1.

Anne, Iris and Alfred formed a partnership on April 30, with the following assets, measured at
their fair market value, contributed by each partner:
Particulars Anne Iris Alfred
Cash P200,000 P240,000 P600,000
Automobile 170,000
Delivery Trucks 560,000
Computer and printer 102,000
Office furniture 70,000 50,000
Land and Building 3,000,000
Totals P3,370,000 P972,000 P650,000
Although Alfred has contributed the most cash to the partnership, he did not have the full
amount of P600,000 available and was forced to borrow P400,000. The land and building
contributed by Anne has a mortgage of P1,800,000 and the partnership is to assume
responsibility of the loan. If the profit and loss sharing agreement is 40 percent, 40 percent, and
20 percent respectively, for Anne, Iris and Alfred, what is the total capital investment of all the
partners at the opening of the business on April 30?
a. P4,992,000 b. P3,192,000 c. P2,792,000 d. P3,328,000

2. Paul admits Timothy as a partner in business. Accounts in the ledger for Paul on November 30,
2016, just before the admission of Timothy, shows the following balances:
Cash P52,000 Accounts payable P124,000
Accounts receivable 140,000 Paul, capital 528,000
Merchandise inventory 360,000
It is agreed that for the purposes of establishing Paul’s interest the following adjustments should
be made:
a. An allowance for doubtful accounts of 2% of accounts receivable is to be established.
b. The merchandise inventory is to be valued at P404,000
c. Prepaid expenses of P13,000 and accrued liabilities of P8,000 are to be established.
Timothy is to invest sufficient funds in order to to receive a 1/3 interest in the partnership. How
much must Timothy contribute?
a. P264,000 b. P286,100 c. P190,720 d. P176,000

3. Mahal admits Mora as a partner in the business. Balance sheet accounts of Mahal on September
30, just before admission of Mora show:
Cash P31,200 Accounts payable P74,400
Accounts receivable 144,000 Mahal, capital 316,800
Merchandise inventory 216,000
It is agreed that for purpose of establishing Mahal’s interest, the following adjustments shall be
made:
• An allowance for doubtful accounts of 2% is to be established
• Merchandise inventory is to be valued at P242,400
• Prepaid expense of P4,200 and accrued expenses of P4,800 are to be recognized
Mora is to invest sufficient cash to obtain a 1/3 interest in the partnership. How much is Mora’s
investment to the partnership?
a. P169,860 b. P211,200 c. P171,660 d. P95,040
4. I and Q formed a partnership on January 2, 2016, and agreed to share income 90%, 10%,
respectively. I contributed a capital of P12,500. Q contributed no capital but has a specialized
expertise and manages the firm full-time. There were no withdrawals during the year. The
partnership agreement provides for the following:
a. Capital accounts are to be credited annually with interest at 5% of beginning capital
b. Q is to be paid a salary of P500 a month
c. Q is to receive a bonus of 20% of income calculated before deducting his bonus, his salary
and interest on both capital accounts
d. Bonus, interest, and Q’s salary are to be considered partnership expenses
The partnership’s 2016 income statement follows:
Revenues P48,225
Expenses 24,850
Net income P23,375
How much is the total share of Q on the 2016 partnership net income?
a. P15,837.50 b. P14,325 c. P16,194 d. P14,169
5. R and J, partners, divide profits and losses on the basis of average capitals. Capital accounts for
the year ended December 31, 2016, are shown below. The net profit for 2016 is P135,000.
(Changes in capitals during the first half of the month are the regarded as effective as the
beginning of the month; changes during the second half of a month are regarded as effective as
of the beginning of the following month.)
Particulars R, Capital J, Capital
Dr Cr Dr Cr
January 1 P300,000 P330,000
March 9 P50,000
April 14 150,000
July 1 100,000
Sept 4 P40,000
Sept 22 100,000
October 26 75,000
The share of R on the 2016 profit is:
a. P57,250 b. P77,250 c. P57,750 d. P62,630
6. Efren and Frenz operate The Gourmet Restaurant as a partnership. Their partnership agreement
has the following provisions for sharing profits and losses:
A. Income is distributed only as far as it is available
B. Available income is to be distributed in the following sequence:
1. Efren, who is the chef, gets a salary of P25,000 a year; Frenz, who is still learning, gets a
salary of P10,000
2. Interest is imputed on the average capital balances at 15 percent
3. Any remaining profits and losses are to be shared equally

The average capital balances during the year were P270,000 for Efren and P50,000 for Frenz. If
the partnership income for the year is P17,500, it should be distributed to the partners as
follows:
a. Efren P8,000; Frenz P9,500 c. Efren P12,500; Frenz P5,000
b. Efren P8,750; Frenz P8,750 d. Efren P14,000; Frenz P3,500
7. Partners A and B have a profit and loss agreement with the following provisions: salaries of
P20,000 and P25,000 for A and B respectively; a bonus to A of 10% of net income after bonus;
and interest of 20% on average capital balances of P40,000 and P50,000 for A and B,
 respectively. Any remainder is to be split equally. If the partnership had net income of P88,000,
how much should be allocated to Partner A
a. P36,000 b. P44,500 c. P50,000 d. P43,500

X, Y and Z, a partnership formed on January 1, 20x4 had the following initial investment:
X P100,000
Y P150,000
Z P225,000
The partnership agreement states that the profits and losses are to be shared equally by the partners
after consideration is made for the following:
• Salaries allowed to partners: P60,000 for X, P48,000 for Y, and P36,000 for Z
• Average partners’ capital balances during the year shall be allowed10%
• Additional information:
• On June 30, 20x4, X invested an additional P60,000
• Z withdrew P70,000 from the partnership on September 30, 20x4
• Share the remaining partnership profit was P5,000 for each partner
8. Partnership net profit of December 31, 20x4 before salaries, interests and partner’s share on the
remainder was
a. P199,750 b. P207,750 c. P211,625 d. P222,750
A partnership begins its first year with the following capital balances:
A, capital P60,000
B, capital P80,000
C, capital P100,000
The articles of partnership stipulate that profits and losses be assigned in the following manner
• Each partner is allocated interest equal to 10 percent of the beginning capital balance
• B is allocated compensation of P20,000 per year
• Amy remaining profits and losses are allocated on a 3:3:4 basis, respectively
• Each partner is allowed to withdraw up to P5,000 cash per year
9. Assuming that the net income is P50,000 and that each partner withdraws the maximum
amount allowed. What is the balance in C’s capital account at the end of that year?
a. P105,800 b. P106,200 c. P106,900 d. P107,400

10. Bekang, an active partner in the BA partnership receives an actual bonus of 25% of the
partnership net income after deducting the bonus. For the year ended July 31, 2018, the
partnership net income before the bonus amounted to P300,000. Bekang’s bonus for the year
ended July 31, 2018 should be:
a. P56,250 b. P60,000 c. P62,500 d. P75,000