1.

In the ABC partnership (to which Daniel seeks admittance), the capital balances of
Albert, Bert, and Connell, who share income in the ratio of 5:3:2 are: Albert – P500,000;
Bert – P300,000; Conell – P200,000. If no goodwill or bonus is recorded, how much
should Daniel invest for a 20 percent interest? *
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P400,000
P200,000
P300,000
P250,000

2. In the DEF partnership (to which Gary seeks admittance), the capital balances of
Dell, Emy, and Famy, who share income in the ratio of 5:3:2 are: Dell – P500,000; Emy
– P300,000; Famy – P200,000. Based on the preceding information, what amount of
goodwill will be recorded if Gary invests P450,000 for a one-third interest?
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P0
P10,000
P50,000
P100,000

3. Griffin and Rhodes formed a partnership on January 1, 2019. Griffin contributed

cash of P120,000 and Rhodes contributed land with a fair value of P160,000. The
partnership assumed the mortgage on the land which amounted to P40,000 on
January 1. Rhodes originally paid P90,000 for the land. On July 31, 2019, the
partnership sold the land for P190,000. Assuming Griffin and Rhodes share profits and
losses equally, how much of the gain from sale of land should be credited to Griffin for
financial accounting purposes?
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P0
P15,000
P35,000
P45,000

4. Which of the following accounts could be found in the PQ partnership's general

ledger?I. Due from PII. P, DrawingIII. Loan Payable to Q
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I, II
I, III
II, III
I, II, and III

5. The DEF partnership reported net income of P130,000 for the year ended December
31, 2018. According to the partnership agreement, partnership profits and losses are
to be distributed as follows: Salaries to D – P25,000; Salaries to E – P20,000; Salaries
to F – P15,000; Bonus to D – 10% on net income; Remainder: D (60%); E (30%); F
(10%).How much of the partnership net income should be allocated to D?
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P78,000
P72,200
P52,500
P42,500

6. The GHI partnership reported net income of P130,000 for the year ended December
31, 2018. According to the partnership agreement, partnership profits and losses are
to be distributed as follows: Salaries to G – P25,000; Salaries to H – P20,000; Salaries
to I – P15,000; Bonus to G – 10% on net income; Remainder: G (60%); H (30%); I
(10%).How much of the partnership net income should be allocated to H?
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P39,000
P37,100
P75,000
P42,500

9. The APB partnership agreement specifies that partnership net income be allocated
as follows: Salary allowance to A – P30,000; Salary allowance to P – P10,000; Salary
allowance to B – P40,000; All partners will have an interest of 10% on their respective
average capital balances. The remainder will be distributed as: A (40%); P (40%); B
(20%). Average capital balances for the current year were P50,000 for A, P30,000 for P,
and P20,000 for B. Assuming a current year net income of P150,000, what amount
should be allocated to partner A?
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P60,000
P59,000
P24,000
P58,000

10. The APB partnership agreement specifies that partnership net income be allocated
as follows: Salary allowance to A – P30,000; Salary allowance to P – P10,000; Salary
allowance to B – P40,000; All partners will have an interest of 10% on their respective
average capital balances. The remainder will be distributed as: A (40%); P (40%); B
(20%). Average capital balances for the current year were P50,000 for A, P30,000 for P,
and P20,000 for B. Assuming a current year net income of P150,000, what amount
should be allocated to partner P?
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P60,000
P37,000
P24,000
P38,000

11. The APB partnership agreement specifies that partnership net income be allocated
as follows: Salary allowance to A – P30,000; Salary allowance to P – P10,000; Salary
allowance to B – P40,000; All partners will have an interest of 10% on their respective
average capital balances. The remainder will be distributed as: A (40%); P (40%); B
(20%). Average capital balances for the current year were P50,000 for A, P30,000 for P,
and P20,000 for B. Assuming a current year net income of P50,000, what amount
should be allocated to partner P?
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P20,000
P16,000
(P3,000)
0

12. The APB partnership agreement specifies that partnership net income be allocated
as follows: Salary allowance to A – P30,000; Salary allowance to P – P10,000; Salary
allowance to B – P40,000; All partners will have an interest of 10% on their respective
average capital balances. The remainder will be distributed as: A (40%); P (40%); B
(20%). Average capital balances for the current year were P50,000 for A, P30,000 for P,
and P20,000 for B. Assuming a current year net income of P50,000, what amount
should be allocated to partner B?
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P10,000
P8,000
P34,000
P33,000
13. RD formed a partnership on February 10, 2019. R contributed cash of P150,000,
while D contributed inventory with a fair value of P120,000. Due to R's expertise in
selling, D agreed that R should have 60 percent of the total capital of the partnership.
R and D agreed to recognize goodwill. What is the total capital of the RD partnership
after the goodwill is recognized?
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P450,000
P330,000
P300,000
P270,000

14. RD formed a partnership on February 10, 2019. R contributed cash of P150,000,

while D contributed inventory with a fair value of P120,000. Due to R's expertise in
selling, D agreed that R should have 60 percent of the total capital of the partnership.
R and D agreed to recognize goodwill. What is the total capital balance of R after the
goodwill is recognized?
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P270,000
P198,000
P180,000
P162,000

15. When a new partner is admitted into a partnership and the new partner receives a
capital credit less than the tangible assets contributed, which of the following explains
the difference?I. The new partner's goodwill has been recognized.II. The old partners
received a bonus from the new partner.
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I only
II only
Either I or II
Neither I nor II

16. When a new partner is admitted into a partnership and the new partner receives a
capital credit greater than the tangible assets contributed, which of the following
explains the difference?I. The old partners' goodwill is being recognized.II. The new
partner's goodwill is being recognized.
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I only
II only
Either I or II
Both I and II

17. When a new partner is admitted into a partnership and the capital of the old
partners decreases, which of the following explains the reason for the decrease?I.
Undervalued liabilities were written up to their fair values.II. Undervalued assets were
written up to their fair values.
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I only
II only
Both I and II
Neither I nor II

18. When a partner retires from a partnership and the retiring partner is paid more than
the capital balance in her account, which of the following explains the difference?I.
The retiring partner is receiving a bonus from the other partners.II. The retiring
partner's goodwill is being recognized.
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I only
II only
Either I or II
Neither I nor II

19. When the old partners receive a bonus upon admission of a new partner into a
partnership, the bonus is allocated to:I. all the partners in their profit and loss sharing
ratio.II. the existing partners in their profit and loss sharing ratio.
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I only
II only
Either I or II
Neither I nor II

20. When a new partner is admitted into a partnership and the old partners' goodwill is
recognized, the goodwill is allocated to:I. all the partners in their profit-and-loss-
sharing ratio.II. the old partners in their profit and loss sharing ratio
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I only
II only
Either I or II
Neither I nor II

21. In the RST partnership, Ron's capital is P80,000, Stella's is P75,000, and Tiffany's is
P50,000. They share income in a 3:2:1 ratio, respectively. Tiffany is retiring from the
partnership. Tiffany is paid P60,000, and no goodwill is recorded. In the journal entry
to record Tiffany's withdrawal:
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Tiffany, Capital will be credited for P60,000.

Ron, Capital will be debited for P5,000.
Stella, Capital will be debited for P4,000.
Cash will be debited for P60,000.

22. In the RST partnership, Ron's capital is P80,000, Stella's is P75,000, and Tiffany's is
P50,000. They share income in a 3:2:1 ratio, respectively. Tiffany is retiring from the
partnership. Tiffany is paid P60,000, and no goodwill is recorded. What is the Ron's
capital balance after Tiffany withdraws from the partnership?
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P74,000
P71,000
P75,000
P86,000

23. In the RST partnership, Ron's capital is P80,000, Stella's is P75,000, and Tiffany's is
P50,000. They share income in a 3:2:1 ratio, respectively. Tiffany is paid P56,000, and
all implied goodwill is recorded. What is the total amount of goodwill recorded?
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P0
P6,000
P30,000
P36,000

24. In the AD partnership, Allen's capital is P140,000 and Daniel's is P40,000 and they
share income in a 3:1 ratio, respectively. They decide to admit David to the
partnership. What amount will David have to invest to give him one-fifth percent
interest in the capital of the partnership if no goodwill or bonus is recorded?
2/2

P60,000
P36,000
P50,000
P45,000
25. In the AD partnership, Allen's capital is P140,000 and Daniel's is P40,000 and they
share income in a 3:1 ratio, respectively. They decide to admit David to the
partnership. Assume that David invests P50,000 for a one-fourth interest. Goodwill is
to be recorded. The journal to record David's admission into the partnership will
include:
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a credit to cash for P50,000.

a debit to goodwill for P7,500.
a credit to David, Capital for P60,000.
a credit to David, Capital for P50,000.

26. In the AD partnership, Allen's capital is P140,000 and Daniel's is P40,000 and they
share income in a 3:1 ratio, respectively. They decide to admit David to the
partnership. Allen and Daniel agree that some of the inventory is obsolete. The
inventory account is decreased before David is admitted. David invests P40,000 for a
one-fifth interest. What is the amount of inventory written down?
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P4,000
P20,000
P15,000
P10,000

27. In the AD partnership, Allen's capital is P140,000 and Daniel's is P40,000 and they
share income in a 3:1 ratio, respectively. They decide to admit David to the
partnership. David directly purchases a one-fifth interest by paying Allen P34,000 and
Daniel P10,000. The land account is increased before David is admitted. By what
amount is the land account increased?
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P40,000
P10,000
P36,000
P20,000

28. In the AD partnership, Allen's capital is P140,000 and Daniel's is P40,000 and they
share income in a 3:1 ratio, respectively. They decide to admit David to the
partnership. David invests P40,000 for a one-fifth interest in the total capital of
P220,000. The journal to record David's admission into the partnership will include:
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a credit to Cash for P40,000.
a debit to Allen, Capital for P3,000.
a credit to David, Capital for P40,000.
a credit to Daniel, Capital for P1,000.

29. In the AD partnership, Allen's capital is P140,000 and Daniel's is P40,000 and they
share income in a 3:1 ratio, respectively. They decide to admit David to the
partnership. David invests P50,000 for a one-fifth interest. What amount of goodwill
will be recorded?
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P20,000
P4,000
P40,000
P15,000

30. If A is the total capital of a partnership before the admission of a new partner, B is
the total capital of the partnership after the admission of the new partner, C is the
amount of the new partner's investment, and D is the amount of capital credited to the
new partner, then there is:
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goodwill to the new partner if B > (A + C) and D < C.

goodwill to the old partners if B = A + C and D > C.
a bonus to the new partner if B = A + C and D > C.
neither bonus nor goodwill if B > (A + C) and D > C.

31. The terms of a partnership agreement provide that one of the partners is to receive
a salary allowance of P30,000, plus a bonus of 20 percent of income after deduction
of the bonus and the salary allowance. If income is P150,000, the bonus should be:
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P18,000
P20,000
P24,000
P30,000

32. The partnership of X and Y shares profits and losses in the ratio of 60 percent to X
and 40 percent to Y. For the year 2018, partnership net income was double X's
withdrawals. Assume X's beginning capital balance was P80,000, and ending capital
balance (after closing) was P140,000. Partnership net income for the year was:
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P120,000.
P300,000.
P500,000.
P600,000.

33. Shue, a partner in the Financial Brokers Partnership, has a 30 percent share in
partnership profits and losses. Shue's capital account had a net decrease of P100,000
during 2018. During 2018, Shue withdrew P240,000 as withdrawals and contributed
equipment valued at P50,000 to the partnership. What was the net income of the
Financial Brokers Partnership for 2018?
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P633,334
P466,666
P300,000
P190,000

34. Bleeker Company issued 10,000 shares of its P5 par value ordinary shares having
a market value of P25 per share and 15,000 shares of its P15 par value preferred
shares having a market value of P20 per share for a lump sum of P480,000. How
much of the proceeds would be allocated to the ordinary shares?
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P50,000
P218,182
P250,000
P255,000

35. Mouser Company issues 4,000 shares of its P5 par value ordinary shares having a
market value of P25 per share and 6,000 shares of its P15 par value preferred shares
having a market value of P20 per share for a lump sum of P192,000. What amount of
the proceeds should be allocated to the preferred shares?
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P172,000
P120,000
P104,727
P90,000

36. On September 1, 2018, Zelner Company reacquired 12,000 shares of its P10 par
value common stock for P15 per share. Zelner uses the cost method to account for
Treasury Shares. The journal entry to record the reacquisition of the stock should debit
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Treasury Shares for P120,000.
Ordinary Share Capital for P120,000.
Ordinary Share Capital for P120,000 and Share Premium for P60,000.
Treasury Shares for P180,000.

37. Gannon Company acquired 6,000 shares of its own ordinary shares at P20 per
share on February 5, 2016, and sold 3,000 of these shares at P27 per share on August
9, 2017. The market value of Gannon's ordinary share was P24 per share at December
31, 2016, and P25 per share at December 31, 2017. The cost method is used to record
Treasury Shares transactions. What account(s) should Gannon credit in 2007 to
record the sale of 3,000 shares?
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Treasury Shares for P81,000.

Treasury Shares for P60,000 and Share Premium - Treasury Shares for P21,000.
Treasury Shares for P60,000 and Retained Earnings for P21,000.
Treasury Shares for P72,000 and Retained Earnings for P9,000.

38. King Co. issued 100,000 shares of P10 par ordinary shares for P1,200,000. King
acquired 8,000 shares of its own ordinary shares at P15 per share. Three months later
King sold 4,000 of these shares at P19 per share. If the cost method is used to record
Treasury Shares transactions, to record the sale of the 4,000 treasury shares, King
should credit
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Treasury Shares for P76,000.

Treasury Shares for P40,000 and Share Premium from Treasury Shares for P36,000.
Treasury Shares for P60,000 and Share Premium from Treasury Shares for P16,000.
Treasury Shares for P60,000 and Share Premium for P16,000.

39. On December 1, 2017, Lynn Corporation exchanged 20,000 shares of its P10 par
value ordinary shares held in treasury for a used machine. The treasury shares were
acquired by Lynn at a cost of P40 per share, and are accounted for under the cost
method. On the date of the exchange, the ordinary shares had a market value of P55
per share (the shares were originally issued at P30 per share). As a result of this
exchange, Lynn's total stockholders' equity will increase by
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P200,000.
P800,000.
P1,100,000.
P900,000.
40. Baden Corporation owned 20,000 shares of Terney Corporation’s P5 par value
ordinary shares. These shares were purchased in 2004 for P180,000. On September
15, 2018, Baden declared a property dividend of one share of Terney for every ten
shares of Baden held by a stockholder. On that date, when the market price of Terney
was P14 per share, there were 180,000 shares of Baden outstanding. What NET
reduction in retained earnings would result from this property dividend?
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P90,000
P252,000
P72,000
P162,000

41. Gonzalez Company has 350,000 shares of P10 par value ordinary shares
outstanding. During the year, Gonzalez declared a 10% stock dividend when the
market price of the stock was P30 per share. Four months later Gonzalez declared a
P.50 per share cash dividend. As a result of the dividends declared during the year,
retained earnings decreased by
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P1,242,500.
P525,000.
P192,500.
P175,000.

42. On January 1, 2017, Golden Corporation had 110,000 shares of its P5 par value
common stock outstanding. On June 1, the corporation acquired 10,000 shares of
stock to be held in the treasury. On December 1, when the market price of the stock
was P8, the corporation declared a 10% stock dividend to be issued to stockholders of
record on December 16, 2017. What was the impact of the 10% stock dividend on the
balance of the retained earnings account?
2/2

P50,000 decrease
P80,000 decrease
P88,000 decrease
No effect

43. Tomlin, Inc. has outstanding 300,000 shares of P2 par ordinary shares and 60,000
shares of no-par 8% preferred shares with a stated value of P5. The preferred share is
cumulative and nonparticipating. Dividends have been paid in every year except the
past two years and the current year. Assuming that P150,000 will be distributed as a
dividend in the current year, how much will the common stockholders receive?
2/2

Zero.
P78,000.
P102,000.
P126,000.

44. Tomlin, Inc. has outstanding 300,000 shares of P2 par ordinary shares and 60,000
shares of no-par 8% preferred shares with a stated value of P5. The preferred share is
cumulative and participating. Dividends have been paid in every year except the past
two years and the current year. Assuming that P183,000 will be distributed, and the
preferred stock is also participating, how much will the common stockholders receive?
2/2

P111,000.
P90,000.
P93,000.
P48,000.

45. Lott Co. has outstanding 50,000 shares of 8% preferred shares with a P10 par
value and 125,000 shares of P3 par value ordinary shares. Dividends have been paid
every year except last year and the current year. If the preferred share is cumulative
and nonparticipating and P250,000 is distributed, the common stockholders will
receive
2/2

P0.
P170,000.
P210,000.
P250,000.

46. On July 1, 2017, Cole Co. issued 2,500 shares of its P10 par ordinary shares and
5,000 shares of its P10 par convertible preferred share for a lump sum of P125,000. At
this date Cole's ordinary share was selling for P24 per share and the convertible
preferred share for P18 per share. The amount of the proceeds allocated to Cole's
preferred stock should be
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P62,500.
P75,000.
P90,000.
P68,750.

47. On May 1, 2017, Kent Corp. declared and issued a 10% stock dividend. Prior to this
dividend, Kent had 100,000 shares of P1 par value ordinary shares issued and
outstanding. The fair value of Kent 's ordinary share was P20 per share on May 1,
2017. As a result of this stock dividend, Kent's total stockholders' equity
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increased by P200,000.
decreased by P200,000.
decreased by P10,000.
did not change.