are to be shared equally by the partners after consideration is made for the following: Salaries allowed to partners: P60,000 for Perez, P48,000 for Yuzon and P36,000 for Mercado. Average partner's capital balances during the year shall be allowed 10% interest. Additional information: On June 30, 2018, Perez invested an additional P60,000. Mercado withdrew P70,000 from the partnership on Sept. 30, 2018. Share on the remaining partnership profits was P5,000 for each partner. The total partnership capital on Dec. 31, 2018 was C. P672,750. a. P405,000. d. P480,000. b . P671,500. Partnership Operations and Financial Reporting | 117