09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

Quiz 2 Partnership Dissolution and Liquidation

Started:
9 Oct at 15:37

Quiz instructions
Put comma and round off your answers to nearest peso. Thank you

GOOD LUCK !!!!!!

Question 1 2 pts

1. Jeremy and Eli are partners who share profits and losses equally. The capital
accounts of the partners have the following balances:

Jeremy                     180,000

Eli                                70,000

Thadez desires to join the firm and offered to invest 96,000 for a 1/3 interest. Jeremy
and Eli declined his offer, but they extended a counter-offer to Thadez of 88,000 for a
25% interest in the capital and profits and losses of the firm. If Thadez accepted the
offer, what would be the balance of Jeremy’s capital account after Thadez’s
admission?

178,250

199,000

181,750

187,000

Question 2 2 pts

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

On December 31, 2020, the accounting records of Alma, Brenda, and Dely
partnership included the following balances: Alma, drawing 60,000; Dely, drawing
P22,500; Brenda loan P75,000; Alma, capital 307,500; Brenda, capital P251,250 and
Dely, capital P270,000. The total assets of the partnership amounted to P1,196,250,
including P131,250 cash, and partnership liabilities totaled P375,000. The partnership
was liquidated Dec. 31 and Dely received P208,125 cash pursuant to the liquidation.
Alma, Brenda and Dely share profits and losses in a 5:3:2 ratio, respectively.

The cash balance after payment of liabilities is:

774,375

886,875

624,375

999,375

Question 3 1 pts

On December 31, 2020, the accounting records of Alma, Brenda, and Dely
partnership included the following balances: Alma, drawing 60,000; Dely, drawing
P22,500; Brenda loan P75,000; Alma, capital 307,500; Brenda, capital P251,250 and
Dely, capital P270,000. The total assets of the partnership amounted to P1,196,250,
including P131,250 cash, and partnership liabilities totaled P375,000. The partnership
was liquidated Dec. 31 and Dely received P208,125 cash pursuant to the liquidation.
Alma, Brenda and Dely share profits and losses in a 5:3:2 ratio, respectively.

The loss on realization is:

309,374

61,875

868,125

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

196,875

Question 4 2 pts

The partnership of A, B, C and D is preparing to liquidate. Profit and loss sharing are
shown in the summarized balance sheet at December 31, 2020 as follows:

Assets Liabilities and capital

Cash 900,000 other liabilities 450,000

inventories 900,000 A, loan 450,000

Loan to B 90,000 A, capital 40% 900,000

other assets 2,295,000 B, capital 20% 1,440,000

C, capital 20% 450,000

D, capital 20% 495,000

Total 4,185,000 Total 4,185,000

During February 2021, the inventories are sold for 382,500, the other liabilities are
paid and P 225,000 is set aside for contingencies.

Which of the following statements is false?

Payment to partner B’s interest P607,500

Payment to partners P607,500

Total loss on realization and liquidation is 2,520,000

Payment to partner A’s capital P0

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

Question 5 2 pts

A, B and C are partners. On January 2, 2020, their capital balances and profit and
loss ratio are as follows:

` Capital P&L ratio

A P625,000 60%

B 1,250,000 25%

C 1,500,000 15%

C withdrew P250,000 during the year. Net loss on December 31, 2020 totaled
P500,000. Hence, the partners decided to liquidate the partnership. It is uncertain
how much of the assets will ultimately yield but favorable realization is expected. It is
therefore, agreed to distribute cash as it become available. There are unpaid
liabilities of P125,000 and cash of P17,500. The amount of non-cash assets before
liquidation is:

2,732,500

Question 6 2 pts

A, B and C are partners. On January 2, 2020, their capital balances and profit and
loss ratio are as follows:

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

` Capital P&L ratio

A P625,000 60%

B 1,250,000 25%

C 1,500,000 15%

C withdrew P250,000 during the year. Net loss on December 31, 2020 totaled
P500,000. Hence, the partners decided to liquidate the partnership. It is uncertain
how much of the assets will ultimately yield but favorable realization is expected. It is
therefore, agreed to distribute cash as it become available. There are unpaid
liabilities of P125,000 and cash of P17,500. 

The amount to be realized by the partnership on the sale of its assets so that A will
receive a total of P475,000 in the final settlement of his interest is:

2,982,500

Question 7 1 pts

Partners Ala, Gerald, and Mike share profits and losses 5:3:2, respectively, and their
balance sheet on October 31, 2005 follows:

                Cash                                      P   240,000           Accounts payable           

P   600,000

                Other assets                        2,160,000             Ala, capital                         

     444,000

                                                                                            Gerald, capital                  
     780,000

                                                                                           Mike, capital                        

     576,000

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

                                                               
P2,400,000                                                          P2,400,000

The assets & liabilities are recorded at their current fair value.  Gerry is to be admitted
as a new partner w/ a 1/5 interest in capital & earnings.  Ala was credited a bonus of
P15,000. How much should Gerry contribute?

480,000

456,000

450,000

487,500

Question 8 2 pts

A, B, C and D are partners, sharing earnings in the ratio of 3:4:6:8. The balance of
their capital accounts on December 21, 2020 are as follows: A – P 25,000; B-
P625,000; C – P625,000 and D – P225,000. The partners decided to liquidate, and
they accordingly convert the non-cash assets into P580,000 of cash. After paying the
liabilities amounting to P75,000, they have P555,000 cash available for payment to
partners. Assume that a debit balance in any of partner’s capital account is
uncollectible. The book value of non-cash assets amounted to:

1,501,000

Question 9 2 pts

DD, EE, FF, and GG share profits and losses 20%, 20%, 20% and 40%, respectively.
FF retired from the partnership on May 31, 2008 and was paid P150,000 cash in full

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

settlement of his interest in the partnership. Then on June 1, 2008, HH was admitted
to the partnership with a P60,000 cash investment for a 10% interest in the
partnership.

How much is the capital to be credited to HH?

70,000

Question 10 1 pts

Mike and November were partners before they admitted Oscar. The share profits and
losses 7:3. Oscar was admitted into the partnership by contributing cash for 35%
interest in the partnership and 15% share in the profits and losses. The capital
balances of Mike and November combined was P390,000 after admission of Oscar.
Upon admission, Oscar had a capital credit in the amount of P60,000 in addition to
his contribution.

 How much is the cash contribution of Oscar?

45,000

Question 11 1 pts

On January 1, 2017, ACJ Partnership entered into liquidation. The partners’ capital
balances on this date were as follows:   A (25%) P2,500,000  ;  C (35%) P5,400,000  
;   J (40%) P3,700,000.  The partnership has liabilities amounting to P4,400,000,
including a loan from C P600,000. Cash on hand before the start of liquidation is 
P800,000.

Noncash assets amounting to P7,400,000 were sold at book value and the rest of the
noncash assets were sold at a loss of P4,200,000. How much cash will be distributed
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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

to the partners?

8,000,000

11,800,000

4,400,000

7,400,000

Question 12 2 pts

On January 1, 2017, ACJ Partnership entered into liquidation. The partners’ capital
balances on this date were as follows:   A (25%) P2,500,000  ;  C (35%) P5,400,000  
;   J (40%) P3,700,000.  The partnership has liabilities amounting to P4,400,000,
including a loan from C P600,000. Cash on hand before the start of liquidation is 
P800,000.

After exhausting the noncash assets of the partnership, assuming all partners has
personal assets more than their personal liabilities. How much cash must be invested
by the partners to satisfy the claims of the outside creditors and to pay the amount
due to the partner/s?

3,680,000

4,480,000

4,360,000

3,800,000

Question 13 1 pts

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

The partnership of Cruz, Amistoso, and Galicia decided to liquidate their partnership
on May 31, 2016.  Before liquidating and sharing of net income, their capital balances
are as follows: Cruz (30%) P875,000, Amistoso (30%) P630,000, and Galicia (40%)
P770,000. Net income from January 1 to May 31 is P420,000. Liabilities of the
partnership amounted to P735,000 and its total assets include cash amounting to
P245,000.

Unsettled liabilities are P385,000. Cruz invested additional cash enough to settle their
partnership’s indebtedness. Amistoso is personally solvent, Galicia is personally
insolvent, and Cruz becomes insolvent after investing the cash needed by the
partnership.

How much were the partnership’s non-cash sold for?

105,000

157,500

3,080,000

525,000

Question 14 1 pts

A new partner is admitted to an existing partnership. As a result of admission, the

capital balances of incumbent partners increase while the contributed capital of the
new partner is less than his capital credit.

Which of the following is the best explanation?

Revaluation of existing assets of old partnership has been recognized.

Bonus has been given by the new partner to incumbent partners and impairment loss of
existing assets of old partnership has been recognized.

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

Bonus has been given by the incumbent partners to the new partner and revaluation of
existing assets of old partnership has been recognized.

Bonus has been given by the incumbent partners to the new partner.

Question 15 2 pts

Glenn, a partner in a law firm, decided to withdraw from the partnership.  Glenn’s
share in the partnership profits and losses was 20%.  Upon withdrawal from the
partnership he was paid cash in final settlement for his interest.  The total of the
partners’ capital accounts before the recognition of the revaluation prior to Glenn’s
withdrawal was P315,000.  After his withdrawal the remaining partners’ capital
accounts, excluding their share of revaluation, totaled P240,000, but including their
share of revaluation, totaled P384,000. 

What is the total amount of cash paid to Glenn?

87,000

96,000

111,000

99,000

Question 16 1 pts

In the liquidation of general partnership, which of the following claims shall be settled
first by the liquidating partner?

Capital contribution by the managing partner

Share in profit by the industrial partner

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

Advances made by capitalist partner to the partnership

Employee benefits of workers

Question 17 1 pts

Partners E, F, G have capital balances of P120,000, P155,000, and P115,000

respectively. The partnership generated net loss of P140,000 during the year. They
share profits and losses 2:5:1 respectively. Due to disagreement partner F wants out
of the partnership. Before retirement, the value of their inventory increased from
P85,000 to P97,000. The partners decided to pay partner F P70,000 upon retirement.

298,000

42,000

264,000

8,000

Question 18 2 pts

A balance sheet for the partnership of Suzy, Millette and Myra, who share profits in
the ratio of 50:25:25, shows the following balance just before liquidation:

Cash P 162,000   Suzy, capital (50%) P 297,000

Millette, capital
Other assets 803,250   209,500
(25%)

Liabilities 269,750   Myra, capital (25%) 189,000

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

On the first month of liquidation, certain assets with book value of P500,000 were
sold for P432,000.  Liquidation expenses of P13,500 are paid, and additional
liquidation expenses are anticipated.  Liabilities are paid amounting to P72,900 and
sufficient cash is retained to insure the payment to creditors before making payments
to partners.  On the first payment to partners, Suzy receives P84,375. 

What is the amount of cash withheld for anticipated liquidation expenses?

40,500

237,600

197,100

Question 19 1 pts

A partners retires from the partners and receives an amount higher than his capital
balance at the time of his retirement. Under Philippine GAAP, which of the following
explanation is valid if the capital balances of the remaining partners increase after
such retirement?

Bonus has been given by the retiring partner to the remaining partners.

Goodwill arising from partner's retirement has been recognized.

Bonus has been given by remaining partners to retiring partner.

Asset revaluation has been recognized at the time of retirement.

Question 20 1 pts

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

In the absence of other relevant data, when a new partner is admitted in an existing
partnership through the acquisition of capital interest of incumbent partners, which is
always true?

The partnership shall recognize gain or loss as a result of the disposal of capital interest.

The partnership shall recognize goodwill arising from the admission of a new partner.

The total capital of the partnership will not change despite the admission of a new partner.

The total assets of the partnership will increase by the amount of the net proceeds of the
disposal of capital interest.

Question 21 1 pts

The financial position of the partnership Marie, Shey, Allan and Roi, just prior to
liquidation shows:

Marie, Loan      25,000

Marie, Capital    137,500

Shey, capital    128,750

Allan, capital    171,250

Roi, Capital    112,500

The partners share profits and losses on a 4:3:2:1 ratio, respectively. Certain assets
are sold for P150,000 and is distributed to partners.

How much cash should Allan receive?

67,917

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

82,083

150,000

Question 22 1 pts

In preparing the schedule of safe payments, it is assumed that:

Unpaid liabilities will be settled by the partners own personal property

No liquidation expenses will be settled.

All non-cash assets are considered worthless

. All partners are solvent

Question 23 1 pts

1. Which of the following procedures is not necessary steps affecting a dissolution of

partnership?

Revising partners’ equity

Closing of partnership books

Recognizing undistributed profit or loss share of partner at dissolution date

Revaluing partnership assets

Question 24 2 pts

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09/10/2021, 18:01 Quiz: Quiz 2 Partnership Dissolution and Liquidation

TM and SJ, having capital balances of P980,000 and P525,000 respectively, decided
to admit GD into their partnership.  GD is to invest sufficient amount in order to have
a 25% interest in the partnership. If TM and SJ share profit in a proportion of 3:1,
respectively, and SJ’s capital balance after GD’s investment is P589,750,

847,000

588,000

848,750

1,174,250

Question 25 1 pts

Which of the following statements is true with regard to a withdrawing partner?

A bonus may be paid to the retiring partner

A bonus must be paid to the retiring partner or to the remaining partners

A bonus must be paid to the retiring partner

Recognizing a bonus is not appropriate when a partner retires

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