Ramon Magsaysay Memorial Colleges

College of Accountancy
Pioneer Ave., General Santos City
Tel. No. 552-3348

Name: ______________________________ Date: ___________ Score: _____________

Subject : ACCTG 13- Acctg for Partnership Midterm Exam
Instructor: Mrs. Marivic B. Peñaflor, CPA,MBA AY: 2021-2022 1st Semester

General Instruction: Write your final answer in a one whole sheet of paper and upload it in schoology not
later than 8 pm today.

1. An adjusting entry to record accrued income is debit to a/an

a. Income account and a credit to an asset account
b. Assets account and a credit to an income account
c. Expense account and a credit to a liability account
d. Liability account and a credit to an expense account
2. Failure to record the entry for accrued salaries results in
a. Salaries payable being overstated
b. Profit being understated
c. Salaries expense being understated
d. Total assets being understated
e. Total assets being overstated
3. Which of the following accounts is not adjusted?
a. Accumulated depreciation
b. Salaries payable
c. Depreciation expense
d. Owners capital
e. Prepaid insurance

4. Which of the following accounting cycle steps comes after the others?
a. Entries are recorded in the journal
b. Source documents are analyzed
c. The financial statements are prepared
d. Adjusting entries are recorded and posted

For item nos. 5 to 9

 Analiza admits Marnie as a partner in the business. Balance sheet accounts of Analiza just before
the admission of Marnie show:
Cash , P 26,000,
Accounts receivable, P 120,000,
Merchandise inventory, P 180,000
Accounts payable, P 62,000.
It was agreed that for purposes of establishing Analiza’s interest, the following adjustments be
made:
1.) 80% of accounts receivable is estimated to be realizable;
2.) merchandise inventory is to be adjusted upward by P 10,000; and
3.) prepaid expense of P 8,000 and accrued liabilities of P 8,000 are to be recognized.

5. If Marnie is to invest sufficient cash to obtain 1/4 interest in the partnership, how much would
Marnie contribute to the new partnership?
6. How much is the total capital of the new partnership?
7. How much is the total liabilities of the new partnership?
8. How much is the total assets of the new partnership?
9. What is the journal entry to record the admission of Marnie ?

For item nos. 10-15

The partnership agreement of RR and SS provides the following: An interest of 10% per year is to be
credited to each partner on the basis of weighted-average capital balances, annual salaries of 40,000
and 30,000 to RR and SS respectively and a bonus of 10% of net income after salaries and bonus to
SS and the remaining balance is shared in a 3:2 ratio. A summary of the capital account of RR and SS
for the year ended December 31, 2021, are as follows:
RR SS

Initial Investment Jan 1 P500, 000 350,000

Additional investment, April 1 150, 000 80,000
Withdrawal, July 1 ( 40,000)
Withdrawal, September 1 ( 45, 000)

Assuming during the year, the partnership has a profit of P 380,000.

10. What are the average capital balances of RR and SS? RR = 597,500, SS = 390,000
11. The share of partners RR and SS in the partnership profit would be%
RR = 237,773
SS = 142,227
12. What is the amount of bonus to be given to SS? 28,182
13. What is the journal entry to distribute the profit to partners RR and SS?
INCOME SUMMARY 380,000
RR, DRAWING 237,773
SS, DRAWING' 142,227
14. What is the capital balance of SS after distribution of profit?

15. What is the capital balance of RR after distribution of profit?

1,992,773
1,312,227

For items nos. 16-26

On June 30, 2021, the statement of financial position for the partnership of AA and BB, together
with their respective profit and loss ratios, were as follows:
Assets, at cost P 180,000
=======
BB, loan 9,000
AA, capital ( 40%) 81,000
BB, capital ( 60%) 90,000_
Total P 180,000
=======
AA and BB decided to admit CC to the partnership by investing P 120,000 for a 40% interest in
the partnership. By mutual agreement, the assets are to be adjusted to their fair value of P 280,000
at June 30, 2021

A 280,000

16. What adjusting entry to be made upon admission of CC?

17. What is the adjusted capital balance of AA?
18. What is the adjusted capital balance of BB?
19. What is the amount of bonus?
20. What is the capital balance of AA after CC’s admission?
21. What is the capital balance of BB after CC’s admission?
22. What is the journal entry to record the admission of CC to the partnership?
23. Assuming , instead of investing cash to the partnership, CC purchased ¼ of BB’s interest by
paying P 40,000. What is the journal entry to record the admission of CC?
24. Assuming, CC purchased 40% of the partnership’s interest for P 90,000. What is the journal entry
to record CC’s admission in the partnership?
25. How much is the capital balance of AA after CC’s admission?
26. How much is the capital balance of BB after CC’s admission?
For item nos. 27 to 50 (24 pts)

RR, MM and NN have decided to liquidate their partnership on May 31,2021. The statement of
financial position is shown below:

Assets
Cash 125,000
Accounts receivable 90,000
Allowance for bad debts (15,000) 75,000
Inventories 100,000
 Property and Equipment 400,000
Accumulated depreciation (100,000) 300,000
Total Assets P600,000
=======

Liabilities and Capital

Accounts payable 80,000
Loan payable- NN 100,000
Loan payable-MM 30,000
RR, capital ( 40%) 400,000
MM, capital (30%) 150,000
NN, capital (30%) (160,000)
Total liabilities and Capital P 600,000
=======

The noncash assets were realized as follows:

June 1 70 % of the accounts receivable was collected. After payment of liabilities all
cash was distributed to partners

August 1 Merchandise inventory was sold for P 80,000 and all available cash was
distributed to partners.

October1 Property and Equipment was sold for P 650,000.

Required:

Assuming deficient partner/s is/are insolvent, prepare the following:

1. Statement of partnership liquidation ( 10 pts)

2. Schedule of cash payment ( 5 pts)
3. Schedule of cash distribution under cash priority program ( 5 pts)
4. Prepare journal entries to record the liquidation process ( 4 pts)