Professional Documents
Culture Documents
MIDTERM EXAMINATION
Alley and Barvey established a partnership on December 1, 2018. They agreed that Alley will contribute cash of P20,000;
Land of P15,000 and Building of P50,000. Alley’s accounts payable of P10,000 is to be assumed by the partnership. Barvey
will contribute cash of P30,000 and furniture and fixtures of P25,000.
1. Assume that each partner is to be credited for the full amount of net assets invested, how much are the capital balances of
each partner?
A. P85,000 for Alley and P55,000 for Barvey C. P65,000 for Alley and P65,000 for Barvey.
B. P75,000 for Alley and P55,000 for Barvey D. P75,000 for Alley and P75,000 for Barvey.
2. Assume that each partner initially should have an equal interest in partnership capital with no contribution of intangible asset
(bonus method). How much are the capital balances of each partner?
A. P85,000 for Alley and P55,000 for Barvey C. P65,000 for Alley and P65,000 for Barvey
B. P75,000 for Alley and P55,000 for Barvey D. P75,000 for Alley and P75,000 for Barvey.
Several years ago, Killough and Seago formed Hokie Partnership. The partnership agreement states that each partner is to
receive a salary of P10,000 per month and 5% interest on beginning-of-the-year capital balances; any remainder would be
divided between Killough and Seago in the ratio 2:3, respectively. The unadjusted trial balance of Hokie Partnership as of
December 31, 2018, appears as follows:
Debits Credits
Cash P 500,000 Accounts payable P 350,000
Accounts receivable 300,000 Notes payable 200,000
Inventory, January 1, 2018 400,000 Killough, capital 750,000
Furniture & fixtures, net 150,000 Seago, capital 620,000
Building, net 300,000 Sales 800,000
Killough, drawing 100,000
Seago, drawing 120,000
Purchases 600,000
Operating expenses 250,000
Total P2,720,000 Total P2,720,000
Additional information:
1. December 31, 2018, inventory was P550,000. 2018 purchases of P600,000 were recorded using the periodic
inventory method.
2. Depreciation for 2018 on furniture and fixtures and building is determined to be 10% and 20% respectively, of net
valuation.
3. On July 1, 2018, the partnership recorded a P100,000 additional capital contribution by Seago. Killough made no
additional capital contributions during the year.
4. Determine the ending capital balance of partner Seago on December 31, 2018.
A. P480,100 C. P478,900
B. 521,100 D. 694,100
5. E, F, and G invest P40,000, P30,000 and P25,000 respectively, in a partnership on June 30, 2018. They agree to divide net
income or loss as follows:
If the amount credited to E is P17,500, the amount of net income for the period is
A. P44,000 C. P51,500
B. P46,167 D. P55,100
6. The partnership agreement of Peter and Simon provides that interest at 10% per year is to be credited to each partner on the
basis of weighted-average capital balances. A summary of Simon’s capital account for the year ended December 31, 2018, is
as follows:
What amount of interest should be credited to Simon’s capital account for 2018?
A. P15,250 C. P16,500
B. P15,375 D. P17,250
8. Assume D receives a one-fourth interest in the assets of the partnership and B is credited with P15,000 of the bonus from D,
how much cash D invest?
A. P115,000 C. P160,000
B. 105,000 D. 120,000
Partners A, B, C, and D have been operating ABCD Partnership for ten years. Due to a significant reduction in the demand for
their product over recent years, the partners have agreed to liquidate the partnership. At the time of liquidation, balance sheet
accounts consisted of cash, P103,500; noncash assets, P300,000; liabilities to outsiders, P60,000; capital credit balances for
partners A, B, and C, P90,000, P150,000, and P120,000, respectively; and a debit capital balance for partner D of P16,500.
Partners share equally in income and loss. It is estimated that the administrative cost of liquidation will total P4,500. While
preparing for liquidation, an unrecorded liability of P7,500 was discovered.
9. Assuming the available cash of P103,500 was distributed, how much must be the share of partner B?
A. P31,500 C. P65,167
B. 30,750 D. none
10. For how much must the noncash assets be sold for partner D to received at least P5,000?
A. P429,500 C. P398,000
B. 501,500 D. 386,000
The Walker, Wilson, and Winston Partnership is being liquidated. All liabilities have been paid. The balance of assets on
hand is being realized gradually. The following are details of partners’ accounts:
Capital Account Drawing Account Loans to P/L
Balances Balances Partnership Ratio
Walker P200,000 P15,000 Cr. P150,000 5
Wilson 250,000 20,000 Dr. - 2
Winston 100,000 30,000 Cr. 50,000 3
11. If you are to rank the partners from the most vulnerable to the least vulnerable, the ranking will be as follows:
A. Walker, Wilson, and Winston, respectively. C. Winston, Wilson and Walker, respectively
B. Wilson, Walker, and Winston, respectively. D. Winston, Walker and Wilson, respectively.
12. If partner Walker receives P150,000, how much partner Wilson receives?
A. P144,000 C. P 86,000
B. 51,000 D. 129,000
13. R, S, and T decided to dissolve the partnership on November 30, 2018. Their capital balances and profit ratios follow: R, Capital
– P50,000 (40%); S, Capital – P60,000 (30%); and T, Capital – P20,000 (30%). The net income from January 1 to November
30, 2018 is P54,000. Also on this date, cash and liabilities are P40,000 and P90,000, respectively. On November 310, 2018,
the book value of the non-cash assets amounted to:
A. P234,000 C. P274,000
B. P243,000 D. P314,000
14. The balance sheet of Yancy and Rafi Partnership on June 1, 2018 before liquidation is as follows:
In June, assets with book value of P22,000 are sold for P18,000, creditors are paid in full, and P2,000 is paid to partners.
In July, assets with book value of P10,000 are sold for P12,000, liquidation expenses P500 are paid and cash P12,500 is
paid to partners. In August, the remaining assets are sold for P22,500. In June, Rafi should receive
A. P0 C. P1,000
B. P2,000 D. P1,500
15. Great Ways Company, which began operations on January 1, 2018, appropriately uses the installment of accounting. The
following information pertains to Great Ways’ operations for year 2018:
In its December 31, 2018 balance sheet, what amount should Great Ways report as deferred gross profit?
A. P250,000 C. P160,000
B. P200,000 D. P 75,000
16. Laggardlite Sales, which began operations on January 2, 2018, appropriately uses the installment sales method of accounting.
The following information is available for 2018:
For the year ended December 31, 2018, cash collections and realized gross profit on sales should be:
Cash collections Realized gross profit
A. P400,000 P320,000
B. P400,000 P240,000
C. P600,000 P320,000
D. P600,000 P240,000
Mexicans, Inc. sells goods on installments and appropriately uses the installment method in recognizing profit. Below are
some of the information from the records of Mexicans over the past three years.
During 2017, write-offs of 2016 unpaid accounts were made amounting to P7,200. During 2018, repossessions were made
on defaulted accounts from 2017 sales for which unpaid balance amounted to P4,200. The fair market value of the
repossessed merchandise is P3,500. Operating expenses for 2018 amounts to P110,800.
17. How much is the total deferred gross profit to be recognized as of December 31, 2018?
A. P404,404 C. P444,400
B. P404,440 D. P440,404
18. Calculate the net income to be reported for the year ended December 31, 2018.
A. P154,400 C. P145,400
B. P144,500 D. P150,440
19. Vicks Corporation, which began business on January 1, 2017, appropriately uses the installment sales method of accounting.
The following data are available:
12/31/2017 12/31/2018
Balance of deferred gross profit on sales account:
2017 P300,000 P120,000
2018 440,000
Gross profit rate on sales 30% 40%
V Construction Company has used the cost-to-cost percentage of completion method of recognizing profits. Michael V
assumed leadership of the business after the recent death of his father, Rudy V. In reviewing the records, Michael V finds the
following information regarding a recently completed building project for which the total contract price was P5,000,000.
21. How much must be the balance of Construction in Progress account at the end of 2018?
A. P1,550,000 C. P3,000,000
B. 2,650,000 D. 4,600,000
22. How much is the estimated cost to complete the project at the end of 2018?
A. P4,250,000 C. P1,550,000
B. 1,600,000 D. 1,700,000
23. The following information relate to a construction job started by Joy Company during 2018:
Any costs incurred are expected to be recoverable. Under the cost recovery method for long term construction contract, what
amount should Joy recognizes as gross profit for 2018?
A. P 0 C. P100,000
B. P40,000 D. P120,000
24. ABC Construction company consistently uses the percentage-of-completion method of recognizing income. During the year
2017, ABC entered into a fixed-price construct to construct an office building for P1,000,000. Information relating to the contract
is as follow:
12/31/2017 12/31/2018
Percentage of completion 20% 60%
Estimated total costs at completion P750,000 P800,000
Income recognized (cumulative) 50,000 120,000
ABC Contractors recognizes construction revenues and expenses using the percentage of completion method. During 2019,
a single long-term contract was started, which continued through 2018. Information regarding the project were as follows:
2018 2019
Accounts receivable on contract P100,000 P300,000
Construction expense for year 105,000 192,000
Construction in progress 122,000 364,000
Partial billings on contract 100,000 420,000
25. What amount of profit should be recognized in 2018?
A. P50,000 C. P17,000
B. P108,000 D. P122,000
27. On March 1, 2016, Robot Construction Company was contracted to construct a factory building for Minion Company for a total
contract price of P25,200,000. The building was completed by October 31, 2018. The annual contract costs incurred, estimated
costs to complete the contract, and billings for 2016, 2017 and 2018 are given below:
2016 2017 2018
Contract cost incurred
during the year P9,600,000 P7,800,000 P4,350,000
Estimated costs to complete
at December 31 9,600,000 4,350,000 0
Billings during the year 9,600,000 10,500,000 5,100,000
28. NOBREAK Construction Corporation started work on three projects during the current year. Any costs incurred are expected
to be recoverable. Data relating to the 3 projects are given below:
Contract Cost Costs to Billings on
Project Price Incurred Completes Contract Collections
KAY P700,000 P558,000 - P700,000 P700,000
BAG 900,000 280,000 P600,000 300,000 300,000
GAL 450,000 220,000 200,000 350,000 300,000
For the current year, calculate the amount of realized gross profit to be reported by NOBREAK under the Zero-Profit-Method
A. P148,363 C. P157,714
B. 164,077 D. 142,000
During 2018, SOSLOW Construction Company started a construction job with a total contract price of P900,000. Any costs
incurred are expected to be recoverable. The project was completed on October 31, 2019. Additional data are as follows:
2018 2019
Actual costs incurred P337,500 P382,500
Estimated total cost on completion 675,000
Billed to the customer 360,000 540,000
Received from customer 350,000 550,000
29. What is the amount of realized gross profit to be recognized for 2019?
A. P67,500 C. P65,700
B. P76,500 D. P75,600
30. Calculate the amount of Construction in Progress, net of Progress billing to be presented on the 2018 Balance Sheet.
A. P60,000 C. P80,000
B. P70,000 D. P90,000
--- END ---
w ep/A C P 101/m id term exam ination