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COMPREHENSIVE EXAMINATION TWO

Pre-week Materials Kenneth Bryan T. Tegio

1.) Partners A and B have a profit and loss agreement with the following provisions: salaries of P30,000
and 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 average capital balance 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 Partners A?
A. 22,833
B. 21,833
C. 18,250
D. None of the above

2.) Respect, a partner of Commitment partnership, is entitled to 40% of the profit and losses. During
2015, Respect contributes land to the partnership cot P50,000 but has a current value of P60,000. Also
during 2015, Respect has drawings of P80,000. The balance in Respect capital account was P120,000 at
the beginning of the year and P150,000 at the end.
What was the partnership earnings?
A. (75,000)
B. 150,000
C. (50,000)
D. 125,000

3.) The partnership of SGV, KPMG, and PWC became insolvent on December 31, 2015 and is to be
liquidated. SGV, KPMG, and PWC has the following balances respectively, P455,000, (P210,000),
(P28,000). After paying their personal liabilities, SGV has still P70,000 while KPMG has P105,000 of
their personal assets. However, PWC has still unpaid personal liabilities amounting to P280,000 and his
personal assets amounted only to P210,000. The partners share profits and losses equally.
How much is the maximum amount that SGV can expect to receive from the partnership?
A. P217,000
B. P427,000
C. P245,000
D. P322,000

4.) L, E, G are partners with capital balances of P336,000, P540,000 and P190,000 respectively, sharing
profits and losses in the ratio of 2:5:1. SJ is admitted as a new partner bringing with him expertise and
is to invest cash for a 15% interest in the partnership considering the transfer of capital from him of
P90,000 upon his admission.

Upon admission of SJ, which of the following is wrong?


A. The capital balance of E amount to P596,250
B. Cash will be debited in the amount of P204,000
C. The capital account of G will be credited in the amount of P11,250
D. The total agreed capital of the old partners is P90,000 greater than their contributed capital

5.) Bitter contributed P50,000 and Anger contributed P75,000 to form a partnership, and they agreed
to share profits in the ratio of their original contributions. The first year of resulted in a loss P29,500;
Bitter made an additional investment of P12,000 while Anger made a withdrawal of P7,000. At start of
the following year, they agreed to admit Emoted into partnership. He was to receive a one-third
interest in the capital and profits upon payment of P24,000 to Bitter and Anger, whose capital accounts
were to be reduced by transfer of Emoted’s capital account of amounts sufficient to bring them back to
their original capital ratio

Upon admission of Emoted, which of the following statements is wrong?


A. The amount of cash paid by Emoted to Anger is P10,100
B. The capital account of Emoted will be credited in the amount of P33,500
C. The capital account of Bitter will be debited in the amount of P23,400
D. The balance of the capital account of anger will be P40,200

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6.) CV and LX are partners with profit and loss ratio of 80:20 and capital balances of P700,000 and
P350,000 respectively. TM is to be admitted into the partnership by purchasing a 30% interest in the
capital, profit and loss for P420,000. Assuming that no asset revaluation is to be made,

Which of the following is true in the books of the partnership upon admission of TM?
A. Increase in asset account in the amount of P420,000
B. Credit capital accounts of the selling partners with the total amount of P315,000
C. Decrease in capital account of the acquiring partner in the amount of P105,000
D. The entry upon admission will not affect the total capital of the partnership

7.) Assuming this time, upon admission of TM, the equipment of the partnership is undervalued,
which of the following is false?
A. Increase in the asset account of the partnership in the amount of P350,000
B. The capital account of CV will be credited in the amount of P280,000 for his share in the
adjustment of the undervalued equipment.
C. The capital account of LX will be debited in the amount of P56,000 upon transfer of capital to the
new partner
D. The capital account of CV will have a net decrease of P56,000 as a result of revaluation of asset
and admission of TM.

8.) The following data were taken from the statement of realization and liquidation of XYZ Corporation
for the quarter ended September 30, 2016:

Assets to be realized 41,250


Assets acquired 45,000
Assets realized 52,500
Assets not realized 18,750
Liabilities to be liquidated 67,500
Liabilities assumed 22,500
Liabilities liquidated 45,000
Liabilities not liquidated 56,250
Supplementary credits 63,750
Supplementary charges 58,500
The ending balances of capital stock and retained earnings are P37,500 and P15,000, respectively.

What is the net income (loss) for the period? How much is the ending balance of cash?
A. P21,000; P69,000
B. P(21,000); P70,000
C. P(21,000); P90,000
D. P21,000; P70,000

9.) Delloite had a beginning inventory of P3,000 units 35% complete, and an ending inventory of 2,500
units 20% complete.
If 17,500 units were completed, weighted-average EUP is?
A. 17,500
B. 18,000
C. 18,500
D. 20,000

10.) If 17,500 units were completed, FIFO EUP is?


A. 17,500
B. 16,950
C. 16,050
D. 15,050

11.) Wisdom recorded an understated January inventory balance by P30,000 and an overstated
December inventory balance by P60,000.

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As a result, Wisdom’s cost of sales was?
A. P30,000 understated
B. P90,000 understated
C. P30,000 overstated
D. P90,000 overstated

12.) AltF4 & Co. has a branch in Iloilo. The branch acquires its merchandise from outside sources and
from the home office (for which it is billed at 120% of cost). Below are excerpts from the records of the
home office and the branch:
Home Office:
Allowance for overvaluation of branch merchandise P370,000
Shipments to branch 850,000
Iloilo Branch:
Beginning inventory P1,440,000
Shipments from home office 1,020,000
Purchases 410,000
Month- end Branch Inventory:
From home office, at billed price P1,170,000
From outside sources, at cost 290,000

The amount of unrealized overvaluation during the month was:


a. P175,000 b. P370,000 c. P200,000 d. P195,000

13.) A home office ships inventory to its branch at a mark-up of 125% above cost. The required balance
of the allowance for overvaluation account is P 1,425,000. During the year, the home office sent
merchandise to the branch costing P 9,000,000. At the start of the year, the branch’s Statement of
Financial Position shows P1,800,000 of inventory on hand that was acquired from the home office.

By what amount will the Allowance for Unrealized Gross Margin in Branch Inventory account be
debited at the end of the year?
a. P10,825,000 b. P2,610,000 c. P1,185,000 d. P12,250,000

14.) Cathay Builders Inc. operates a branch in Nueva Ecija. On July 31, 2015, the Branch Current
account had a balance of P420,100. In the process of reconciling the reciprocal current accounts, the
items that were noted:
 The home office had billed the branch P1,250,000 for merchandise shipment which were still
in transit as of July 31
 A home office customer erroneously paid his account of P125,000 to the branch on July 31
 The branch has failed to recognize its P200,000 share in advertising expense paid by the home
office
 The branch reported a net income of P880,000 during the fiscal period then ended but was
recorded by the home office as P808,000

Assuming that all other transactions related to the home office and its branch are correctly recorded,
how much is the adjusted balance of the reciprocal current accounts as of July 31, 2015?
a. P617,100
b. P817,100
c. P417,100
d. P217,100

15.) During 2013, goods were shipped to the branch at 120% above cost. The reciprocal account in the
income statement of the home office amounted to P237,500. The balance of the contra branch current
account reports a balance of P375,000 before adjustment. The beginning inventory of the branch
current from the home office at cost is P360,000 and from outsiders, P93,000. The branch purchased
goods from outsiders during the year amounting to P125,200. If the ending inventory of the branch as
reported in the combined statement of financial position is P345,000. The branch income as reported
in the combined financial statement and as reported in the branch’s books are P201,125 and 120,750,

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respectively.

How much is the cost of goods sold to be reported in the branch’s income statement for the year
ended December 31, 2013?
a. P551,075
b. P514,500
c. P470,700
d. P790,500

16.) MAX Company is in bankruptcy and is being liquidated. The trustee has converted all assets into
P120,000 cash and has prepared the following list of approved claims:

Customer deposits (P1,000 from each two customers


that ordered products that were never delivered) P2,000
Property taxes payable 4,000
Accounts payable, unsecured 30,000
Trustees fees and other costs of liquidation 16,000
Mortgage payable, secured by property that was sold for P80,000 60,000
Note payable to bank, secured by all accounts receivable
(P40,000) of which P30,000 were collected and P10,000 were
written off as uncollectible 40,000

How much will the bank receive on this note payable?


a. 30,000
b. 32,000
c. 32,500
d. 40,000

17.) The following data are provided by excellent Corp. Which is undergoing liquidation process:
 Total liabilities amounts to P692,000. 35% is fully secured by assets amounting to P270,000
with a FMV of P250,000; 40% is partially secured by assets amounting to P300,000 with a FMV
of P225,000; and the remaining balance is unsecured.
 Total assets amounts to P890,000 and has a total fair market value P695,000.
 Unpaid income taxes amounts to P35,000. Additional salaries payable and administrative
expenses totaled P28,000.
 Deficit amounts to P79,000.

Which of the following statement is correct?


a. The assets available to all unsecured creditors with and without priority is P227,800
b. The amount paid to partially secured creditors is P225,000
c. The estate deficit amount to P60,000
d. The amount paid to all secured creditors is P695,000

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