1RETENTION EXAMINATION TUTORIAL ON PARTNERSHIP ACCOUNTING Problem 1. Janet, Lee, Noy are partners sharing profits 30%, 20% and 50%, and with capital balances of P1,050,000, P750,000 and P1,050,000, respectively. The partners agreed to dissolve their partnership and upon liquidation, all of the partnership’s assets are sold and sufficient cash is realized to pay all claims except one for P150,000. Of the three partners, Noy is personally insolvent. In the remaining claim against the partnership, Janet is to absorb: A. P75,000 B. P90,000 C. P120,000 D. P45,000 Problem 2. Hans, Lance, Arthur and Sidd own a publishing company that they operate as a partnership. Their agreement includes the following: Distribution is to the extent of the earnings only. Hans will receive a salary of P20,000 and a bonus of 3% of income after all the bonuses Lance will receive a salary of P10,000 and a bonus of 2% of income after all the bonuses All the partners are to receive the following: Hans – P5,000; Lance – P4,500; Arthur – P2,000; and Sidd – P4,700, representing 10% interest on their average capital balances. Any remaining profits are to be divided equally among the partners Partnership reports a profit of P40,000 How much is Lance’s share in the profit if profit is distributed in the following order of priority: Interest on invested capital, then bonuses, then salary, and then according to profit and loss percentage? A. P12,560 B. P13,235.75 C. P12,433 D. P12,830.75 Problem 3. Vida, Vina, and Vita, sharing profits and losses 50%, 30% and 20%, have capital credit balances of P400,000, P300,000 and P200,000, respectively. They decided to admit a new partner, Vera to a 30% interest in the partnership upon Vera’s investment of an amount equal to five-sixths of her capital credit with no asset adjustment recognized. Immediately after the admission of Vera, the capital credit balance of Vina will be: A. P300,000 B. P330,000 C. P318,000 D. P282,000 Problem 4. Ester, Judith and Martha were partners with capital balances on January 2, 2013 of P70,000, P84,000 and P56,000, respectively. Their loss sharing ratio is 3:5:2. On July 1, 2013, Ester retires from the partnership. On the date of retirement the partnership net profit from operations is P48,000. The partners agreed further to pay Ester P76,560 in settlement of her interest. How much will be the capital of Judith after retirement of Ester? a. P103,200 b. P114,743 c. P108,864 d. P107,904 Problem 5. A, B and C are partners in a business being liquidated. The partnership has cash of P22,000, noncash assets with a book value of P264,000 and liabilities of P173,250. The following data relates to the partners as of June 1, 2013: (a) A has capital balance of P129,250, personal assets of P27,500, personal liabilities of P13,750. (d) Their profit and loss ratio is 3:1:1.000 S.000 and a fair value of P63. On July 3. deficit of P38. L .500.750 and personal liabilities of P41.875 D.2 (b) B extended a loan to the partnership in the amount of P13. P36.000 and M . SCA Partnership has the following account balances before liquidation: Cash 350. During the remainder of June.000. respectively. P2.000 Receivable from S 20.000 were expected to be incurred through the following months of liquidation the partnership.875 B. (70%) and M is the partner who has to invest or withdraw sufficient amount of cash to conform with the agreement. P3. respectively. On June 12.375.250. P2. Problem 7. .000 P Liabilities 1.000 C.000 P2. B and C.800. M receives a bonus of 20% of net income after deducting the bonus and his salary.000 Revenues 4.000 were paid and additional expenses amounting to P90.000 were paid. P12. Capital (20%) 1. The partners will be allowed with interest of 12% on their capital balances at the end of the year before closing the income summary account and any distribution against net income. the partners agreed to contribute personal assets. assets with a book value of P82.250 were distributed to A. Upon formation. (c) C has a capital balance of P8.250.000 Loan from A 50.000 P During June. to whatever extent possible. Liabilities to outsiders amounting to P875.500 were sold for P55. 2012. Capital (40%) 1. Shortly thereafter.000 cash. Capital (40%) 1.250.250. in order to eliminate their respective deficits.130. What is the book value of the noncash assets which were sold for C to receive P555. The proceeds were used to pay off liabilities of the partnership.750. personal liabilities of P16.000 Noncash assets 7. 2013. L and M formed a partnership with cash investments of P330.800 D. P30.650 B. (30%) and M . some noncash assets were sold that resulted to a loss of P46.500. P2. A.000.850 C.083.125.900. personal assets of P68.230. Liquidation expenses of P175. P8. How much cash would be distributed to C? A. o On June 1. P550 Problem 6.000 Expenses 2.000 C.500. assets with book value of P55. Assuming additional noncash assets with book value of P110.000 were sold in July for P148.000 Loan to C 150.000 A.375.000. the partners agreed to bring their capital ratio in proportion with their profit and loss ratio which is L . personal assets of P41.328.550? A. no additional assets were realized and outside creditors began to pressure the partnership for payment.000 and P420. o Profit allocation were as follows : monthly salaries.125. how much is the net income that must be generated by the partnership? A B P356. having capital balances of P980. If TM and SJ share profit in a proportion of 3:1. P698.000 Problem 9. P240.600 C.300 P300.798 Capital balance of M immediately after admission of N A B P718. M invested additional P48. (2) Interest of 9% on the original capital balance for each partner. P360.000 respectively.000 for I. P512. P403. GD is to invest sufficient amount in order to have a 25% interest in the partnership. N was admitted as a partner by purchasing 1/3 interest of M.000 D.290 D.750. P237. TM and SJ. M. and P48.600 For I to receive P39. On September 1.200 Problem 10.000.600 C. Capital balance of L immediately after admission of N A B P498. For D to receive P80. 2012. T. o In 2012. How much was invested by GD? A B P848.000. 2012. and I was formed on January 1. (3) Remainder is divided equally.000 D. P847.000 distributed at year-end against share in net income. P70. 2013.700 as his share in the profit of the partnership.900 D. the partnership reported net income of P450.000.000 D.400 P319. 2013. P381. P108. P529.300 For T to receive P121. P540.000 for T.200 C.000 and P525.000 on December 1.000 for D. L.000. P588.306 C. The original investments were as follows: D. T.250 C. P300.202 P724.750 P1.000 before any deductions and each partner has drawings of P150. N also invested P230.174.440 Problem 8.000 as his share in the profit of the partnership.340 C. paying the selling partner the amount of P276. On January 1.000 cash and withdrew P30.600 as his share in the loss of the partnership. L invested additional P80. P136. how much is the net income that must be generated by the partnership? A B P363.294 P541. decided to admit GD into their partnership.000 cash and withdrew P18. respectively. The partnership of D. and N formed a partnership with capital contributions of .000 on October 1.3 o On August 1.000 cash for a total interest of 20% in capital of the partnership. net income or loss will be divided among the respective partners as follows: (1) salaries of P80. how much is the net loss that must be generated by the partnership? A B P171. According to the partnership agreement. and SJ’s capital balance after GD’s investment is P589.220 D. P702. 2013.000 P129. I. o On January 1. 2012. 2012. The partners agreed that profit and loss would be allocated as follows: P75.000.000 C. P1. the remainder divided in the ratio 2:4:4. P1. The partnership generated income amounting to P375.000 for the year 2013.000 salary to each partner. P1.000 was expensed. The equipment has an estimated life of ten years with equal service potential each year.000. and N. ending inventory was understated by P50. N decided to retire from the partnership. 2013. and P937. M.000. 3% interest on initial capital contributions.000. P750. the following partnership errors were discovered before the distribution of profit: o In 2013. respectively.231.090.000.085. how much is the settlement to N for his retirement? A B P1.500 D. o On December 31.152. a purchase of piece of equipment costing P50.500 C.000 P1. If the balance of the capital of L after retirement amounts to P770.500. P1.120. how much is the settlement to N for his retirement? A P1.4 P625.500 . On January 1.062.127.110.500 B P1. respectively to L. During 2013. 2014.500 D.875 If the balance of the capital of M after retirement amounts to P890.