160 MidTerm Exam

COLLEGE OF ACCOUNTANCY
MIDTERM EXAMINATION
ACCOUNTING 160
INSTRUCTIONS:
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Multiple Choice: 3 POINTS EACH
1. When a new partner is admitted into a partnership and the new partner receives a
capital credit less than the tangible assets contributed, which of the following explains
the difference?
I. The new partner's received a bonus from the old partners.
II. The old partners received a bonus from the new partner.
a. I only
b. II only
c. Either I or II
d. Neither I nor II
2. Which item is not shown on the schedule of partnership liquidation?
a. Current cash balances.
b. Property owned by the partnership.
c. Liabilities still to be paid.
d. Personal assets of the partners.
e. Current capital balances of the partners.
3. Which of the following will not result in the dissolution of a partnership?
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MIDTERM EXAMINATION ACCOUNTING 160
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1) Partners are incompatible and choose to cease operations.
2) Partners realize that the profit figures have failed to reach projected levels.
3) Retirement of a partner.
4) Death of a partner.
a. 1 and 2 only
b. 3 and 4 only
c. 1, 2, and 3
d. 1, 2, 3, and 4
e. Neither 1, 2, 3, or 4
N. Bruno and A. Carlos are combining their separate businesses to form a partnvership.
Cash and noncash assets are to be contributed for a total capital of P300,000. The
noncash assets to be contributed and the liabilities to be assumed are:
Bruno Carlos
BV FMV BV FMV
Accounts receivable P20,000 P20,000
Inventories 30,000 40,000 P 20,000 P25,000
Equipment 60,000 45,000 40,000 50,000
Accounts payable 15,000 15,000 10,000 10,000
The partners’ capital accounts are to be equal after all the contribution of assets and the
assumption of liabilities.
4. The amount of cash to be contributed by Bruno is
a. P150,000 c. P210,000
b. P 60,000 d. P 85,000
5. The total assets of the partnership is
a. P325,000 c. P170,000
b. P180,000 d. P315,000
A local partnership has assets of cash of P13,000 and land worth P70,000. All liabilities
have been paid and the partners are all insolvent. The partners capital accounts are as
follows Roberts, P50,000, Ferry, P30,000 and Mones 3,000. The partners share profits
and losses 5:3:2.
6. If the land is sold for P45,000, how much cash will Mones receive in the final
settlement?
a. P0.
b. P1,500.
c. P3,000.
d. P21,750.
e. P36,250.
A, B and C are joint operators of ABC Company. The following data are taken from
separate books of joint operators;
A B C Total
Inventory contribution 100,000 120,000 220,000
Purchases of inventory 120,000 120,000
Expenses paid 20,000 5,000 25,000
Sales 50,000 400,000 450,000
Inventory, end taken by operators 10,000 15,000 - 25,000
Profit or loss ratio 30% 40% 30% 100%
7. How much is the balance of joint operation account?
a. 365,000 Dr.
b. 85,000 Cr.
c. 110,000 Cr.
d. 110,000 Dr.
e. None of these
8. How much is the profit or loss of joint operation?
a. 110,000 profit
b. 60,000 loss
c. 110,000 loss
d. 60,000 profit
e. None of these
9. How much is the share of A from the Joint Operation’s profit or loss?
a. 18,000 loss
b. 24,000 loss
c. 33,000 profit
d. 44,000 profit
e. None of these
10. How much is the share of B from the Joint Operation’s profit or loss?
a. 18,000 loss
b. 24,000 loss
c. 33,000 profit
d. 44,000 profit
e. None of these
11. How much is the cash settlement to A?
a. 153,000
b. 143,000
c. 128,000
d. 138,000
e. None of these
12. How much is the cash settlement to B?
a. 169,000
b. 149,000
c. 134,000
d. 154,000
e. None of these
13. How much is the cash settlement to C?
a. 138,000
b. 153,000
c. 120,000
d. None of these
14. If the total debits in the statement of realization and liquidation exceeds the total
credits, there is
a. net gain for the period c. either a or b
b. net loss for the period d. none of these
15. “Liabilities liquidated” is placed on which side of a statement of realization and
liquidation?
a. credit side, measured at realizable value
b. credit side, measured at actual settlement amount
c. debit side, measured at book value
d. debit side, measured at actual settlement amount
Gonda, Herron, and Morse is considering possible liquidation because Morse is insolvent.
The partners have the following capital balances: P60,000, P70,000, and P40,000,
respectively, and share profits and losses 30%, 45%, and 25%, respectively. The
partnership has P200,000 in assets that can be sold for P150,000.
16. What is the minimum that Morse’s creditors would receive if they have filed a claim
for P50,000?
a. P0.
b. P27,500.
c. P45,000.
d. 47,500.
e. 50,000.
17. The estimated recovery of partially secured creditors is equal to
a. the realizable value of the assets pledged plus the excess amount multiplied by the
estimated recovery percentage.
b. the realizable value of the assets pledged minus the excess amount multiplied by
the estimated recovery percentage.
c. their claims multiplied by the estimated recovery percentage.
d. any of these
A. Anton, C. Briones, and C. Camba are partners with average capital balances during
2003 of P472,500, P238,650, and P162,350 respectively. The partners receive 10%
interest on their average capital balances; after deducting salaries of P122,325 to Anton
and P82,625 to Camba, the residual profit or loss is divided equally.
In 2003, the partnership had a net loss of P125,624 before the interest and salaries to
partners.
18. By what amount should Anton’s and Camba’s capital account change?
Anton’s capital account Camba’s capital account
a. P40,844 decrease P31,237 decrease
b. P28,358 increase P32,458 increase
c. P29,476 increase P17,536 increase
d. P30,267 increase P40,448 decrease
D. Jose and E. Andres are partners with capital balances of P30,000 and P40,000 and
sharing profits and losses 40% and 60% respectively. If F. Apolinario is admitted as
partner paying P20,000 in exchange for 50% of Jose’s equity.
19. The entry in the partnership books should be as follows:
a. D. Jose, Capital 15,000
F. Apolinario, Capital 15,000
b. Cash 20,000
c. Cash 20,000
Goodwill 5,000
d.. Cash 20,000
D. Jose, Capital 5,000
20. In a partnership liquidation, the final cash distribution to the partners should be made
in accordance with the
a. partner profit and loss sharing ratios
b. balances of partner capital accounts
c. ratio of the capital contributions by partners
d. safe payment computations
21. The estimated recovery of unsecured creditors without priority is equal
a. to the realizable value of the assets pledged plus the excess amount multiplied by
the estimated recovery percentage.
b. to the realizable value of the assets pledged minus the excess amount multiplied
by the estimated recovery percentage.
c. to their claims multiplied by the estimated recovery percentage.
d. any of these
Lina and Mina are partners with a profit and loss ratio of 75:25 and capital balances of
P100,000 and P50,000 respectively. R. Nina is to be admitted into the partnership by
purchasing a 20% interest in the capital, profits and losses for P60,000.
22. The capital balances of Lina and Mina after the admission of Nina are:
a. Lina, P 80,000 and Mina, P40,000
b. Lina, P120,000 and Mina, P60,000
c. Lina, P112,000 and Mina, P38,000
d. Lina, P100,000 and Mina, P50,000
23. How much is the total Capital of the Partnership?
a. 180,000
b. 120,000
c. 150,000
d. None of these
24. According to PFRS 11, it is a separately identifiable financial structure, including
separate legal entities or entities recognized by statute, regardless of whether those
entities have a legal personality.
a. separate vehicle c. special purpose vehicle
b. special purpose entity d. public utility vehicle
AAA, BB, and CC are partners in ABC Partnership and share profits and losses 50%, 30%
and 20%, respectively. The partners have agreed to liquidate the partnership and some
liquidation expenses to be incurred. Prior to the liquidation, the partnership balance sheet
reflects the following book values:
Cash……………………………………………………………………….. P 25, 200

Non-cash assets………………………………………………………… 297, 600
Loan from C……………………………………………………… 38, 400
Other liabilities…………………………………………………………… 184, 800
A, capital……………………………………………………………….. 72, 000
B, capital deficit……………………………………………………….. (12, 000)
C, capital……………………………………………………………….. 39, 600
Assuming that the actual liquidation expenses are P 16,800 and that the non-cash
assets with a book value of P 240,000 are sold for P216,000.
25. How much cash should C receive?
a. P46, 457
b. P74,571
c. 39,600
d. 0
26. In a joint arrangement, which of the following establishes joint control by the parties?
a. mutual sharing of control
b. contractual arrangement
c. ownership interest of more than 20%
d. stock certificate
On December 31, 1998, the partners of MNP Partnership decided to liquidate their
business. Immediately before liquidation, the following condensed balance sheet was
prepared:
Cash P 50,000 Liabilities P 375,000
Noncash assets 900,000 Nieva, loan 80,000
Perez, loan 25,000
Munoz, capital (50%) 312,500
Nieva, capital (30%) 107,500
____ Perez, capital (20%) 50,000
Total P 950,000 Total P 950,000
27. The noncash assets were sold for P400,000. Assuming Perez is the only solvent
partner, what amount of additional cash will be invested by Perez? (rounded to the
nearest peso)
a. P 37,143
b. 25,000
c. 5,250
d. 0
28. The partners share in partnership profits or losses in accordance with their
partnership agreement. If there is no stipulation on how the partners should share in
the profits or losses of the partnership,
a. they should share equally.
b. they should let one of the partners decide unilaterally on how the profits should be
divided among the partners.
c. their respective shares would be in proportion to their contributions.
d. they should not share at all but donate their profits to the world.
A and B formed a partnership. A contributed cash of P500,000 while B contributed land

with carrying amount of P400,000 and fair value of P800,000. The land has an unpaid
mortgage of P200,000 which is assumed by the partnership.
29. How much is the correct valuation of B’s capital immediately after the partnership
formation?
a. 400,000
b. 500,000
c. 600,000
d. 800,000
The partnership agreement of A, B and C stipulates the following:

 Partners A and C shall receive annual salaries of P12,000 and P8,000, respectively.
 A bonus of 10% of profit after salaries but before deduction of bonus shall be given
to Partner A, the managing partner.
 Each partner shall receive 10% interest on average capital investments.
 Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B
and C.
The average capital investments of partners during the year are as follows:
A P100,000
B 60,000
C 120,000
The partnership earns profit of P100,000.
30. How much is the share of Partner C in the partnership profit?
a. 47,600
b. 32,200
c. 19,200
d. 33,200
On June 30, 2003, the condensed balance sheet for the partnership of Eddy, Fox, and
Grimm, together with their respective profit and loss sharing percentages were as follows:
Assets, net of liabilities320,000
Eddy, capital (50%) 160,000
Fox, capital (30%) 96,000
Grimm, capital (20%) 64,000
320,000
Eddy decided to retire from the partnership and by mutual agreement is to be paid
P180,000 out of partnership funds for his interest. No goodwill is to be recorded.
31. After Eddy’s retirement, what are the capital balances of the other partners?
Fox Grimm
a. 84,000 56,000
b. 102,000 68,000
c. 108,000 72,000
d. 120,000 80,000
32. It is a financial report which shows information on the progress of the liquidation
process of a corporation.
a. statement of affairs
b. statement of realization and liquidation
c. statement of liquidating affairs
d. statement of changes in net assets
Quitter Co. is undergoing liquidation. Relevant information follows:

Carrying Realizable
amount value
Assets pledged with partially secured creditors 80,000 50,000
Free assets 220,000 160,000
Expected settlement
amount Amount unsecured
Liabilities with priority 16,000 -
Partially secured creditors 75,000 25,000
Unsecured creditors 155,000 155,000
33. What is the total amount available for payment of claims of unsecured creditors?
a. 210,000
b. 144,000
c. 160,000
d. 0
34. What is the estimated amount of liquidating dividend per peso claim(percentage of
recovery)?
a. 1.17
b. 0.88
c. 1.03
d. 0.80
35. What is the amount of deficiency to creditors?
a. 36,000
b. 144,000
c. 160,000
d. 180,000
The following data were taken from the statements of realization and liquidation of Big
corporation for the three-month period ended December 31, 2015:
Assets to be realized P5, 500
Assets acquired 6, 000
Assets realized 7, 000
Assets not realized 2, 500
Liabilities to be liquidated 9, 000
Liabilities assumed 3, 000
Liabilities liquidated 6, 000
Liabilities not liquidated 7, 500
Supplementary credits 8, 500
Supplementary charges 7, 800
36. What is the net income or(loss) for the period?
a. P2, 800
b. P3, 500
c. (P2, 800}
d. (P3,500)
A, B, and C formed a joint operation. Profit or loss shall be divided equally. The following
were taken from the joint operation’s books:
Debit Credit
JO – Cash 80
Joint operation 20
B, Capital 60
C, Capital 40
37. A’s share in the joint operation’s profit is P16. A agreed to be charged for the
unsold merchandise as of year-end. How much is the cost of unsold merchandise
charged to A?
a. 56
b. 62
c. 68
d. 72
A and B formed a joint operation. The following were the transactions during the year:
A B
Total
purchases 400 320
Total sales 960 720
Expenses paid 800
Other income 40
The joint operation was completed at the end of the year. Each joint operator is entitled
to a 10% commission on its purchases and a 20% commission on its sales. Any remaining
profit or loss is divided equally.
38. How much is the profit (loss) of the joint operation?
a. 200,000
b. (200,000)
c. 180,000
d. (180,000)
39. On the cash settlement between the joint operators,
a. A pays B P368
b. A pays B P428
c. B pays A P368
d. B pays A P428
The partnership agreement of A and B 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 B’s capital account for the year ended December 31, 20x1 is as follows:
Balance, Jan. 1, 20x1 252,000

Additional investment, July 1 72,000
Withdrawal, August 1 (27,000)
Balance, Dec. 31, 20x1 297,000
40. How much is the interest on B’s weighted average capital?
a. 27,675
b. 33,633
c. 37,214
d. 23,322
“It is the Lord who goes before you. He will be with you; he will not fail
you or forsake you. Do not fear or be dismayed.”
– (Deuteronomy 31:8)
=================END OF
EXAMINATION========================
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COLLEGE OF ACCOUNTANCY

Cash……………………………………………………………………….. P 25, 200

A and B formed a partnership. A contributed cash of P500,000 while B contributed land

The partnership agreement of A, B and C stipulates the following:

Quitter Co. is undergoing liquidation. Relevant information follows:

Balance, Jan. 1, 20x1 252,000

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