Pre Midterm AFAR PDF

 

CLAIRE, DAISY, and ELSIE formed the CDE Partnership on August 1, 2019, with the following assets, measured at fair market values, contributed by each partner: CLAIRE DAISY ELSIE Cash P 324,000 P108,000 P129,600 Accounts receivable 73,080 91,800 Plant, Property, & Equipment (PPE) 1,620,000 340,200 A part of CLAIRE’s cash contribution, P216,000, P216 ,000, comes from personal borrowings. borrowings. Also, the PPE of CLAIRE and DAISY are mortgaged with the bank for P972,000 and P72,000, respectively. The partnership is to assume responsibility for these PPE mortgages. The partners have agreed to share profits and losses on a 5:2:3 ratio, to CLAIRE, DAISY, and ELSIE, respectively. 1.  What is the capital balance for each partner at the opening of business on August 1, 2015? a.  CLAIRE, P1,045,080; DAISY, P376,200; & ELSIE, P221,400 b.  CLAIRE, P1,161,200; D DAISY, AISY, P418,00 P418,000; 0; & ELSIE, P246,000 c.  CLAIRE, P1,987,500; DAISY, P189,000; & ELSIE, P217,500 d.  CLAIRE, P1,095,120; DAISY, P547,560; & ELSIE, P182,520 2.  What is the capital balance for each partner at August 1, 2019, instead, if tthe he interest ratio is given at 5:3:2 to CLAIRE, DAISY, and ELSIE, respectively? a.  b.  c.  d. 

CLAIRE, P730,080; DAISY, P730,080; & ELSIE, P365,040 CLAIRE,P985,608; CLAIRE,P98 5,608; DAISY, P P492,804; 492,804; & ELSIE, P164,268 CLAIRE,P1,987,500;DAISY,P18 CLAIRE,P1,987 ,500;DAISY,P189,000;& 9,000;& ELSIE, P217,500 CLAIRE,P821,340; CLAIRE,P821, 340; DAISY,P492,804; DAISY,P492,804; & ELSIE, P328,536

On January 1, 2019, FRIDA and GLACE formed a partnership by contributing cash of P405,000 and P270,000, respectively. On February 1 2019, Partner FRIDA contributed an additional P135,000 cash to the partnership and on August 1, 2019 Partner FRIDA made a permanent withdrawal of P67,500. On May 1, 2019, Partner GLACE contributed machinery with a fair market value of P90,000 and a net book value of P75,000 when contributed. On November 1, 2019 Partner GLACE contributed an additional P45,000 cash to the partnership. Both partners withdrew one-fourth of their salary allowances in 2019. The partnership reported a net income of P257,400 in 2019 and the profit and loss agreement are as foll follows: ows: a.  Interest at 6% is allowed on average capital balances; b. Salaries of of P2,70 P2,700 0 per month to each par partner; tner; c. Bonus to FRIDA of 10% of net income after interest, salaries, and bonus; and d. Balance to be divided divided in the ratio of 6:4 to FR FRIDA IDA and GLA GLACE, CE, respectively. 3.  Determine how the net income will be allocated to the partners: a.  FRIDA, P160,000 and GLACE, P126,000 b.  FRIDA, P 180,000 and GLACE, P106,000 c.  FRIDA, P170,000 P170,000 and GLACE, P116,000 d.  FRIDA, P153,000 and GLACE, P104,400 4.  Determine the capital balances of the partners at December 31, 2019: a.  FRIDA, P617,400 and GLACE, P501,300 b.  FRIDA, P551,000 and GLACE, P686,000 c.  FRIDA, P688,000 and GLACE, P449,000 d.  FRIDA, P683,000 and GLACE, P554,000 HAIDEE and ISABEL are partners sharing profits and losses in the ratio of 60% and 40%, respectively. The partnership balance sheet at August 30, 2019 follows: Cash Other assets Isabel, Loan

P

12,150 119,700 9,000

Total

P 140,850

Accounts payable Haidee, Loan Haidee, capital Isabel, capital Total

P 13,500 5,850 81,000 40,500 P140,850

At this date, JOSIE was admitted as a partner for a consideration of P43,875 cash for a 40% interest in capital and in profits. 5.  Assume JOSIE is admitted admitted by purchase of 40% each of the original original partners’ interest, determine interest, determine how the P43,875 will be apportioned to HAIDEE and ISABEL a.  HAIDEE, P32,850 and ISABEL, P15,900 b.  HAIDEE, P32,450 and ISABEL, P16,300 c.  HAIDEE, P29,565 and ISABEL, P14,310 d.  HAIDEE, P32,950 and ISABEL, P15,800 6.  Assume JOSIE is admitted by investing tthe he P43,875 to the partnership, determine the e effects ffects of any bo bonus nus over the capital balances of the original partners: a.  b.  c.  d. 

HAIDEE, P( 9,900) and ISABEL, P(14,850) HAIDEE, P 9,000 and ISABEL, p 14,850 HAIDEE, P (14,850) and ISABEL, P( 9,900) HAIDEE, P (13,365) and ISABEL P ( 8,910)

 

The following balances as at October 31, 2019 for the Partnership of KARLO, LORNA, and MYRNA were as follows: Cash P 50,000 Liabilities P 15,000 Lorna, Loan 15,000 Karlo, loan 22,500 Non-cash 400,000 Karlo, 105,000 assets capital Lorna, 97,500 capital Myrna, 225,000 capital Totals P465,000 Totals P465,000 KARLO has decided to retire from the partnership on October 31. 31. Partners agreed to adjust the non-cash assets to their fair market value of P490,000. The estimated profit to October 31 is P100,000. KARLO will be paid P173,000 for his partnership interest inclusive of his loan which is repaid in full. Their profit and loss ratio is 3:3:4 to KARLO, LORNA, and an d MYRNA, respectively. 7.  What will be the balance of LORNA’s LORNA’s capital account account after the retirement of KARLO. a.  P 129,444 c. P 124,449 b.  P 144,429  144,429  d. P 149,424 The accounts of the partnership of NOP Cash P 74,250 Non-cash assets 655,875 Loan to N 13,500

Total

P743,625

at December 31, 2019 are as follows: Liabilities P 56,250 Loan from O 18,000 N, capital O, capital P, capital Total

185,625 329,625 154,125 P743,625

They divide profits and losses 3:5:2 to N, O, and P respectively. They have decided to liquidate the partnership at this date. 8.  Determine the amount payable to Partner P if cash is paid just before the start of liquidation on December 31, 2019. a. P 16,750 c. P 17,679 a.  P 15,911 d. P 17,560 9.  Determine the amount Partner N and Partner O would have received by the time Partner P would have received a cumulative amount of P40,500. a.  N, P1,785 and O, P72,650 b.  N, P1,578 and O, P70,265 c.  N, P1,875 and O, P70,625 d.  N, P1,688 and O, P63,562 The following condensed balance sheet is prepared for QUIEL and ROGER, who share profits and losses in the ratio of 60:40, respectively respectively:: P108,000 Other assets P 405,000 Accounts payable Quiel, loan 18,000 Quiel, capital 175,500 Roger, capital 139,500 Total P 423,000 Total P 423,000 10.  The partners have decided to liquidate the partnership. If the other assets are sold for P346,500, what amount of the available cash sho should uld be distribu distributed ted to QUIEL? a.  P136,000 c. P122,400  P122,400  b.  P156,000 d. P195,000

On January 1, 2019, the partners SELYA, TESSA, and URSULA, who share profits and losses in the th e ratio of 5:3:2, respectively, decided to liquidate their partnership. On this date the partnership condensed balance sheet was as follows: Cash Other assets

P

45,000 225,000

Total

P 270,000

Liabilities Selya, capital Tess, capital Ursula, capital Total

P

54,000 72,000 81,000 63,000 P270,000

On January 15, 2019, the first cash sale of other assets with a carrying amount of P135,000 realized P108,000. Safe installment payments were made on the same date. 11.  How much cash should be distributed to each partner? SELYA TESSA URSULA a.  P15,000 P51,000 P44,000 b.  P40,000 P45,000 P35,000 c.  P55,000 P33,000 P22,000 d.  P13,500 P45,900 P39,600

 

VENUS and WILMA partnership’s balance balance sheet at December 31, 2019, reported the following: Total assets P 100,000 Total liabilities 20,000 Venus, capital 40,000 Wilma, capital 40,000 On January 2, 2019, VENUS and WILMA 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 patent. VENUS and WILMA were each issued 5,000 shares of the corporation’s P1 par common stock. 12.  Immediately following incorporation, 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 When LAGUNA COMPANY filed for liquidation with the Securities and Exchange Commission, it prepared the following balance sheet. Current assets, net realizable value, P110,000 Land and buildings, fair value, P180,000) Goodwill, fair value, P0 Total assets Accounts payable Mortgage payable, secured by land and building Common stock Retained earnings, deficit Total equities

P

80,000

200,000 40,000 P 320,000 P 160,000 200,000 100,000 ( 140,000) P 320,000

13.  How much would the holders of the mortgage payable likely to get? a. P 60,000 c. P192,222 P192,222   b. P360,667 d. 241,000 14.  What is the estimated deficiency to unsecured amounts? a. P 70,000 70,000   c. P192,000 b. P 90,000 d. P140,000 CANYON ENTERPRISES filed a voluntary bankruptcy petition on July 31, 2019 and its Statement of Affairs reflects the following amounts: Book Value Current Value Assets: Pledged with Fully secured creditor P 520,000 P 410,000 Pledged with Partially secured creditor 292,500 92,500 Free Assets 350,000 47,500 Totals P1,162,500 P 550,000 Liabilities: Unsecured with priority Fully secured Partially secured Unsecured without priority Sub-total Stockholders’ Equity  Equity  Capital stock Retained Earnings, deficit Totals

P

65,000 402,250 225,000 345,000 P1,037,250 147,500 ( 22,250) P1,162,500

15.  The total estimated deficiency is allocable to the following creditors at the t he respective amounts shown below: Unsecured Fully Pa Partially rtially U Unsecured nsecured W/priority Secured Secured w/out priority a. P 0 P0 P132,500 P289,750 b. P 65,000 P0 P225,000 P345,000 c. P 9,750 P0 P132,500 P345,000 d. P 0 P110,000 P225,000 P289,750 16.  The estimated payment that will be made to partially secured creditors in the event of liquidation at this point is: a. P205,125 b. P112,625

c. P 92,500  92,500  d. P225,000

 

  The following data were taken taken from the statement of affairs of MARACLARA C CORPORATION ORPORATION:: Assets pledged for fully secured liabilities P 90,000 (current fair value, P75,000) Assets pledged for partially secured 74,000 liabilities (current fair value P52,000) 70,000 Free assets (current fair value , P40,000) 7,000 Unsecured liabilities with priority 30,000 Fully secured liabilities 60,000 Partially secured liabilities 112,000 Unsecured liabilities without priority 17.  The amount that will be paid to creditors with priority is: a.  P7,000 P7,000   c. P7,500   b. P6,000 d. P6,200 18.  The amount to be paid fully secured creditors is: a.  P30,000 P30,000   c. P20,000 b.  P32,000 d. P35,000 19.  The amount to be paid to partially secured creditors is: a. P52,700 c. P56,200 b. P57,200  P57,200  d. P 57,000 20.  The amount to be paid to unsecured creditors: a. P78,200 c. P72,000 b. P70,800 d. P72,800  P72,800  PRINCESS COMPANY filed a voluntary bankruptcy petition on August 15, 2019 and the statement of affairs reflect the following amounts: BOOK CARRYING VALUE Pledged with fully secured creditors Pledged with partially secured creditors Free Assets

Liabilities with priority Fully secured creditors Partially secured creditors Unsecured creditors

ESTIMATED CURRENT VALUE

P 150,000

P 185,000

90,000 210,000 P 450,000

60,000 160,000 P 405,000

Liabilities P 35,000 130,000 100,000 270,000 P 535,000

21.  How much cash will be available to pay the unsecured u nsecured non-priority claims? a.  P240,000 c. P160,000 b.  P180,000 P180,000   d. P125,000 22.  BROOKLYNNE ENTERPRISES. has been forced into bankruptcy and liquidated. Unsecured claims will be paid at the rate of P0.70 on the peso. KITKAT ENTERPRISES holds a non-interest bearing note receivable from BROOKLYNNE in the amount of P60,000 collateralized by machinery with a liquidation value of P10,000. The total amount to be realized by KITKAT on this note receivable is: a.  P45,000 P45,000   c. P25,000 b.  P30,000 d. P10,000 23.  The statement of affairs of JEREMIAH CORPORATIO CORPORATION. N. shows the following: Estimated gains on realization of P 1,280,000 assets Estimated losses on realization of 2,244,000 assets 1,000,000 Additional assets 300,000 Additional liabilities 2,000,000 Capital stock 900,000 Deficit The pro-rata payment on the peso, to stockholders, is: a.  P0.78 c. P0.76 P0.76   b.  P0.43 d. P0.75 24.  The Statement of Affairs for CANDY CORPORATION shows that approximately P0.78 on the peso probably will be paid to unsecured creditors without priority. The corporation owes TOY COMPANY P23,000 on a promissory note, plus accrued interest of P940. Inventories with a current fair value of P19,200 collateralize the note payable. Compute the amount that the TOY COMPA COMPANY NY would receive from CANDY CANDY CORPOR CORPORATION ATION assuming that the actual payments to unsecured creditors without priority consist of 78% of total claims. Round all amounts to the nearest peso.

 

a.  P19,200 b. P22,897  P22,897 

c. P33,987 d. P52,200 

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. 25.  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 P3,192,000   c. P2,792,000 d. P3,328,000 In 2020, Jessie and Anne agreed to contribute equal amounts into a new partnership for a 50% interest in profit (loss) and in capital to each of them. Their respective contributions will come from old proprietor proprietorships ships they owned and will both be dissolved. Jessie contributed the following items and amounts: Cash P585,000 Machineries (at book value per her proprietorship records) P400,000 Anne contributed the following items at their carrying amounts in the proprietorship records: Accounts receivable P75,000 Inventory 210,000 Furniture and fixtures 402,000 Intangibles 172,500 All non cash contributions are not property valued. The two partners have agreed that (a) P6,000 of the accounts receivable are uncollectible; (b) the inventories are overstated by P15,000; (c) the furniture and fixtures are understated by P9,000; and the intangibles includes a patent with a carrying value of P10,500, which must now be derecognized due to the result of unsuccessful litigation promulgated by the court just before the partnership formation. 26.  What is the fair value of the machineries invested by Jessie into the partnership? a. P336,000 b. P252,000 P252,000   c. P390,000 d. P350,000

27.  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 P44,500   c. P50,000 d. P43,500

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 28.  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 P107,400   •

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29.  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:  be:   a. P56,250 b. P60,000 P60,000   c. P62,500 d. P75,000 30.  What is the valuation if a partner contributes a noncash property to the partnership?   a. Book value of the property c. Actual amount of the property b.  Acquisition cost of the property d. Fair value of the property  property   31.  An advance cash distribution plan is prepared a.  Each time cash is distributed to partners in an installment liquidation b.  Each time a partnership asset is sold in an installment liquidation

 

c.  d. 

To determine the order and amount of cash each partner will receive as it becomes available for distribution None of these

32.  In the cash distribution plan, which partner gets the first cash distribution? a.  The partner with the largest loan balance b.  The partner with the largest loss absorption potential c.  The partner with the largest capital balance d.  The partner with the largest profit or loss ratio 33.  In the reporting of a corporate liquidation, assets are shown at a.  Present value calculate using an appropriate discount rate b.  Net realizable value c.  Historical rate d.  Book value 34.  In a statement of affairs, assets are classified a.  according to whether they are pledged with particular creditors. b.  as current or noncurrent. c.  as monetary or nonmonetary. d.  as operating or nonoperating. 35.  What are free assets? a.  assets for which net realizable value is greater than historical cost. b.  assets for which no market exists. c.  assets for which replacement cost is greater than historical hi storical cost. d.  assets available to be distributed for liabilities with priority and other unsecured obligations. Summary balance sheet for the ABD Partnership follows: Abner, Blanche, and Donna share profits in the ratio of 5:3:2, respectively. Cash P 100,000 Accounts receivable 125,000 Inventory 200,000 Land 800,000 Buildings, net 1,500,000 Total P2,725,000 Accounts payable P 250,000 Long-term debt 450,000 Abner, capital 810,000 Blanche, capital 729,000 Donna, capital 486,000 Total P2,725,000 The partners agree to admit Janice for a one-fifth interest. The fair value of the land is appraised at P900,000 and the market value of the inventory is P250,000. The assets are to be revalued prior to the admission of Janice. 36.  By how much will the capital accounts of Abner, Blanche, and Donna increase due to the revaluation of the assets? a.  The capital accounts will increase by P50,000 each. b.  P60,000, P54,000, and P3 P36,000 6,000 resp respectively. ectively. c.  P75,000, P45,000, P45,000, and P30,000 respectively. d.  P60,000, P50,000, and P40,000 respectively. 37.  How much cash will Janice have to invest into the partnership to acquire her one-fifth interest? a.  P534,750 c. P547,350 b.  P553,740 d. P543,750 d. 38.  When the bankruptcy court grants the order for relief: a.  Creditors may not seek payment of their claims directly from the debtor corporation. b.  The reorganization plan has been accepted by at least two-thirds t wo-thirds in amount and over half in number of claims. c.  The bankruptcy court confirms that the reorganization plan is fair and equitable. d.  The court discharges the debtor except for claims provided for in the reorganization plan. 39.  When a secured claim is not fully settled by the selling of the underlying collateral a.  The unsettled portion of the claim cannot be collected by the creditor b.  The unsettled portion remains as a secured claim. c.  The unsettled portion remains as an unsecured priority claim.

 

d.  The unsettled portion is classified as an unsecured priority claim. Walang Forever Company is in bankruptcy and is being liquidated. li quidated. The trustee has converted all assets into P300,000 and has prepared the following list of approved claims: Accounts payable, unsecured P 75,000 Trustee’s fees and other costs of liquidation 40,000  40,000  Mortgage payable, secured by property that as sold for P200,000 150,000 Note payable to PRTC Bank, secured by all the accounts receivable Of which P75,000 were collected and P5,000 were written off 100,000 Prepaid revenue (P2,500 each of two customers that ordered Products that were never delivered Property taxes payable 40.  How much is the total amount of unsecured priority claims a.  P55,000 P55,000   c. P50,000 b.  P40,000 d. P45,000

5,000 10,000

41.  How much is the total amount of deficiency to unsecured non-priority claims a.  P 20,000 c. P100,000 b.  P 0 d. P80,000  P80,000  42.  How much will the bank be paid for the note paya payable? ble? a.  P 80,000  80,000  b.  P100,000

c. P75,000 d.P76,250

A balance sheet for the QRS Partnership, which shares profits and losses in the ratio of 5:3:2 shows the following balances just before liquidation. Cash P 30,000 Other assets 148,750 Liabilities 50,000 Q, Capital 55,000 R, Capital 38,750 S, Capital 35,000 On the first month of liquidation, certain assets are sold for P80,000. Liquidation expenses of P2,500 are paid, and additional expenses are anticipated. Liabilities are paid amounting to P13,500, and sufficient cash is retained to insure the payment to creditors before making payment to partners, On the payments to partners, Q receives P15,625. 43.  Calculate the amount of cash withheld for anticipated liquidation expenses. c.  a. P0 b. P7,500  P7,500  c. P3,000 P4,500 The partners share profits and losses as follows: fol lows: A, 20%; B, 30%; and C, 50%. B is retiring from the partnership and the partners have agreed that the non-cash-assets should be adjusted to fair value of P600,000 at December 31, 2007. They further agreed that B will receive P344,000 cash for his total partnership interest 44.  After B’s retirement, the capital balances balan ces of A and C, respectively, will be: a. P116,000 and P240,000  P240,000  c. P100,000 and P200,000 b. P101,714 and P254,286 d. P 73,143 and P182,857 ABC Corporation Corporation has become insolvent and a statement of affairs is being prepared. The following figures on a statement of affairs are condensed as follows. Assets Pledged with fully secured creditors

Creditors P 71,000

With priority

P 3,000

Pledged with partially secured

12,500

Fully secured

60,000

Free

11,000

Partially secured

20,000

Unsecured

18,000

45.  The estimated deficiency to unsecured creditors is a. P 5,000 b. P 12,500 c. P 15,500

d. P

6,500 6,500  

The following is the balance sheet for ABC Partnership at December 31, 2009. Cash P 2,000 Liabilities P 5,000 Non-cash assets 28,000 A, Loan 2,500 A, capital 12,500 B, capital 7,000 C, capital 3,000 Total P30,000 Total P30,000 Profits and losses are divided in the ratio of 3:2:1 for A, B, and C, respectively. The partnership was liquidated on January 2, 2009 and the following realization of assets occurred for the three-month period indicated. Date Cash Proceeds Book Values January, 2009 P6,000 P9,000 February, 2009 3,500 7,700

 

  March, 2009 12,500 11,300 Cash is distributed as assets are realized. 46.  Calculate the total cash received by B from the above data: a. P2,200 c. P5,000  P5,000  b. P 0 d. P1,500 Partners R, S and T share profits profits and losses in the ratio of 5:3:2. At the end of a very unprofitable unprofitable year, they decided to liquidate the firm. firm. The partner’s capital account balances balances at this time are as follows: R, P121,000; S, P136,950; P136,950; T, P82,50 P82,500. 0. The liabilities accumulate to P16 P165,000, 5,000, including a loan of P55,000 from R. The cash balance is P33,000. P33,000. All the partners are persona personally lly solvent. The partners plan tto o sell the asse assets ts in installment. 47.  If S received P19,800 from the first distribution of cash, how much did T receive at that time? a. P11,000 c. P 6,600 b. P 4,400  4,400  d. P12,100

Drake Company filed a voluntary bankruptcy petition on July 15, 2099 and the statement of affairs reflects the following amounts: Book Estimated Carrying Amount Current Value Assets Assets pledged with fully secured creditors P 160,000 P 190,000 Assets pledged with partially secured creditors 90,000 60,000 Free assets 200,000 140,000 Liabilities Liabilities with priority 20,000 Fully secured creditors 130,000 Partially secured creditors 120,000 Unsecured non-priority creditors 240,000 Assume that the assets are converted into cash at the estimated current values and the business is liquidated. 48.  What total amount of cash should the partially secured creditors receive? a.  P 60,000 b. P 84,000

c. P 96,000  96,000 

d. P100,000

The following information is available concerning INSOLVENT, INC. on the th e date the company entered bankruptcy proceedings: Account Cash Accounts receivable Inventory Prepaid expenses Buildings, net Equipment, net Goodwill Wages payable Taxes payable Accounts payable Notes payable Common stock Retained earnings, Deficit

Balance per Books P3,661 66,893 35,840 550 75,520 7,168 7,232 (3,200) (2,317) (101,120) (19,392) (92,160) 21,325

Inventory with a book value of P25,600 is security for notes of P12,800. The other notes are secured by the equipment. Expected realizable values of the assets are: Accounts receivable Inventory Buildings Equipment

P56,448 23,680 28,160 2,560

49.  What is the estimated deficiency to unsecured creditors? a.  P 11,520  11,520  c. P 92,800 b.  P 83,840 d. P101,120 Because of inability to pay its debts, the WHAHAPEND MANUFACTURING COMPANY has been forced into bankruptcy as of April 30, 2019. The balance sheet on that date shows: ASSETS P 4,320 Cash 62,960 Accounts Receivable Notes Receivable Inventories Prepaid expenses Land and building Equipment

29,600 140,560 1,520 98,000 78,080 P 415,040

 

LIABILITIES Accounts payable Notes payable Accrued wages Accrued taxes Mortgage bond payable Common stock – P20 par Retained earnings

P

84,000 106,000 2,960 7,440 144,000 120,000 (49,360) P415,040

Additional information: a.  Accounts receivable of P27,120 and notes receivable of P20,000 are expected to be collectible. The good notes are pledged to P24,000 of the notes payable. b.  Inventories are expected to bring in P72,160 when sold under bankruptcy condition. c.  Land and buildings have an appraised value of 152,000. they serve as security on the bonds. d.  The current value of the equipment, net of disposal cost is P14,400. 50.  What is the estimated payment to all creditors? a. P 164,000 c. P 190,000 b. P 344,400 d. P 290,000 290,000   51.  Calculate the estimated total amount recoverab recoverable le on the n notes otes payable. a. P 72,080 c. P 22,720 b. P106,000 d. P 78,480 78,480   KAMILANG INC. a closely-held corp corporation oration was undergoing undergoing liquidation. The total cas cash h value of KAMILANG’s KAMILANG’s bankruptcy estate after the sale of all assets and payment of administrative expenses is P240,000. KAMILANG has the following creditors: KAMILANG’s ’s real property. The property was   Fracon Bank is owed P120,000 on a mortgage loan secured by KAMILANG valued at and sold, in bankruptcy, for P112,000.   The BUREAU of INTERNAL REVENUE has a P19,200 recorded judgment for unpaid corporate income tax.   JOG Office Supplies has an unsecured claim of P4,800 that was timely filed.   Nanstar Electric Company has an unsecured claim of P16,000 that was timely filed.   Liquid Corporation is owed P80,000 in a loan contract secured by KAMILANG’s notes receivable which realized P96,000. KAMILANG’s inventory that was valued and valued  and   Decoy Publications has a claim of P25,600, which is secured by KAMILANG’s sold, in bankruptcy, for P3,200. The claim was timely filed. •

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52.  Calculate the total amount recoverable by partially-secured creditors: a. P0 c. P130,400 P130,400   b. P10,400 d. P 19,200 53.  Calculate the total amount recoverable by unsecured creditors with priority: a. P 80,000 c. P130,400 b. P 10,400 d. P 19,200  19,200  54.  Calculate the total amount recoverable by fully secured creditors: a. P 80,000  80,000  c. P130,400 b. P 5,200 d. P 19,200 55.  Calculate the total amount recoverable by unsecured creditors without priority: a. P0 c. P14,400 b. P10,400 P10,400   d. P 19,200 A distressed corporation is to be liquidated and has the following liabilities: Income taxes P 16,000 Notes payable, secured by land 240,000 Accounts payable 166,000 Salary payable, evenly to two employees 12,000 Bonds payable 140,000 Administrative expenses for liquidation 40,000 The said company has the following foll owing assets: Current assets Land Building and equipment

Book value P 128,000 160,000 160,000

Fair value P 67,600 180,000 220,000

56.  How much will the holders of notes payable collect following the liquidation? li quidation? a. P216,000 P216,000   c. P166,000 b. P180,000 d. P240,000 The GLOOMY COMPANY has the following data in connection with its bankruptcy petition with the Securities and Exchange Commission at the end of 2019. Liabilities without priority Liabilities with priority Secured liabilities

P

460,000 220,000

 

Debt 1, P420,000; value of pledged asset P 360,000 Debt 2, P340,000, value of pledged asset P 200,000 Debt 3, P240,000, value of pledged asset P 280,000 The company also has a number of other assets that are not pledged in any way. The creditors holding Debt 2 want to receive at least P284,000. 57.  For how much do these free assets have to be sold so that th at Debt 2 would receive exactly P284,000? a. P 616,000 c. P680,000 b. P 396,000 d. P576,000 P576,000   HARDSHIPS, INC. is undergoing liquidation since August 1, 2019. 2019. Five months later, on December 31, 2019, its condensed realization and liquidation statement shows the following: Assets: P2,200,000 To be realized Acquired Realized Not realized Liabilities: Liquidated Not liquidated To be liquidated Assumed Supplementary: Charges Credits

1,200,000 1,920,000 2,200,000 3,000,000 2,720,000 3,600,000 2,600,000 5,000,000 4,680,000

58.  The net gain (loss) for the five-month period is: a.  P(520,000) c. P 680,000 b.  P 400,000 d. P 880,000 880,000  

Aljon and Blas have just formed a partnership. Aljon contributed cash of P3,881,000 and office equipment that cost P1,170,000. The equipment had been used in the sole proprietors proprietorship hip and had been 80% depreciated. The current fair value of the equipment is P756,000. An unpaid mortgage loan on the equipment of P252,000 will be assumed by the partnership. Aljon is to have a 70% interest in the partnership net assets. Blas is to contribute, only, merchandise with a fair value of P1,890,000. Both partners agreed on a profit and loss ratio of 55% to Aljon and the balance to Blas. 59.  To finalize the partnership agreement, Aljon should make additional investment (withdrawal) of cash in the amount of. a.  P 25,000  25,000  c. P264,000 b.  P(540,000) d. P(15,000) In 2019, JESSIE and ANNE agreed to form a new partnership under the following general agreements: (1)  Partners’ CONTRIBUTIONS will be on a 5:4 ratio; (2) P ROFIT & LOSS, equally, and (3) CAPITAL CREDITS, 6:4 ratio, respectively to JESSIE and ANNE. ANNE. Their respective contributions w will ill come from old proprietorships proprietorships they owned. JESSIE contributed the following items and amounts: Cash P748,800 Equipment (at book value per her proprietorship proprietor ship records) 512,000 ANNE contributed the following items at their carrying amounts in the proprietorship records: Accounts receivable 96,000 Inventory 268,800 Furniture and fixtures 514,560 Intangibles 220,800 All the non-cash contributions are not properly valued. The two partners have agreed that (a) P7,680 of the accounts receivable are uncollectible; (b) the inventories are overstated by P19,200; (c) the furniture and fixtures are understated by P11,520; and the intangibles include a patent with a carrying value of P13,440, which must now be derecognized upon upon a court order. The rest of the int intangible angible items are fairly valued. 60.  How much is is the agreed fair value assigned to Jessie’s equipment? a. P1,060,800 c. P 590,400 590,400   b. P 403,200 d. P 1,116,480 65. What is the capital balance of Jessie after the formation of the partnership? a. P1,036,541 c. P1,374,019 b. P1,339,200 d. P1,446,336 P1,446,336   MYRNA and NORMA are partners sharing profits and losses in the ratio of 60% and 40%, respectively. The partnership balance sheet at August 30, 2019 follows: Cash Other assets NORMA, Loan

P

27,000 266,000 20,000

Accounts payable MYRNA, Loan MYRNA, capital

P 30,000 13,000 180,000

 

  Total

P 313,000

NORMA, capital Total

90,000 P313,000

At this date, OLGA was admitted as a partner for a consideration of P97,500 cash for a 40% interest in capital and in profits. 61.  Assume OLGA is admitted by purchase of 40% 40% each of the original partners’ interest, determine how the P97,500 will be apportioned to MYRNA and NORMA a.  MYRNA, P65,700 and NOR NORMA, MA, P31,800 b.  MYRNA, P64,800 and NORMA, P32,700 c.  MYRNA, P65,500 and NORMA, P32,000 d.  MYRNA, P65,900 and NORMA, P31,600 62.  Assume OLGA OLGA is admitted by investing the P97,50 P97,500 0 into the p partnership, artnership, d determine etermine the effects of a any ny bonus over the capital balances of the original partners: a.  MYRNA, P(19,800) and NORMA, P(29,700) b.  MYRNA, P 18,000 and NORMA, p 29,700 c.  MYRNA, P(29,700) and NORMA, P(19,800) d. MYRNA, P(18,675) and NORMA P(12,450) The equity accounts of the partnership of KING and QUEEN at March 31, 2019 are as follows: KING, capital P512,000 QUEEN, capital 256,000 KING, loan (credit) 48,000 QUEEN, drawing (debit) 24,000 The partners share profits and losses in the ratio of 3:2, respectively. The partnership is in desperate need of cash, and the partners agree to admit JACK as a partner with a 1/3 interest in the capital and profits and losses upon his investment of P192,000. 63.  Immediately after JACK’s JACK’s admission, what should be the capital balances of KING, QUEEN, and JACK, respectively: a.  P598,000; P222,000; P410,000 b.  P480,000; P480,000; P480,000 c.  P544,000; P256,000; P400,000 d.  P435,200; P204,800; P320,000 The following are the capital balances of ABC Partnerships at August 1, 2019: Albert (40% P&L) P220,000 Bernard (40% P&L) 160,000 Conrad (20% P&L) 110,000 Dennis invests P270,000 in cash for a 30% ownership interest. The payment goes to the original partners. Revaluation/adjustment in asset is to be recognized upon Dennis’ admission.  admission.   64.  How much adjustment in asset should be recorded and what is Dennis’ beginning capital capi tal balance. 1.  P410,000 and P270,000 2.  P140,000 and P270,000 3.  P140,000 and P189,000 4.  P410,000 and P189,000 The following are the condensed balance sheets of G&N Partnership at August 30, 2019, at which date Ellery is to be admitted with a 30% interest in capital for an investment of P55,000. Book Value Fair Value Cash P 20,000 P 20,000 Other assets Total assets Current liabilities Non current liabilities Gemmo, capital Norma, capital Total equities

503,000 P523,000 P 54,000 269,000 120,000 80,000 P523,000

417,000 437,000 P 54,000 275,000

Gemmo and Norma share profits at 60% and 40%, respectively. 65.  What will be the respective capital balances of Gemmo, Norma, and Ellery after the new partner’s admission. admission.   a.  P68,460, P45,640, and P48,900 b.  P48,900, P45,640, and P68,460 c.  P45,640, P68,460, and P48,900 d.  P64,860, P49,240, and P48,900 The following balances as at October 31, 2019 for the Partnership of WILMA, XELYN , and YSKA were as follows: Cash P 80,000 Liabilities P 24,000 XELYN, 24,000 WILMA, 36,000 Loan loan Non-cash assets

640,000

WILMA, capital XELYN, capital YSKA, capital

168,000 156,000 360,000

 

Totals

P744,000

Totals

P744,000

WILMA has decided to retire from the partnership on October October 31. Partners agreed to adjust the non-cash assets to their fair market value of P784,000. The estimated profit to October 31 is P160,000. WILMA will be paid P276,800 for his partnership interest inclusive of her loan which is to be paid in full. Their profit and loss ratio is 3:4:3 to WILMA, XELYN, and YSKA, respectively. 66.  What will be the balance of XELYN’s capital account after a fter the retirement of WILMA. c.  P 258,888 c. P 288,114  288,114  d.  P 231,086 d. P 298,848 On June 30, 2015, the balance sheet for the partnership of COCO, PIOLO, and DANIEL and their profit and loss ratios were as follows: Assets P 1,200,000 Coco, loan P 60,000 Coco, capital (30%) 280,000 Piolo, capital (30%) 260,000 Daniel, capital (40%) 600,000 Total equities P 1,200,000 COCO decided to retire from the partnership and by mutual agreement, the assets were adjusted to their current fair value of P1,440,000. The partnership paid P408,000 P408,000 cash for COCO’s eq equity uity in the partnership, exclusive of the loan which was repaid in full. 67.  The capital balances of PIOLO and DANIEL, respectively respectively,, after COCO’s retirement from the partnership was:  was:  a.  P360,000; P855,000 c. P300,000; P675,000 b. P288,000; P684,000 d. P308,000; P664,000  P664,000  The MORICATA Partnership has the following capital balances and P&L ratio at August 4, 2019. Mora, capital (30%) P129,750 Rico, capital (30%) 108,750 Cara, capital (20%) 80,000 Tano, capital (20%) 71,500 P390,000 Cara has decided to withdraw from the partnership and by agreement of all the partners, will be paid P90,000 from partnership cash. 68.  Immediately after Cara’s retirement, the capital ratio of Mora, Rico, and Tano, respectively will be  be   a.  33-1/3%, 33-1/3%, and 33-1/3% b.  40 %, 34 %, and 26 % c.  37-1/2%, 37-1/2%, and 25 % d.  42 %, 35 %, and 23 %. A, B, and C formed a partnership on January 2, 1018 with the following contributions: A P100,000 B 200,000 C 300,000 The partners agreed on a capital ratio of 1:2:3 upon formation and P&L ratio of 3:3:4, respectively. The partnership reported a net loss of P20,000 for 2018. Also, at the end of 2018, C has decided to withdraw from the firm and was paid P250,000 from partnership cash. On April 1, 2019, D was admitted as a partner with an investment i nvestment of P160,000. He is given a share in capital of 40%and in profits, 30% the old partners have agreed to retain their old ratio over the remaining profit and loss share of 70%. The partnership reported a net profit of P21,000 for 2014, one-third of which is deemed earned as of the end of the year’s first quarter’s operation. operation.   69.  Determine the capital balances of A and B, respectively, as of December 31, 2018. a.  P 94,000 & P194,000 c. P 194,000 & P115,000 b.  P 115,000 & P215,000 P215,000   d. P 165,000 & P215,000 70.  Determine the capital balances of A, B, and C, respectively on December 31, 2019. a.  P98,540, P75,720 & P113,840 b.  P93,640, P70,820 & P109,640 c.  P100,990, P78,170 & P120,140 d.  P104,000, P204,000 & P203,000