MULTIPILE CHOICES – COMPUTATIONAL

1-1: On May 1, 2019, Jose and Maria formed a partnership and agreed
to share profits and losses in the ratio of 3:7, respectively.
Jose contributed a computer that cost him P50,000. Maria
contributed P200,000 cash. The computer was sold for P55,000 on
May 1, 2019 immediately after the formation of the partnership.
What amount should be recorded in Jose’s capital account on
formation of the partnership?

a. P55,000
b. P51,500
c. P60,000
d. P50,000

1-2: Red, White, and Blue form a partnership on May 1, 2019. They
agree that Red will contribute office equipment with a total
fair value of P40,000; White will contribute delivery equipment
with a fair value of P80,000; and Blue will contribute cash. If
Blue want a one third interest in the capital and profits, he
should contribute the following of cash:

a. P 40,000
b. P 60,000
c. P120,000
d. P180,000

1-3: Mateo and Julio formed a partnership on April 1 and

contributed the following assets:

Mateo Julio
Cash P300,000 P100,000
Land 300,000

The land was subject to a mortgage of P50,000, which was assumed

by the partnership. Under the partnership contract, Mateo and
Julio will share profit and loss in the ratio of one-third and
two-thirds respectively. Julio’s capital account at April 1
should be:

a. P350,000
b. P300,000
c. P400,000
d. P450,000
1-4: Elsa and Perla form a new partnership. Elsa invests P300,000 in
cash for her 60 percent interest in the capital and profits of
the business. Perla contributes land that has an original cost
of P40,000 and a fair market value of P70,000, and a building
that has a tax basis of P50,000 and a fair market value of
P90,000. The building is subject to a P40,000 mortgage that the
partnership will assume. What amount of cash should Perla
contribute?

a. P 40,000
b. P 80,000
c. P110,000
d. P150,000

1-5: Anton and Bauzon formed a partnership and agreed to divide

initial capital equally, even though Anton contributed P100,000
and Bauzon contributed P84,000 in identifiable assets. Under
the bonus method, to adjust the capital accounts, Bauzon’s
intangible assets should be debited for:

a. P46,000
b. P16,000
c. P 8,000
d. Zero

1-6: Reyes and Santos drafted a partnership agreement that lists the
following assets contributed at the partnership formation:

Contributed by
Reyes Santos
Cash P200,000 P300,000
Inventory - 150,000
Building - 400,000
Equipment 150,000 -

The building is subject to a mortgage of P100,000, which the

partnership has assumed. The partnership agreement also
specifies the profits and losses are to be distributed evenly.
What amounts should be recorded as capital for Reyes and Santos
at the formation of the partnership?
Reyes Santos
a. P350,000 P850,000
b. P350,000 P750,000
c. P550,000 P550,000
d. P600,000 P600,000
1-7: On April 30, 2019, AA, BB and CC formed a partnership by
combining their separate business proprietorships. AA
contributed cash of P50,000. BB contributed property with a
P36,000 book value, a P40,000 original cost, and P80,000 fair
value. The partnership accepted responsibility for the P35,000
mortgage attached to the property. CC contributed equipment
with a P30,000 book value, a P75,000 original cost and P55,000
fair value. The partnership agreement specifies that profits
and losses are to be shared equally but is silent regarding
capital contributions. Which partners has the largest April
30, 2019, capital balance?

a. AA
b. BB
c. CC
d. All capital account balances are equal

1-8: PP, RR, and SS are new CPA’s and are to form a partnership. PP
is to contribute cash of P50,000 and his computer originally
costing P60,000 but has a second hand value of P25,000. RR is
to contribute cash of P80,000. SS, whose family is selling
computers, is to contribute cash of P25,000 and a brand new
computer with a regular selling price of P60,000 but which cost
is P50,000. Partners agree to share profits equally. The capital
balances upon formation are:

PP RR SS
a. P 75,000 P80,000 P85,000
b. P110,000 P80,000 P75,000
c. P 80,000 P80,000 P80,000
d. P 83,000 P88,333 P88,334

1-9: Maria and Nora entered into a partnership on March 1, 2019 by

investing the following assets:

Maria Nora
Cash P 30,000 P -
Merchandise Inventory - 90,000
Computer Equipment 160,000
Furniture & Fixtures 200,000

The agreement between Maria and Nora provides that profits and
losses are to be divided into 40% to Maria and 60% to Nora, and
the partnership is to assume a liability on the computer
equipment of P60,000. The partners further agree that Nora is
to receive a capital credit equal to her profit and loss ratio.
How much cash is to be invested by Nora?

a. P135,000
b. P145,000
c. P155,000
d. P130,000
1-10: Roy, Sam and Tim decided to engage in a real estate venture as
a partnership. Roy invested P140,000 cash and Sam provided an
office and furnishings valued at P220,000. (There is a P60,000
note payable remaining on the furnishings to be assumed by the
partnership). Although Tim has no tangible assets to invest,
both Roy and Sam believe that Tim’s expert salesmanship provides
an adequate investment. The partners agree to receive an equal
capital interest in the partnership. Using the bonus method,
what is the capital balance of Tim?

a. P 50,000
b. Zero
c. P140,000
d. P100,000

1-11: Lara and Mitra formed a partnership on July 1, 2019 and invested
the following assets:

Lara Mitra
Cash P130,000 P200,000
Computer Equipment - 50,000

The computer equipment has a note payable amounting to P10,000,

which was assumed by the partnership. The partnership agreement
provides that Lara and Mitra will have an equal capital credit.
Using the goodwill method, the amount of goodwill to be recorded
upon formation of the partnership is:

a. P110,000
b. P120,000
c. P100,000
d. P130,000

1-12: The partnership of Perez and Reyes was formed on March 31, 2019.
At that date, Perez invested P50,000 cash and office equipment
valued at P30,000. Reyes invested P70,000 cash, merchandise
valued at P110,000, and furniture valued at P100,000, subject
to a notes payable of P50,000 (which the partnership assumes).
The partnership provides that Perez and Reyes share profits and
losses 25:75, respectively. The agreement further provides that
the partners should initially have an equal interest in the
partnership capital. Under the goodwill and the bonus method,
what is the total capital of the partners after the formation?

Bonus Method Goodwill Method

a. P310,000 P460,000
b. P360,000 P510,000
c. P300,000 P410,000
d. P350,000 P400,000
1-13: Ruiz and Peña are combining their separate businesses to form
a partnership. 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:

Ruiz Peña
Book Fair Book Fair
value value value value
Accounts receivable P20,000 P20,000 - -
Inventories 30,000 40,000 P20,000 P25,000
Equipment 60,000 45,000 40,000 50,000
Accounts payable 15,000 15,000 10,000 10,000

The partner’s capital accounts should be equal after all the

contribution of assets and the assumption of liabilities. How
much cash is to be contributed by Ruiz?

a. P150,000
b. P 60,000
c. P210,000
d. P 85,000

1-14: On March 1, 2019, Cruz and Ferrer formed a partnership with

each contributing the following assets:

Cruz Ferrer
Cash P30,000 P 70,000
Machinery and equipment 25,000 75,000
Building - 225,000
Furniture and fixtures 10,000 -

The building is subject to a mortgage loan of P90,000 which is

to be assumed by the partnership. The partnership agreement
provides that Cruz and Ferrer share profits and losses 30
percent and 70 percent, respectively.

Assuming that the partners agreed to bring their respective

capital in proportion to their respective profit and loss ratio,
and using Ferrer’s capital as the base, how much cash is to be
invested by Cruz?

a. P19,000
b. P30,000
c. P40,000
d. P55,000
1-15: The statement of financial position as of July 31, 2019 for the
business owned by C. Borja shows the following assets and
liabilities:

Cash P 2,500
Accounts Receivable 10,000
Merchandise Inventory 15,000
Fixtures 18,000
Accounts payable 6,000

It is estimated that 5% of the receivable may prove

uncollectible. Merchandise inventory includes obsolete items
costing P5,000 of which P2,000 might still be realized.
Depreciation has never been recorded: the fixtures are two years
old, have an estimated useful life of 10 years, and would cost
P20,000 if currently purchased. D. Arce is to be admitted as a
partner upon his investment of P20,000 cash and P10,000 worth
of merchandise. What is the total assets of the partnership?

a. P70,500
b. P48,000
c. P67,500
d. P74,000

1-16: On September 30, 2019, Lopez admits Mendez for an interest in

his business. On this date, Lopez’s capital account shows a
balance of P158,400. The following were agreed upon before the
formation of the partnership:

1. Prepaid expenses of P17,500 and accrued expenses of P5,000

are to be recognized.
2. 5% of the outstanding accounts receivable of Lopez amounting
to P100,000 is to be recognized as uncollectible.
3. Mendez is to be credited with a one-third interest in the
partnership and is to invest cash aside from the P50,000
worth of merchandise.

The amount of cash to be invested by Mendez and the total

capital of the partnership are:

a. P32,950 and P248,850 respectively.

b. P55,300 and P221,200 respectively.
c. P82,950 and P248,850 respectively.
d. P32,950 and P171,200 respectively.
1-17: Moran and Nakar entered into a partnership on February 1, 2019
by investing the following assets:

Moran Nakar
Cash P 15,000 -
Merchandise inventory - P45,000
Land - 15,000
Bulding - 65,000
Furniture and fixture 100,000 -

The agreement between Moran and Nakar provides that profits and
losses are to be divided into 40% (to Moran) and 60% (to Nakar),
and that the partnership is to assume the P30,000 mortgage loan
on the building.

If Nakar is to receive a capital credit equal to his profit and

loss ratio, how much cash must he invest?

a. P127,500
b. P172,500
c. P 97,500
d. P 77,500

1-18: As of July 1, 2019, Flores and Garcia decided to form a

partnership. Their statements of financial position on this
date are:

Flores Garcia
Cash P 1,500 P 3,750
Accounts receivable 54,000 22,500
Merchandise inventory - 20,250
Machinery and equipment 15,000 27,000
Total P70,500 P73,500
Accounts Payable P13,500 P24,000
Flores, capital 57,000 -
Garcia, capital - 49,500
Total P70,500 P73,500

The partners agreed that the machinery and equipment of Flores

is under depreciated by P1,500 and that of Garcia by P4,500.
Allowance for doubtful accounts is to be set up amounting to
P12,000 for Flores and P4,500 for Garcia. The partnership
agreement provides for a profit and loss ratio and capital
interest of 60% to Flores and 40% to Garcia. How much cash must
Flores invest to bring the partner’s capital balances
proportionate to their profit and loss ratio?

a. P14,250
b. P 5,250
c. P17,250
d. P10,250
1-19: Ortiz and Ponce are partners sharing profits in this proportion-
60:40. A statement of financial position prepared for the
partners on April 1, 2019

Cash P 48,000 Accounts Payable P 89,000

Accounts receivable 92,000 Ortiz, capital 133,000
Inventories 165,000 Ponce, capital 108,000
Equipment P70,000
Less Accumulated
Depreciation 45,000 25,000

Total assets P330,000 Total liabilities & P330,000

Capital

On this date, the partners agree to admit Roxas as a partner.

The terms of the agreement are summarized below.

Assets and liabilities are to be restated as follows:

a. An allowance for possible uncollectible of P4,500 is to be

established.
b. Inventories are to be restated at their present replacement
value of P170,000.
c. Accrued expenses of 4,000 are to be recognized.
Ortiz, Ponce and Roxas will divide profits in the ratio of 5:3.
Capital balances of the partners after the formation of the new
partnership are to be in the aforementioned ratio, with Ortiz
and Ponce making cash settlement between themselves outside of
the partnership to adjust their capitals, and Roxas investing
cash in the partnership for his interest. How much cash is to
be invested by Roxas?
a. P60,250
b. P47,500
c. P50,000
d. P59,375
1-20: On July 1 of the current year, Jocson and Gomez form a
partnership. Jocson is to invest certain business assets at
values which are yet to be agreed upon. He is to transfer his
business liabilities and is to contribute sufficient cash to
bring his total capital to P180,000, which is 60% of the total
capital as had been agreed upon.
Details regarding the book values of Jocson’s business assets
and liabilities and their corresponding valuation follow:

Book Agreed
Values Valuations
Accounts receivable P54,000 P54,000
Allowance for doubtful accounts 3,600 6,000
Merchandise inventory 96,600 105,000
Store equipment 27,000 -
Accum. Dep’n – store equipment 18,000 13,200
Office equipment 18,000 -
Accum. Dep’n – office equipment 9,600 4,800
Accounts Payable 48,000 48,000

Gomez Agrees to invest cash of P30,000 and merchandise valued

at current market price. The value of the merchandise to be
invested by Gomez and the amount of cash to be invested by
Jocson are:
a. P120,000 and P48,000 respectively.
b. P210,000 and P49,200 respectively.
c. P105,000 and P50,000 respectively.
d. P 90,000 and P48,000 respectively.