6/7/2021 Combined Quiz No.

1 ACCO 30013 Accounting for Special Transactions

Combined Quiz No. 1 ACCO 30013

Accounting for Special Transactions
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6/7/2021 Combined Quiz No. 1 ACCO 30013 Accounting for Special Transactions

Jean and Joy formed general professional partnership (practicing law) in the
Philippines on January 1, 2021. Their capital contributions were credited to their
respective account as follows: Jean – P2,500,000 and Joy – P1,500,000. During
the year, the partnership earned profit of P6,000,000. The income tax rate was
25%. Loss ratio is 60:40 to Jean and Joy, respectively.

How much is the share of Jean in the partnership profit? *

P3,750,000

A, B, C and D established a publishing company on March 31, 2021 (each

contributed enough cash to start their operation) that they operate as a
partnership. The partnership agreement includes the following:

a. A receives annual salary of ₱250,000 and a bonus of 2% of income after all

bonuses

b. B receives a quarterly salary of ₱60,000 and a bonus of 3% of income after

all bonuses

c. All partners are to receive 10% interest on their average capital balances

d. There is only one additional investment made during the year – Partner A
invested additional P30,000 on September 1. There is no withdrawal during the
year.

The average capital balances are as follows: A – ₱70,000; B – ₱40,000; C –

₱20,000 and D – ₱60,000. Any remaining profits and loss are to be divided
equally among the partners.

How much is the capital of A as of December 31 if net income for 2021 is

₱693,000? *

P346,075

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6/7/2021 Combined Quiz No. 1 ACCO 30013 Accounting for Special Transactions

MN and OP decided to form a partnership on June 01, 2020. The partnership

will take over their assets as well as assume their liabilities. As of June 01, 2020,
the net assets of MN and OP are P220,000 and P309,375 respectively. Liabilities
of MN are 55% less than book value of its net assets while liabilities of OP are
40% more than the book value of its net assets.

The partners agreed on a 25:75 profit and loss ratio. Furthermore, the partners
arrived on the following agreements: MN’s inventory is undervalued by P11,000.
An allowance for doubtful accounts is to be set-up in the books of MN and OP
at 10% of the accounts receivable balances (AR balances: MN, P27,500; OP,
P41,250). Accrued salary of P20,250 was not recognized in OP’s books.

What is the total asset of the partnership immediately after formation if

partner’s capital interest should be equal to their profit and loss ratio through
withdrawal of excess cash investment by one of the partners? *

P1,045,375

On July 01, 2021, A, B, and C formed a business partnership to be operated as

an advertising agency. A contributed P100,000 cash while B shall have capital
credit of P60,000 upon receipt of bonus of P10,000 from A based on the
provision in Articles of Co-Partnership. The terms of the agreement provide that
A and B shall have a combined 40% capital interest in the newly formed
partnership.

What is the capital contribution made by C to the partnership? *

P225,000

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6/7/2021 Combined Quiz No. 1 ACCO 30013 Accounting for Special Transactions

P561,818

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6/7/2021 Combined Quiz No. 1 ACCO 30013 Accounting for Special Transactions

On January 1, 2021, Kobe, Lebron, and Michael formed a partnership with

respective capital contribution of P2,000,000, P5,000,000, and P3,000,000. The
articles of co-partnership provides that profit or loss shall be distributed
accordingly:

a. 20% interest on original capital contribution.

b. P30,000 monthly salary for Kobe and P50,000 monthly salary for Michael.

c. The remainder shall be distributed on the basis of original capital

contribution ratio.

On December 31, 2021, Kobe and Lebron made withdrawals of P500,000 and
P1,000,000, respectively. the statement of financial position of the partnership
shows that Lebron’s capital on December 31, 2031 is P6,500,000.

What is the capital balance of Kobe on December 31, 2021? *

P2,860,000

Juancho and Miguel entered into a partnership agreement wherein Juancho is

to have a 60% interest in capital and profits while Miguel is to have a 40%
interest in capital and profits. Juancho contributed the following non cash
assets and enough cash to meet the 60% interest in capital.

Book Value Fair Value

Land P500,000 P875,000

Building 1,250,000 625,000

Equipment 375,000 250,000

There is a P250,000 mortgage on the building that the partnership agrees to

assume. Miguel contributed P1,500,000 cash for his 40% interest in the firm.
Assume the bonus method is used to account for the formation.

How much is the total assets of the partnership after the formation? *

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6/7/2021 Combined Quiz No. 1 ACCO 30013 Accounting for Special Transactions

P4,000,000

The partnership of X, Y and Z provides for the division of net income as follows:

i. Y, who manages the partnership is to receive a salary of P10,500 monthly

ii. Each partner is to be allowed interest at 10% on ending capital

iii. Balance – 30:30:40 to X, Y and Z respectively

During 2021, X invested an additional P96,00 in the partnership. Y made an

additional investment of P60,000 and withdrew P90,000. Z withdrew P72,000.
No other investments or withdrawals were made during 2021. On January 1,
2021, the capital balances were X – P280,00; Y – P300,000 and Z – P170,000.
Total capital at year-end was P975,000.

How much is the capital balance of Partner Y at December 31, 2021? *

P432,180

D, E and F share partnership profits in the ratio of 2:3:5. On September 30, F

opted to retire from the partnership. The capital balances on this date follow:

D, Capital - P25,000 E, Capital - P40,000 F, Capital -

P35,000

F accepted a fully depreciated PPE for a value of P10,000 and P40,000 cash in
full settlement of the partnership interest.

How much is the capital of D after retirement of F? *

P23,000

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6/7/2021 Combined Quiz No. 1 ACCO 30013 Accounting for Special Transactions

10

Haven is trying to decide whether to accept a bonus of 25% of net income after
salaries and bonus or a salary of P97,500 plus a bonus of 10% of net income
after salaries and bonus as a means of allocating profit among the partners.
Salaries traceable to the other partners are estimated to be ₱450,000.

What amount of income would be necessary so that Haven would consider the
choices to be equal? *

P1,262,500

11

A, B, C and D established a publishing company on March 31, 2021 (each

contributed enough cash to start their operation) that they operate as a
partnership. The partnership agreement includes the following:

a. A receives annual salary of ₱180,000 and a bonus of 6% of income after all

bonuses

b. B receives a quarterly salary of ₱60,000 and a bonus of 4% of income after

all bonuses

c. All partners are to receive 10% interest on their average capital balances

d. There were no additional investment or withdrawal during the year.

The average capital balances are as follows: A – ₱50,000; B – ₱40,000; C –

₱20,000 and D – ₱60,000. Any remaining profits and loss are to be divided
equally among the partners.

How much is the capital of B as of December 31 if net income for 2021 is

₱660,000? *

P315,000

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6/7/2021 Combined Quiz No. 1 ACCO 30013 Accounting for Special Transactions

12

Missouri, Connecticut, and Oklahoma have been partners throughout 2021.

Their average balances and their balances at the end of the year before closing
the nominal accounts are as follows:

Partner Average Balances Balances, 12/31/21

Missouri P97,500 P70,000

Connecticut 7,300 11,800

Oklahoma 4,250 1,700 (debit

balance)

The income for 2021 is P103,500 before charging partners’ salary allowances
and before payment of interest on average balances at the agreed rate of 4%
per annum. Annual salary allocations are P12,500 to Missouri, P8,750 to
Connecticut, and P6,250 to Oklahoma. The balance of the profits is to be
allocated at the rate of 60% to Missouri, 10% to Connecticut, and 30% to
Oklahoma.

It is intended to distribute cash to the partners so that, after credits and

allocations have been made as indicated in the preceding paragraph, the
balances in the partners’ accounts will be proportionate to their residual profit-
sharing ratios. None of the partners is to invest additional cash, but they wish to
distribute the lowest possible amount of cash.

How much is the capital balances of Missouri at the end of the year? *

P0

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6/7/2021 Combined Quiz No. 1 ACCO 30013 Accounting for Special Transactions

13

ABC and XYZ have been operating an accounting firm as partners for a number
of years and at the beginning of 2021, their capital balances were P85,000 and
P70,000, respectively. During 2021, ABC invested an additional P10,000 on April
1 and withdrew P5,000 on August 30. XYZ withdrew P12,000 on May 1 and
invested P12,000 on November 1. In addition, ABC and XYZ withdrew their
salary allowances of P18,000 and P24,000, respectively. At year-end 2021 total
capital of the ABC and XYZ partnership was P182,000. ABC and XYZ share
income after salary allowances in a 60:40 ratio.

The ending capital of XYZ: *

P86,000

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6/7/2021 Combined Quiz No. 1 ACCO 30013 Accounting for Special Transactions

14

Aria and Ezra form a partnership on May 1, 2021, Aria contributes cash of
P500,000; Ezra conveys title to the following properties to the partnership:

Book Value FMV

Land P150,000 P280,000

Building and equipment 350,000 360,000

According to the Articles of Partnership written by the partners, profits or losses

are allocated based on the following formula:

a. Aria receives a compensation allowance of P10,000 per month.

b. All remaining profits and losses are split 60:40 to Ezra and Aria,
respectively.

c. Annual cash drawings of P50,000 can be made by each partner beginning

in 2022.

Net income of P110,000 is earned by the business during 2021.

Jake is invited to join the partnership on January 1, 2022. Because of Jake’s

business reputation and financial expertise, Jake is given a 40% interest for
P540,000 cash. The Articles of Partnership are amended to give Jake a P20,000
compensation allowance per month and an annual cash drawing of P100,000.
Remaining profits are now allocated: Ezra, 48%; Aria, 12%; Jake, 40%.

All drawings are taken by the partners during 2022. At the end of that year,
partnership reports an earned net income of P280,000.

On January 1, 2023, Ezra elects to withdraw from the business for personal
reasons. The Articles of Partnership contain a provision stating that any partner
may leave the partnership at any time and is entitled to receive cash in an
amount equal to the recorded capital at that time plus 10%.

The share of Aria on the net income of 2021 must be: *

P92,000

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6/7/2021 Combined Quiz No. 1 ACCO 30013 Accounting for Special Transactions

15

Refer to #14, How much was paid to Ezra upon his withdrawal? *

P0

16

Full Name (Surname, First name, Middle Initial) *

MENDIOLA, ROZ RAINIEL M.

17

Course_Year-Section (Example: BSA 2-1 or BSMA 2-1) *

BSA 2-4

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