LYCEUM FIRST PREBOARD

Name: Date
1. Based on the following data taken from the statement of affairs of Mark Corp: Allan Baby
BV FMV BV FMV
Accounts Receivables 160,000 160,000
Assets pledged to fully secured liabilities (Fair value P750,000) 900,000 Inventory 240,000 400,000 160,000 200,000
Assets pledged for partially secured liabilities (Fair value P520,00) 740,000 Equipment 480,000 360,000 320,000 400,000
Free assets (current fair value P400,000) 700,000 Accounts Payable 120,000 120,000 80,000 80,000
Unsecured liabilities with priority 70,000
Fully secured liabilities 300,000 The partners agreed that equipment contributed by Allan is worth P400,000 while of
Babe is worth 600,000. The partners’ capital accounts are to be equal after all the
Partially secured liabilities 600,000
contribution of assets and the assumption of liabilities. The amount of cash to be
Unsecured liabilities without priority 1,120,000 contributed by Allan is
a. 360,000 c. 160,000
The amount to be paid to partially secured creditors is b. 1,200,000 d. 800,000
a. 570,000 c. 572,000
b. 527,000 d. 562,000 4. The total non- cash asset of the partnership is:
a. 2,600,000 c. 1,360,000
2. On August 1, 2020, A and B form a partnership. A is to invest certain business assets at b. 2,200,000 d. 1,760,000
values which are yet to be agreed upon. He is to transfer business liabilities and is to
contribute sufficient cash to bring his capital to P210,000, which is 70% of the total 5. A, B and C are partners. On January 2, 2020, their capital balances and profit and loss
capital as had been agreed upon. The details regarding the book values and agreed ratio are as follows:
valuation of A’s business assets and liabilities follow:
` Capital P&L ratio
A P625,000 60%
BV Agreed Values B 1,250,000 25%
C 1,500,000 15%
Accounts Receivables 58,000 58,000
Allowance for doubtful accounts 4,200 5,000 C withdrew P250,000 during the year. Net loss on December 31, 2020 totaled P500,000.
Inventory 98,400 107,000 Hence, the partners decided to liquidate the partnership. It is uncertain how much of the
assets will ultimately yield but favorable realization is expected. It is therefore, agreed to
Store equipment 32,000 32,000 distribute cash as it become available. There are unpaid liabilities of P125,000 and cash
Accumulated Depreciation 19,000 16,400 of P17,500.
a. 2,625,000 c. 2,750,000
Office Equipment 27,000 27,000 b. 2,607,500 d. 2,732,500
Accumulated Depreciation 14,200 8,600
6. The amount to be realized by the partnership on the sale of its assets so that A will
Accounts Payable 56,000 56,000 receive a total of P475,000 in the final settlement of his interest is:
a. 2,582,500 c. 232,500
B agrees to invest cash of P42,000 and merchandise valued at current market price. The b. 2,982,500 d. 150,000
value of the merchandise to be invested by B and the amount of cash to be invested by A,
respectively are:
a. 90,000 ; 72,000
7. Partners Chris, Paul and Pedro share profits and losses in the ratio of 5:3:2. At the end of
b. 252,000 ; 138,000
a very unprofitable year, they decided to liquidate the firm. The partners’ capital account
c. 48,000; 138,000
balances at this time are as follows:
d. 48,000; 72,000
Partner Chris 123,200 Partner Paul 139,440 Partner Pedro 84,000
3. Allan and Baby are combining their separate business to form a partnership. Cash and
non-cash assets are to be contributed for a total capital of P2,400,000. The non-cash
assets to be contributed and the liabilities to be assumed are as follows:
 The liabilities accumulate to P168,000, including a loan of P56,000 from Chris. The cash If the net income for the year ended June 30, 2021, before interest and salary allowances
balance is P33,600. All the partners are personally solvent. The partners plan to sell to partners was P44,000, the net income credited to E is:
assets in installment.
a. P16,000 c. P14,000
If Paul received P20,160 from the first distribution of cash, how much did Chris received b. P16,500 d. P17,500
at that time?
a. 11,200 c. 6,720
12. E, R and G operate a local accounting firm as partnership. After working together for
b. 0 d. 4,480
several years, they have decided to liquidate the partnership. The partners have
presented the following balance sheet;
8. Partners A and B share profits and losses 50:25 ratio, respectively. Each partner received
an annual salary allowance of P1,440,000. If salaries are recorded in the accounts of the Cash P200,000 Liabilities P400,000
partnership as an expense rather than treated as an allocation of profit, the total amount Receivable from E 80,000 Loan Payable to R 100,000
allocated to each partner for salaries and net profit would be
Non-cash assets 1,620,000 E, Capital (10%) 900,000
a. less for both A and B
R, Capital (50%) 300,000
b. unchanged for both A and B
G, Capital (40%) 200,000
c. more for A and less for B
d. more for B and less for A
The non-cash assets are sold for P800,000 with P210,000 of this amount being used
to pay liquidation expenses. All partners are personally insolvent.
9. Partner Chris and Baby share profits and losses equally after each has been credited in
How much of the cash must E received?
all circumstances with annual salary allowances of P750,000 and P600,000, respectively.
a. P261,667 c. P390,000
Under this arrangements, in which of the following circumstances will Chris benefit by
b. P128,333 d. P305,000
P150,000 more than Baby?
a. Only if the partnership has earnings of at least P150,000 for the year
b. Only if the partnership does not incur a loss for the year
13. FAR, MAS and TAX share profits and losses from their partnership in the ratio of 35%,
c. Only is the partnership has earnings of P1,350,000 or more for the year
45% and 20% respectively. Capital and loan balances related to each partner are as
d. In all earnings or loss situations
follows:

10. Partner a and B have profits 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 Loan to Partner Loan to
from Partnership Partnership
salaries and bonus; and interest of 10% on average capital balances of P20,000 and
from partner Capital
P35,000 for A and B, respectively. One-third of any remaining profits are allocated to A
FAR P100,000 P500,000
and the balance to B.
MAS P70,000 280,000
TAX 200,000 250,000
If the partnership had net income of P102,500, how much should be allocated to partner
A? In addition to loan to partner, assets of the partnership includes cash of P110,000,
a. P41,000 c. P41,167 inventory of P360,000, receivable of P260,000 and plant and equipment of P710,000.
b. P44,250 d. P47,500 Partnership liabilities to non-partners amount to P180,000.

If FAR receives already P450,000, how much TAX receives at this point?
a. P321,155 c. P450,000
11. E, F and G invest P40,000; P30;000 and P25,000, respectively in a partnership on June b. P364,286 d. P375,000
30, 2020. They agree to divide the net income or loss as follows:
 Interest at 10% on beginning capital account balances 14. On May 1, 2020, the capital accounts of S, T and C are P1,260,000; P787,500 and
 Salaries of P10,000; P8,000 and P6,000, respectively, to E, F and G P472,500 , respectively.
 Remaining net income loss divided equally
 A minimum of P15,000 of income guaranteed to G At this time, I is admitted to the firm, he purchased a 1/6 interest in the firm for
P288,750. The old partners equalized their capital investments. Afterwards, all the
 partners agree to divide profits and losses equally. The new partnership closes its 18. A category of assets that typically has no estimated realizable value in the Statement of Affairs is:
books June 30, 2020 reporting profit of P44,100 for two months. Each partner made a. Merchandise inventory c. Equipment
the following withdrawals: S and C P2,625 per month while T and I, P3,500 per b. Prepaid expenses d. Account Receivables
month. On June 30, 2020, I invest enough cash to increase his capital to a 1/3
interest in the partnership. 19. In a bankruptcy proceeding, the term Statement of Affairs refers to:
a. A document containing a series of questions concerning all aspects of the debtor’s financial
How much cash is to be invested by I? condition and operations
a. P211,165.50 c. P632,642.50 b. A financial statement prepared in lieu of a balance sheet
b. P70,000 d. P633,762.50 c. Both a and b
d. Neither a nor b
15. Max decided to withdraw from his partnership with Fried and Chic. Before his
withdrawal, Max’ capital balance was P58,000, while Fried’s was P64,000 and Chic’s was
P77,000. Also, the partnership’s total assets amounted to P450,000, but the partners 20. The bankruptcy trustee for insolvent company sold assets having a carrying amount of P25,000
agreed that a fixed asset was under depreciated by P15,000. Max, Fried and Chic share
for P18,500 cash. The journal entry to record the sale is is:
profits and losses in the ration of 2:4:4, respectively. If Max was paid P53,200 upon his
a. Cash 18,500
retirement, how much is the remaining partnership net assets after Max’ withdrawal?
a. P182,800 c. P130,800 Loss on realization of assets 6,500
b. P197,800 d. P160,800 Assets 25,000
b. Cash 18,500
16. Partners Irish, Ivan and Irvin share profits and losses in the ratio of 4:3:3. at the end of a Estate administrative expense 6,500
very unprofitable year, they decided to liquidate the firm. The balances of their accounts Assets 25,000
on this date are:
Cash 18,000 c. Cash 18,500
Other assets ? Estate Deficit 6,500
Liabilities 90,000 Assets 25,000
Irish, cap 66,000
Ivan, cap 74,700 d. Cash 18,500
Irvin, cap 45,000 Estate Equity 6,500
Assets 25,000
The liabilities included a loan of P30,000 from Irish. All the partners are personally
solvent. The partners plan to sell the assets on instalment.

If Ivan received P33,000 from the first distribution of cash, how much did Irish received
at that time?
a. P40,400 c. P36,000
b. P24,750 d. P33,000

17. Solly and Dante are partners who share profits and losses in the ratio of 7:3, respectively.
On February 1, 20x1, their respective capital accounts were as follows: Solly P140,000
and Dante P120,000.

On that date they agree to admit Jam as partner with 1/3 interest in the capital and
profit and losses, and upon his investment of P100,000. The new partnership will begin
with a total capital of P360,000. Immediately after Jam’s admission, what are the capital
balance of Solly, Dante and Jam?
a. 120,000; 120,000; 120,000 c. 126,668; 113,322; 120,000
b. 126,000; 114,000; 120,000 d. 140,000; 120,000; 100,000