Ateneo de Zamboanga University

School of Management and Accountancy

Advanced Accounting
FINAL EXAMINATION

DEADLINE: September 28, 2020 (Monday, 6:00 PM)

MODE OF SUBMISSION: Send your answers to rolyne.patron@gmail.com with the Subject line <Family Name – FE>.

INSTRUCTIONS: Provide a separate summary of your answers in letters only. PRESENT YOUR SOLUTIONS NEATLY and box your final
answer. Answers requiring computation should be presented with solution; otherwise, no merits will be given. Should your answer be “(E)
NONE OF THE ABOVE”, box your computed answer.

You may present your answers in MS Excel, MS Office, or in a separate sheet of paper. If you choose the latter option, please ensure that that the
scanned or photographed copy is readable (i.e. not blurred).

For questions 1 to 3, please refer to this given:

On December 31, 2019, the accounting records of LABADIDADI Partnership included the following ledger account balances.

LA, Drawing 48, 000 BA, Loan 60, 000

DI, Drawing 18, 000 LA, Capital 246, 000
BA, Capital 201, 000
DI, Capital 216, 000

Total assets of the partnership amounted to P975,000 including 105,000 cash. The partnership was liquidated on this date and DI
received P166,500 cash pursuant to the liquidation. LA, BA, and DI shared income and losses in a 5:3:2 ratio, respectively.

1. How much is the loss on realization of assets?

A. P157,500
B. P357,500
C. P247,500
D. P47,500
E. NONE OF THE ABOVE

2. How much cash is received by LA?

A. P26,250
B. P71,250
C. P74,250
D. P119,250
E. NONE OF THE ABOVE

3. How much cash is received by BA?

A. P213,750
B. P193,750
C. P109,750
D. Nil
E. NONE OF THE ABOVE

4. On January 2, 2020, Ben and Ped formed a partnership. Ben contributed capital of P175,000 and Ped, P25,000. They agreed to
share profits and losses 80% and 20%, respectively. Ped is the general manager and works in the partnership full time and is given a
salary of P5,000 a month, interest of 5% of the beginning capital (of both partners) and a bonus of 15% of net income before salary,
interest, and bonus.
The profits and loss statement of the partnership for the year ended December 31, 2020 is as follows:

Net Sales P875,000

Cost of goods sold (700,000)
Gross profits P175,000
Expenses (including salary, interest, and bonus) (143,000)
Net Income P 32,000

The amount of bonus to Ped in 2020 amounted to:

A. P13,304
B. P16,456
C. P20,700
D. P18,000
E. NONE OF THE ABOVE

5. Ang, Beng, and Ching are partners sharing profits in the ratio of 3:3:2. On June 30, their capital balances are as follows: Ang –
P600,000; Beng – 400,000; Ching – 300,000

The partners agree to admit Dong on the following agreement:

- Dong is to pay Ang P400,000 for ½ off Ang’s interest
- Dong is also to invest P300,000 in the partnership
- The total capital of the partnership is to be P2,000,000 of which Dong’s interest is to be 25%.

What are the capital balances of the partners after Dong’s admission?

Ang Beng Ching

A. P487,500 P587,500 P425,000
B. P300,000 P400,000 P300,000
C. P400,000 P300,000 P300,000
D. P187,500 P187,500 P187,500
E. NONE OF THE ABOVE

6. Jaja and Jeje agreed to form a partnership. Jaja shall contribute P160,000 cash while Jeje shall contribute P400,000 cash. However
due to the expertise that Jaja will be bringing to the partnership, the partners agreed that they should initially have an equal interest in the
partnership capital. Using the bonus method, the journal entry to record the initial investments of the partner includes:

A. Credit to cash for P560,000

B. Credit to Jaja’s capital for P160,000
C. Debit to bonus for P120,000
D. Credit to Jeje’s capital for P280,000
E. NONE OF THE ABOVE

7. On August 1, A and B pooled their assets to form a partnership, with the firm to take over their business assets and assumes the
liabilities. Partners’ capitals are to be based on net assets transferred after the following adjustments.

B’s inventory is to be increased by P4,000; an allowance for doubtful accounts of P1,000 & P1,500 are to be setup in the books of A and
B, respectively; and accounts payable of P4,000 is to be recognized in A’s books.
The individual trial balances, before adjustments, follow:

A B
Assets P75,000 P113,000
Liabilities 5,000 34,500

What is the capital of A and B, respectively, after the above adjustments?

A. P68,750; P77,250
B. P75,000; P81,000
C. P65,000; P76,000
D. P65,000; P81,000
E. NONE OF THE ABOVE

8. On January 1, 2020, Baba and Bebe, who share profits and losses on a 60:40 ratio, decided to liquidate their partnership. After all
of the non-cash assets of the partnership were sold for P760,000 and all of the P120,000 liabilities were settled, the partners had
P720,000 to distribute among themselves. Baba received P112,000 in the settlement of his beginning (prior to liquidation) capital balance
of P400,000. How much was the capital balance of Bebe prior to the liquidation?

A. P860,000
B. P1,600,000
C. P720,000
D. P600,000
E. NONE OF THE ABOVE – P800,000

9. When Minie retired from the partnership of Minie, Nene, and Onie, the settlement of Minie’s interest exceeded Minie’s capital
balance. Under the bonus method, the excess:
A. Revalues the assets downward (negative reevaluation)
B. Reduced the capital balances of Nene and Onie
C. Increased the capital balances of Nene and Onie
D. Had no effect on the capital balances of Nene and Onie
E. NONE OF THE ABOVE

10. The partners’ capital (income-sharing ratio) of Den, Ed, Fred and Gale Partnership on May 31, 2020, was as follows:

Den (20%) P60,000

Ed (20%) 80,000
Fred (20%) 70,000
Gale (40%) 40,000
Total partners' capital (100%) P250,000

On May 31, 2020, with the consent of Den, Ed and Gale:

- Fred retired from the partnership and was paid P50,000 cash in full settlement of his interest in the partnership.
- Henry was admitted to the partnership with a P20,000 cash investment for a 10% interest in the net assets of Den, Ed, Gale and
Henry Partnership.

The capital account to be credited to Henry:

A. P22,000
B. P27,000
C. P20,000
D. P25,000
E. NONE OF THE ABOVE

11. The capital account for the partnership of Marjorie and Romulo at October 31, 2020 are as follows:
Marjorie, Capital P80, 000
 Romulo, Capital 40, 000
P120, 000

The partners share profits and losses in the ratio of 3:2 respectively.

The partnership is in desperate need of cash, and the partners agree to admit John as a partner with one-third interest in the capital and
profits and losses upon his investment of P30,000. Immediately after John’s admission, what should be the capital balances of Marjorie,
Romulo, and John respectively, assuming bonus is to be recognized?

A. P50,000; P50,000; P50,000

B. P60,000; P60,000; P60,000
C. P66,667; P33,333; P50,000
D. P68,000; P32,000; P50,000
E. NONE OF THE ABOVE

For questions 12 to 13, please refer to this given:

The balance sheet of KITTYKATTY Partnership on October 10,2020 when it decided to liquidate was as follows:
Cash 40,000 Liabilities 60,000
Other assets 125,000 KIT, Capital (50%) 45,000
KAT, Capital (30%) 42,000
KET, Capital (20%) 18,000

Assume the other assets with a book value of P90,000 are sold for P50,000 and that all available cash, except for a P10,000 contingency
fund for anticipated expenses, is distributed immediately.

12. Which of the following is CORRECT?

A. KET should receive P1,000 D. No cash distribution is
B. KIT should receive nothing made

C. KAT should receive P10,000

13. Assuming the contingency fund was not used and remaining assets were already sold. How much should the remaining other
assets be sold so that KIT should receive a total of P22,500 cash pursuant to the liquidation?
A. P20,000
B. P25,000
C. P35,000
D. P40,000
E. NONE OF THE ABOVE – P30,000

14. Amounts related to the statement of affairs of Samantha Company, in bankruptcy liquidation as of April 1, 2020, were as
follows:
Assets pledged for fully secured liabilities P80, 000
Assets p Assets pledged for partially secured liabilities 50, 000
Free assets 272, 000
Fully secured liabilities 60, 000
Partially secured liabilities 80, 000
Unsecured liabilities with priority 40, 000
Unsecured liabilities without priority 330, 000

The costs per peso that unsecured creditors may expect to receive from Samantha Company:
A. P0.76
B. P0.70
C. P0.81
D. P0.61
E. NONE OF THE ABOVE
15. Mayo, a CPA, has prepared a statement of affairs. Assets which there are no claims or liens are expected to yield P70,000, which
must be allocated to the unsecured claims of all classes totaling P105,000. The following are some of the claims outstanding:

- Accounting fees for Mayo, P1,500

- An unrecorded note for P1,000, on which P60 of interest has accrued held by Angie
- A note for P3,000 secured by P4,000 receivables, estimated to be 60% collectible held by Jay
 - A P1,500 note, on which P30 of interest has accrued, held by Joy. Property with a book value of P1,000 and a market value of
P1,800 is pledged to guarantee payment of principal and interest
- Unpaid income taxes of P3,500

The estimated payment to partially secured creditors:

A. P1,060
B. P1,950
C. P2,490
D. P2,790

16. Zest and Co., Inc. purchased a Cadillac automobile with little cash down and signed a note, secured by the Cadillac, for 48 easy
monthly payments. When the company files for balance due on the Cadillac amount to P6,000,000, the car has a book value of
P8,000,000 and a net realizable value of P4,000,000. The unsecured creditors of Zest and Co. can expect to receive 50 percent of their
claims. In the liquidation, the bank that holds the note on the Cadillac should receive:
A. P6,000,000
B. P5,000,000
C. P4,500,000
D. P3,000,000

17. MISTER BANATERO Corp. has been undergoing liquidation since January 1, 2020. The following data have been obtained:
Noncash_assets,1/1 P1,300,000
Accounts receivable arising from sale on 2/14 950,000
Proceeds - realization of assets 1,500,000
Noncash assets, 3/31 1,475,000
Liabilities 3/31 1,800,000
Liabilities 1/1 2,150,000
Interest payable accrued for 3 months 625,000
Cash paid to settle some liabilities 1,700,000
Total expenses, 1/1 - 3/31 3,100,000
Total revenue, 1/1 -3/31 2,400,000

The net gain (loss) for the three-month period ending March 31 is:

A. P700,000
B. P(700,000)
C. P750,000
D. P(750,000)
E. NONE OF THE ABOVE
For questions 18 to 19, please refer to this given:

AL, BE, and CHA decided to dissolve their partnership on May 31, 2020. On this date, their capital balances were as follows: AL –
P43,750; BE – P52,500; CHA – P17,500. The following provision for sharing of profits and losses is provided in the agreement:
- Income is distributed only as it is available
- Available income is to be distributed in the following sequence
1. AL, who is the managing partner, gets a salary of P90,000 per year, the remaining partners get a salary of P36,000
each per year.
2. Interest is imputed on the average capital balances at 12% per annum
3. Any remaining profits and losses are to be shared by 3:2:5

The average capital balances during the five-month period ended were P35,000, P42,000 and P14,500, respectively. The net income
from January 1 to May 31, 2020 was P60,750. Also, before liquidation on May 31, 2020, the partnership’s cash and liabilities,
respectively, were P35,000 and P78,750. Liquidation expenses of P3,750 were paid.

18. What would be the share of AL, BE, and CHA, respectively in the net income of the partnership prior to liquidation?

A. P33,750; P13,500; P13,500

B. P35,856.25; P14,862.50; P10,031.25
C. P67,500; P27,000; P27,000
D. P60,540; P18,660; P(18,540)
E. NONE OF THE ABOVE

19. For BE to receive P63,200 cash in full settlement of his interest in the partnership, how much must be realized from the sale of
the partnership’s noncash assets?

A. P228,500
B. P208,000
C. P204,250
D. P218,250
E. NONE OF THE ABOVE

20. Capital balances of partners after exhausting their noncash assets are as follows:

A (20%) U (10%) B (10%) R (10%) I (20%) O (10%) N (20%)

P(54,000) P20,000 P(66,000) P(12,000) P35,000 P10,000 P(40,000)
Partners R, I, O and U are personally solvent. How much cash must O contribute to the partnership?

A. P29,000
B. P19,000
C. P21,000
D. P12,000
E. NONE OF THE ABOVE – P22,000

21. Which of the following would be LEAST likely to be used as a means of allocating profits among partners who are active in the
management of the partnership?
A. Salaries
B. Bonus as a percentage of net income before the bonus
C. Bonus as a percentage of sales in excess of a targeted amount
D. Interest on average capital balances

22. State the proper order of liquidation

I. Outside creditors
II. Owners’ interest
III. Inside creditors

A. I, III, II C. III, II, I

B. I, II, III D. II, I, III
 23. After the admission of a new partner, the total partnership capital increased by the fair value of the new partner’s net contributions
to the partnership. The admission was accounted for:
A. Under the good will method
B. Under the bonus method
C. As a purchase of interest
D. As an investment

24. The admission of a new partner effected through purchase of interest in partnership is
A. Recorded in the partnership books as a debit to cash or other asset and credit to the incoming partner’s capital
amount
B. Recorded in the partnership books as a transfer within equity
C. Recoded in the partnership books as a transfer from equity to liability
D. Not recorded

25. Which of the following statements is TRUE concerning the distribution of safe payments?
A. The distribution of safe payments assumes that any capital deficit balance will prove to be a total loss to the
partnership
B. Safe payments are equal to the recorded capital balances of partners with positive capital balances
C. The distribution of safe payments may only be made after all liabilities have been paid
D. In computing safe payments, partners with positive capital balances are assumed to absorb an equal share of any
capital deficit balance(s).

The only person worthy of validating you – your struggles, small victories, dreams – is you. Don’t ever let other people make you feel unworthy.

“Take heart for the world has already been conquered, and the battle you’re in has already been won.”

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