1. Blue and Rubi are partners who share profits and losses in the ratio of 6:4, respectively.

y. On May 1, 2009, their

respective capital accounts were as follows:
Blue P60,000
Rubi 50,000

On that date, Lind was admitted as a partner with a one-third interest in capital and profits for an investment of
P40,000. The new partnership began with total capital of P150,000. Immediately after Lind’s admission, Blue’s
capital should be
a. P50,000 c. P56,667
b. P54,000 d. P60,000

2. Western and Pate are partners with capital balances of P60,000 and P20,000, respectively. Profits and losses are
divided in the ratio of 60:40. Western and Pate decided to form a new partnership with Grant, who invested land
valued at P15,000 for a 20% capital interest in the new partnership. Grant’s cost of the land was P12,000. The
partnership elected to use the bonus method to record the admission of Grant into the partnership. Grant’s
capital account should be credited for
a. P12,000 c. P16,000
b. P15,000 d. P19,000

3. Dunn and Grey are partners with capital account balances of P60,000 and P90,000, respectively. They agree to
admit Zorn as a partner with a one-third interest in capital and profits, for an investment of P100,000, after
revaluing the assets of Dunn and Grey. Goodwill to the original partners should be
a. P0 c. P50,000
b. P33,333 d. P66,667

4. The following condensed balance sheet is presented for the partnership of Alfa and Beda, who share profits and
losses in the ratio of 60:40, respectively:
 Cash P 45,000
Other assets 625,000
Beda, loan 30,000
P 700,000

Accounts payable P 120,000

Alfa, capital 348,000
Beda, capital 232,000
P 700,000

The assets and liabilities are fairly valued on the balance sheet. Alfa and Beda decide to admit Capp as a new
partner with 20% interest. No goodwill or bonus is to be recorded. What amount should Capp contribute in cash
or other assets?
a. P110,000 c. P140,000
b. P116,000 d. P145,000

5. A and B contributed the net assets of their respective proprietorship business amounting to P50,000 and
P80,000, respectively. A is to invest additional cash into the partnership and shall have 60% interest in the
partnership. How much cash shall A invest?
a. P3,333 b. P20,000 c. P70,000 d. P120,000

6. A, K and O formed a partnership. They agreed that their capital contributions shall be aligned with their profit
or loss agreement of 40%, 25% and 35% respectively. A, K and O contributed non-cash assets at agreed values
of P20,000, P30,000 and P85,000, respectively. K first contributed P40,000 cash for his capital, compute the
total cash contributions of the other partners?
a. P160,000 b. P105,000 c. P145,000 d. P120,000
7. On June 30, 2009, the condensed balance sheet for the partnership of Eddy, Fox, and Grimm, together with their
respective profit and loss sharing percentages was as follows:
Assets, net of liabilities P320,000
Eddy, capital (50%) P160,000
Fox, capital (30%) 96,000
Grimm, capital (20%) 64,000
P320,000

Eddy decided to retire from the partnership and by mutual agreement is to be paid P180,000 out of partnership
funds for his interest. Total goodwill implicit in the agreement is to be recorded. After Eddy’s retirement, what
are the capital balances of the other partners?
Fox Grimm Fox Grimm
a. P 84,000 P56,000 c. P108,000 P72,000
b. P102,000 P68,000 d. P120,000 P80,000

8. Assume instead that Eddy remains in the partnership and that Hamm is admitted as a new partner with a 25%
interest in the capital of the new partnership for a cash payment of P140,000. Total goodwill implicit in the
transaction is to be recorded. Immediately after admission of Hamm, Eddy’s capital account balance should be
a. P280,000 b. P210,000 c. P160,000 d. P140,000
9. As of December 31, 2009, A, B and C shares profit equally and have unadjusted capital balances of P120,000,
P180,000 and P200,000, respectively. Also as of this date, the income summary account have a credit balance
of P60,000. Both A and B made drawings of P40,0000 each during the year which were charged directly to their
capital. On December 31, 2009, A retired and was paid P110,000. Compute the capital balances of B and C,
respectively, after A’s retirement.

a. P160,000; P215,000 b. P155,000; P215,000 c. P155,000; P235,000 d. P215,000; P235,000

10. On June 30, 2009, the balance sheet for the partnership of Coll, Boy, and Rei, together with their respective
profit and loss ratios, was as follows:
Assets, at cost P 180,000
Coll, loan P 9,000
Coll, capital (20%) 42,000
Boy, capital (20%) 39,000
Rei, capital (60%) 90,000
Total P 180,000

Coll has decided to retire from the partnership. By mutual agreement, the assets are to be adjusted to their fair
value of P216,000 at June 30, 2009. It was agreed that the partnership would pay Coll P61,200 cash for Coll’s
partnership interest, including Coll’s loan which is to be repaid in full No goodwill is to be recorded. After
Coll’s retirement, what is the balance of Boy’s capital account?
a. P36,450 c. P45,450
b. P39,000 d. P46,200
11. MacDo will invest in the partnership of Jabili and Pitsa Hat for a 40% interest. Jabili and Pitsa Hat have capital
of P40,000 and P30,000 and shares profit 60:40, respectively. MacDo is to invest P20,000 into the partnership
and to purchase 1/2 of Jabili’s interest for P30,000. Compute the capital interest of MacDo, Jabili and Pitsa Hat,
respectively, under the bonus method.
a. P 50,000, P20,000; P20,000 c. P 40,000, P20,000; P20,000
b. P 36,000, P22,400; P31,600 d. P 20,000, P20,000; P20,000

12. Bridgette, Benny and Kenny are partners with existing capital balances of P 50,000, P120,000 and P130,000,
respectively. The partners also shares profits and losses 30:35:35, respectively. Bridgette sold her interest to the
partnership for P40,000. As part of the settlement she shall take an item of equipment with a book value of
P20,000 at its fair value of P25,000. The capital of Benny after Bridgette’s sale of interest is
a. P 125,000; P 135,000 c. P 120,000; P 130,000
b. P 127,500; P 137,500 d. P 121,750; P 131,750
13. Partners A and B, sharing profits 50:50, have the following balance sheet as of December 31, 2006:

Cash P 120,000 Accounts payable P 172,000

Receivable 100,000 Accum. Depreciation 8,000

Inventory 140,000 A. Capital 140,000

Equipment 80,000 B, Capital 120,000

Total P 440,000 P 440,000

They need to incorporate their partnership, with the new corporation absorbing the net assets after the following
adjustments: provision for allowance for bad debts of P10,000; statement of the inventory at its current fair
value of P160,000; and, recognition of further depreciation on the equipment of P3,000. The corporation’s
capital stock is to have a par value of P100, and the partners are to be issued corresponding total shares
equivalent to their adjusted capital balances. The total par value of the shares of capital stock that were issued to
Partner A and B was:
a. P260,000 b. P267,000 c. P273,000 d. P280,000
14. Jay &Kay partnership’s balance sheet at December 31, 2009, reported the following:
Total assets P 100,000
Total liabilities 20,000
Jay, capital 40,000
Kay, capital 40,000

On January 2, 2010, Jay and Kay dissolved their partnership and transferred all assets and liabilities to a newly
formed corporation. At the date of incorporation, the fair value of the net assets was P12,000 more than the
carrying amount on the partnership’s books, of which P7,000 was assigned to tangible assets and P5,000 was
assigned to goodwill. Jay and Kay were each issued 5,000 shares of the corporation’s P1 par value common
stock. Immediately following incorporation, additional paid-in capital in excess of par should be credited for
a. P68,000 c. P77,000
b. P70,000 d. P82,000