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MIDTERM EXAMINATION
ACCTG 7 ADVANCED FINANCIAL ACCOUNTING AND REPORTING PART 1
Choose the correct answer. For items without choices, kindly provide solution and box
or underline your final answer.
MULTIPLE CHOICE
1. Statement I: The personal assets, liabilities, and personal transactions of partners are
excluded from the accounting records of the partnership.
Statement II: In a liquidation, the final distribution of cash to partners should be on the basis
of their income ratios.
a. Only Statement I is true c. Both are true
b. Only Statement II is true d. Both are false
2. Statement I: A major advantage of the partnership form of organization is that the partners
have unlimited liability.
Statement II: Partnership creditors may have a claim on the personal assets of any of the
partners if the partnership assets are not sufficient to settle claims.
a. Only Statement I is true c. Both are true
b. Only Statement II is true d. Both are false
3. Which of the following statement about joint venture is false?
a. There is an agreement between two or more persons.
b. Joint venture is made for the specific execution of a business plan/project.
c. It is a permanent partnership without the use of a firm name.
d. All of the above statement is true.
4. Which of the following statement about joint venture is true?
a. Agreement for joint ventures is not automatically dissolved as soon as specific project is
over.
b. Profit & loss are shared on the same terms and conditions agreed upon by the one of the
venturers.
c. In the absence of any agreement, profit & share will be divided based on capital contribution.
d. None of the above is true.
5. Jointly controlled assets involve the joint control, and often the joint ownership, of assets
dedicated to the joint venture. Each venturer may take a share of the output from the assets
and each bears a share of the expenses incurred.
a. Joint venture c. Jointly controlled assets
b. Jointly controlled operations d. Jointly controlled entities
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6. It is a contract among and between two or more persons who bind themselves to contribute
money, property or industry to a common fund with the intention of dividing the profits among
themselves.
a. Corporation c. Partnership
b. Sole proprietorship d. All of the above
7. Which is not among the characteristics of a partnership?
a. Separate legal personality c. Limited liability
b. Limited life d. Voluntary association
8. The non-cash contributions of the partners to form a partnership are recorded by partnership
at their ________.
a. Book value c. Zonal Value
b. Market value d. Historical Cost
9. When a partnership cannot pay its debts with business assets, the partners
a. Are not personally liable for the debts c. Must convert the partnership to a joint venture
b. Have limited personal liability d. Must use their personal assets to meet debts
10. If the partners have not drawn up an agreement, then they must share profits and loses
a. Equally c. By an appropriate ratio
b. By any means that will save taxes d. According to capital contributions
11. Among the various options available by determining the partners` share of profits are the
following except
a. Loans to the partnership c. Capital contributions
b. Stated fraction or ratio d. Capital contributions and service to the partnership
12. A person maybe come a partner in a partnership by all of the following methods except
a. Investing in the partnership with a bonus to the new partner
b. Making a loan to the partnership
c. Investing in the partnership with a bonus to the old partner
d. Purchasing a partner`s interest
13. Which of the following does not result in the dissolution of the partnership?
a. Marriage of a partner c. Addition of a new partner
b. Withdrawal of a partner d. Death of a partner
14. A new partner maybe admitted into a partnership of the following except
a. Investing in the partnership c. Purchasing a partner`s interest
b. Both a and c d. Purchasing preferred stock of the partnership
15. The individual assets invested by a partner in a partnership
a. Revert back to that partner if the partnership liquidates.
b. Determine that partner’s share of net income or loss for the year.
c. Are jointly owned by all partners.
d. Determine the scope of authority of that partner.
16. The partnership agreement should include each of the following except the
a. date of the partnership inception.
b. principal location of the firm.
c. surviving family members in the event of a partner’s death.
d. Each of these should be included.
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17. Which of the following statements about a partnership is correct?
a. The personal assets of a partner are included in the partnership accounting records.
b. A partnership is not required to file an information tax return.
c. Each partner’s share of income is taxable to the partnership.
d. A partnership represents an accounting entity for financial reporting purposes.
18. Bailey invests personally owned equipment, which originally cost P220,000 and has
accumulated depreciation of P60,000 in the Bailey and Madonna partnership. Both partners
agree that the fair value of the equipment was P120,000. The entry made by the partnership to
record Bailey’s investment should be
a. Equipment 220,000
Accumulated DepreciationEquipment 60,000
Bailey, Capital 160,000
b. Equipment 160,000
Bailey, Capital 160,000
c. Equipment 120,000
Loss on Purchase of Equipment 40,000
Accumulated DepreciationEquipment 60,000
Bailey, Capital 220,000
d. Equipment 120,000
Bailey, Capital 120,000
19. Nathaniel is investing in a partnership with Andre. Nathaniel contributes as part of his initial
investment, Accounts Receivable of P60,000; an Allowance for Doubtful Accounts of P9,000;
and P6,000 cash. The entry that the partnership makes to record Nathaniel’s initial contribution
includes a
a. credit to Nathaniel, Capital for P66,000.
b. debit to Accounts Receivable for P51,000.
c. credit to Nathaniel, Capital for P57,000.
d. debit to Allowance for Doubtful Accounts for P9,000.
20. Total cost to date amounts to 10,000 and gross profit to date amounts to 5,000. How is
construction in progress be presented in the balance sheet if the progress billing to the buyer
amounts to 12,000?
a. 3,000 asset
b. 3,000 liability
c. 2,000 asset
d. 2,000 liability
21. Which of the following is true regarding the percentage of completion method
a. Revenue in any given year is determined by the actual contract costs incurred for that year
multiplied by the total estimated cost multiplied by the total contract price.
b. Used when estimates of the bases upon which progress is measured are reasonably
dependable
c. No earnings are recognized until the contract is substantially completed.
d. All of the above statements are true
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22. It is recorded upon installment sale and decreased upon collection equal to the gross profit
rate multiplied by the amount collected.
a. sales revenue
b. deferred revenue
c. cost of goods sold
d. installment accounts receivable
23. Using this method, gross profit is only recognized when collection exceed the cost of the
project
a. Installment sales method
b. Cost recovery method
c. Accrual basis method
d. Cash basis method
24. Statement I: Significant influence is present if the venturer has above 20% share from
another venturer.
Statement II: Initial investment in joint venture are recorded at fair market value to reflect the
current and fair measurement of the investment.
a. Only Statement I is true c. Both are true
b. Only Statement II is true d. Both are false
25. Statement I: An installment sale is a financing arrangement in which the seller allows the
buyer to make payments over an extended period of time.
Statement II: In installment sales, revenue and expense are recognized at the time of sale
and not at the time of collection
a. Only Statement I is true c. Both are true
b. Only Statement II is true d. Both are false
PROBLEM 1
Bien and Bowie are forming a partnership. Bien will invest a truck with a book value of P10,000
and a fair value of P14,000. Bowie will invest a building with a book value of P30,000 and a fair
value of P42,000 with a mortgage of P15,000 which the partnership assumed.
26. What amount should be recorded in Bowie’s capital account?
PROBLEM 2
Partners Gary and Elena have agreed to share profits and losses in an 80:20 ratio respectively,
after Gary is allowed a salary allowance of P30,000 and Elena is allowed a salary allowance of
P15,000.
27. If the partnership had net income of P30,000 for 2014, Elena’s share of the income would
be?
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PROBLEM 3
Nhel and Cath formed a partnership on January 1, 2016. Nhel’s contributions are cash of
P30,000 and equipment costing P40,000 which has a book value of P270,000 and a current
market value of P300,000. Cath’s contributions are cash of P10,000 and a building with zonal
value of P240,000 and a book value of P300,000 with mortgage liability of P100,000 which the
partnership does not assume. 60:40 capital contributions for Nhel and Cath, respectively was
agreed by the partners.
28. What is the capital balance of Cath upon formation assuming the problem is silent as to
method to be used?
29. What is the amount of goodwill, if any, assuming they used the goodwill method upon
formation?
PROBLEM 4
Bea, Angela and Alyssa formed a partnership with capital balances of 20,000, 30,000 and
25,000 respectively. Profit/loss sharing ratio is 4:3:3. Shown below are the summary of
transactions for year 1 and year 2.
Year 1
Net income is P189,000.
Bea, as the managing partner, received a bonus of 5% of net income before salaries &
interest but after bonus
Salaries are paid in the amount of P40,000 to Bea and P30,000 to Angela and P20,000 to
Alyssa.
Interest of 10% is paid on the beginning capital balances.
Bea and Angela withdraw 10% of their share in net income each at year end, while Alyssa
maid P5,000 additional investment.
Year 2
Net loss is P50,000.
No bonus was given because of the loss.
Salaries are paid in the amount of P10,000 to Bea and P20,000 to Angela and P15,000 to
Alyssa.
Interest is paid amounting to the ending capital balances of Year 1 in excess of 70,000
Bea and Alyssa withdraw P5,000 each at year end while Angela invest a machinery which
she bought 3 years ago amounting to 50,000 with useful life of 5 years depreciated using
straight line method which fair value cannot be measured reliably.
30. On year 1, what is the amount of bonus given to Bea?
31. On year 1, what is the ending balance of Alyssa?
32. On year 1, what is the ending balance of Angela?
33. On year 2, how much is the total interest given to partners?
34. On year 2, what is the ending balance of Alyssa?
35. On year 2, what is the ending balance of Bea?
36. By how much did the capital of Angela change as a result of the 2-year operation? Indicate
whether increase or decrease.
37. True or False: The difference between the ending capital balances of Bea and Alyssa at
year 2 is greater than 20,000.
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PROBLEM 5
On the first year of operations, Francis and Abner Partnership decided to admit Robert as a
new partner who invested 1/3 interest for P450,000 using the goodwill method. Capital balances
of Francis and Abner before admission are P500,000 and P700,000 respectively. They agreed
to an equal interest after admitting Robert.
On the second year of operations, Francis retires from the partnership and was paid P400,000.
The partnership decided to use the bonus method.
38. On year 1, what is the amount of goodwill to be recognized?
39. On year 1, what is the capital ending balance of Francis?
40. On year 2, what is the capital ending balance of Abner?
41. On year 2, what is the capital ending balance of Robert?
PROBLEM 6
Mary, Adelle and Grace Partnership has the following balances:
Cash
P 100,000
Loan payable to Adelle
P 15,000
Loan from Mary
5,000
Loan payable to Grace
20,000
Land
100,000
Mary, Capital (40%)
80,000
Building
60,000
Adelle, Capital (40%)
100,000
Machinery
70,000
Grace, Capital (20%)
120,000
TOTAL
P 335,000
TOTAL
P 335,000
They incurred liquidation expenses of P20,000 and used safe payment as method of liquidation.
42. What is the total adjusted capital balance of the partnership, net of loans?
43. How much loss was absorbed by Adelle from the loss of Mary?
44. How much loss was absorbed by Grace from the loss of Adelle?
45. How much cash was available for distribution?
PROBLEM 7
Liza, Kathryn, Nadine and Julia Partnership has the following balances:
Cash
P 200,000
Liabilities
P 600,000
Non-cash assets
1,000,000
Liza, Capital (30%)
240,000
Kathryn, Capital (30%)
150,000
Nadine, Capital (20%)
110,000
Julia, Capital (20%)
100,000
TOTAL
P 1,200,000
TOTAL
P 1,200,000
On the first month of liquidation, half of the non-cash assets were sold at P600,000 and 80% of
the liabilities were paid. P90,000 cash was distributed to partners. On the second month of
liquidation, remaining non-cash assets were sold at book value and the balance of liabilities was
paid. Remaining cash was distributed to partners.
Due to the installment liquidation, they decided to use cash priority program as method of
liquidation.
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46. How much is the priority amount to be given to Liza before any other partner received cash
from the distribution?
47. What is the amount of remaining cash after the first distribution?
48. What is the amount received by Julia from the first cash distribution?
49. What is the amount received by Kathryn from the second cash distribution?
50. What is the amount received by Nadine from the second cash distribution?
PROBLEM 8
Company A and B were partners in a joint venture where Company A buys 20,000 shares of
Company B at 20 per share. On year 1, Company B total shares are 100,000 shares and
earned income amounting to 200,000 and distributed 100,000 to its venturers. On year 2,
Company B incurred loss amounting to 300,000 but still able to distribute 50,000 to its
venturers. They used equity method.
51. What is the amount of investment in joint venture to re recognized by Company A after the
second year of operations?
PROBLEM 9
Company A is an appliance company and makes a sale an appliance with a retail price of
P10,000 at the end of January. The cost of the appliance to the company is 6,000.
The company strikes a deal with the customer in which the customer is required to make
installment payments of P2,500 each month for the appliance until the full amount is paid.
52. By the end of February, what is the balance of deferred revenue?
53. By the end of March, what is the balance of installment sales receivable?
54. By the end of April, what is the balance of cost of sales?
PROBLEM 10
During 2019, the company repossessed a motorcycle which had been sold in 2015 for P90,000
and P60,000 has been collected prior to the default. The resale price of the repossessed
merchandise is P20,000 after reconditioning cost of P3,000 and a normal gross profit of 30%.
The company 2015 sales and cost of sales are P1,000,000 and P600,000 respectively.
55. What is the gain or loss on repossession? (Indicate whether gain or loss)
PROBLEM 11
Venturer A and B were partners in a joint venture sharing 60:40 of profits and losses,
respectively. Venturer A supplies goods to the value of 10,000 and inures expenses amounting
to 3,000. B supplies goods to the value of 8,000 and his expenses amounting to 2,000. Venturer
B sells goods on behalf of the joint venture and realizes 32,000 sales and is entitled to a
commission of 10% on sales. They used proportionate consolidation method.
56. What is the profit to be distributed to Venturer B?
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Problem 12
On January 1, 2019, Jaguar Enterprises obtained a contract to construct a building. It was
estimated at the beginning of the contract that it would take three years to complete the project
at an expected cost of P400,000. The contract price was P500,000. The following information
describes the status of the job at the close of production each year:
Year 1
Year 2
Actual costs incurred
P209,100
P220,000
Estimated costs to complete
200,900
60,000
Billings on contract
225,000
225,000
Collections on contract
220,000
220,000
57. What is the revenue to date as of year 1?
58. What is the cost to date as of year 2?
59. What is the gross profit for year 3?
60. What is the balance of construction in progress presented in the balance sheet as of
second year? (Indicate whether asset or liability)
Lucky guess!! (Plus 2, Plus 1 or nothing)

Unformatted Attachment Preview

MIDTERM EXAMINATION ACCTG 7 – ADVANCED FINANCIAL ACCOUNTING AND REPORTING PART 1 Choose the correct answer. For items without choices, kindly provide solution and box or underline your final answer. MULTIPLE CHOICE 1. Statement I: The personal assets, liabilities, and personal transactions of partners are excluded from the accounting records of the partnership. Statement II: In a liquidation, the final distribution of cash to partners should be on the basis of their income ratios. a. Only Statement I is true b. Only Statement II is true c. d. Both are true Both are false 2. Statement I: A major advantage of the partnership form of organization is that the partners have unlimited liability. Statement II: Partnership creditors may have a claim on the personal assets of any of the partners if the partnership assets are not sufficient to settle claims. a. Only Statement I is true b. Only Statement II is true c. d. Both are true Both are false 3. Which of the following statement about joint venture is false? a. There is an agreement between two or more persons. b. Joint venture is made for the specific execution of a business plan/project. c. It is a permanent partnership without the use of a firm name. d. All of the above statement is true. 4. Which of the following statement about joint venture is true? a. Agreement for joint ventures is not automatically dissolved as soon as specific project is over. b. Profit & loss are shared on the same terms and conditions agreed upon by the one of the venturers. c. In the absence of any agreement, profit & share will be divided based on capital contribution. d. None of the above is true. 5. Jointly controlled assets involve the joint control, and often the joint ownership, of assets dedicated to the joint venture. Each venturer may take a share of the output from the assets and each bears a share of the expenses incurred. a. Joint venture b. Jointly controlled operations c. d. Jointly controlled assets Jointly controlled entities 6. It is a contract among and between two or more persons who bind themselves to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves. a. Corporation c. Partnership b. Sole proprietorship d. All of the above 7. Which is not among the characteristics of a partnership? a. Separate legal personality c. Limited liability b. Limited life d. Voluntary association 8. The non-cash contributions of the partners to form a partnership are recorded by partnership at their ________. a. Book value c. Zonal Value b. Market value d. Historical Cost 9. When a partnership cannot pay its debts with business assets, the partners a. Are not personally liable for the debts c. Must convert the partnership to a joint venture b. Have limited personal liability d. Must use their personal assets to meet debts 10. If the partners have not drawn up an agreement, then they must share profits and loses a. Equally c. By an appropriate ratio b. By any means that will save taxes d. According to capital contributions 11. Among the various options available by determining the partners` share of profits are the following except a. Loans to the partnership c. Capital contributions b. Stated fraction or ratio d. Capital contributions and service to the partnership 12. A person maybe come a partner in a partnership by all of the following methods except a. Investing in the partnership with a bonus to the new partner b. Making a loan to the partnership c. Investing in the partnership with a bonus to the old partner d. Purchasing a partner`s interest 13. Which of the following does not result in the dissolution of the partnership? a. Marriage of a partner c. Addition of a new partner b. Withdrawal of a partner d. Death of a partner 14. A new partner maybe admitted into a partnership of the following except a. Investing in the partnership c. Purchasing a partner`s interest b. Both a and c d. Purchasing preferred stock of the partnership 15. The individual assets invested by a partner in a partnership a. Revert back to that partner if the partnership liquidates. b. Determine that partner’s share of net income or loss for the year. c. Are jointly owned by all partners. d. Determine the scope of authority of that partner. 16. The partnership agreement should include each of the following except the a. date of the partnership inception. b. principal location of the firm. c. surviving family members in the event of a partner’s death. d. Each of these should be included. 17. Which of the following statements about a partnership is correct? a. The personal assets of a partner are included in the partnership accounting records. b. A partnership is not required to file an information tax return. c. Each partner’s share of income is taxable to the partnership. d. A partnership represents an accounting entity for financial reporting purposes. 18. Bailey invests personally owned equipment, which originally cost P220,000 and has accumulated depreciation of P60,000 in the Bailey and Madonna partnership. Both partners agree that the fair value of the equipment was P120,000. The entry made by the partnership to record Bailey’s investment should be a. Equipment 220,000 Accumulated Depreciation—Equipment 60,000 Bailey, Capital 160,000 b. Equipment 160,000 Bailey, Capital 160,000 c. Equipment 120,000 Loss on Purchase of Equipment 40,000 Accumulated Depreciation—Equipment 60,000 Bailey, Capital 220,000 d. Equipment 120,000 Bailey, Capital 120,000 19. Nathaniel is investing in a partnership with Andre. Nathaniel contributes as part of his initial investment, Accounts Receivable of P60,000; an Allowance for Doubtful Accounts of P9,000; and P6,000 cash. The entry that the partnership makes to record Nathaniel’s initial contribution includes a a. credit to Nathaniel, Capital for P66,000. b. debit to Accounts Receivable for P51,000. c. credit to Nathaniel, Capital for P57,000. d. debit to Allowance for Doubtful Accounts for P9,000. 20. Total cost to date amounts to 10,000 and gross profit to date amounts to 5,000. How is construction in progress be presented in the balance sheet if the progress billing to the buyer amounts to 12,000? a. 3,000 asset b. 3,000 liability c. 2,000 asset d. 2,000 liability 21. Which of the following is true regarding the percentage of completion method a. Revenue in any given year is determined by the actual contract costs incurred for that year multiplied by the total estimated cost multiplied by the total contract price. b. Used when estimates of the bases upon which progress is measured are reasonably dependable c. No earnings are recognized until the contract is substantially completed. d. All of the above statements are true 22. It is recorded upon installment sale and decreased upon collection equal to the gross profit rate multiplied by the amount collected. a. sales revenue b. deferred revenue c. cost of goods sold d. installment accounts receivable 23. Using this method, gross profit is only recognized when collection exceed the cost of the project a. Installment sales method b. Cost recovery method c. Accrual basis method d. Cash basis method 24. Statement I: Significant influence is present if the venturer has above 20% share from another venturer. Statement II: Initial investment in joint venture are recorded at fair market value to reflect the current and fair measurement of the investment. a. Only Statement I is true b. Only Statement II is true c. d. Both are true Both are false 25. Statement I: An installment sale is a financing arrangement in which the seller allows the buyer to make payments over an extended period of time. Statement II: In installment sales, revenue and expense are recognized at the time of sale and not at the time of collection a. Only Statement I is true b. Only Statement II is true c. d. Both are true Both are false PROBLEM 1 Bien and Bowie are forming a partnership. Bien will invest a truck with a book value of P10,000 and a fair value of P14,000. Bowie will invest a building with a book value of P30,000 and a fair value of P42,000 with a mortgage of P15,000 which the partnership assumed. 26. What amount should be recorded in Bowie’s capital account? PROBLEM 2 Partners Gary and Elena have agreed to share profits and losses in an 80:20 ratio respectively, after Gary is allowed a salary allowance of P30,000 and Elena is allowed a salary allowance of P15,000. 27. If the partnership had net income of P30,000 for 2014, Elena’s share of the income would be? PROBLEM 3 Nhel and Cath formed a partnership on January 1, 2016. Nhel’s contributions are cash of P30,000 and equipment costing P40,000 which has a book value of P270,000 and a current market value of P300,000. Cath’s contributions are cash of P10,000 and a building with zonal value of P240,000 and a book value of P300,000 with mortgage liability of P100,000 which the partnership does not assume. 60:40 capital contributions for Nhel and Cath, respectively was agreed by the partners. 28. What is the capital balance of Cath upon formation assuming the problem is silent as to method to be used? 29. What is the amount of goodwill, if any, assuming they used the goodwill method upon formation? PROBLEM 4 Bea, Angela and Alyssa formed a partnership with capital balances of 20,000, 30,000 and 25,000 respectively. Profit/loss sharing ratio is 4:3:3. Shown below are the summary of transactions for year 1 and year 2. Year 1 ◼ Net income is P189,000. ◼ Bea, as the managing partner, received a bonus of 5% of net income before salaries & interest but after bonus ◼ Salaries are paid in the amount of P40,000 to Bea and P30,000 to Angela and P20,000 to Alyssa. ◼ Interest of 10% is paid on the beginning capital balances. ◼ Bea and Angela withdraw 10% of their share in net income each at year end, while Alyssa maid P5,000 additional investment. Year 2 ◼ Net loss is P50,000. ◼ No bonus was given because of the loss. ◼ Salaries are paid in the amount of P10,000 to Bea and P20,000 to Angela and P15,000 to Alyssa. ◼ Interest is paid amounting to the ending capital balances of Year 1 in excess of 70,000 ◼ Bea and Alyssa withdraw P5,000 each at year end while Angela invest a machinery which she bought 3 years ago amounting to 50,000 with useful life of 5 years depreciated using straight line method which fair value cannot be measured reliably. 30. On year 1, what is the amount of bonus given to Bea? 31. On year 1, what is the ending balance of Alyssa? 32. On year 1, what is the ending balance of Angela? 33. On year 2, how much is the total interest given to partners? 34. On year 2, what is the ending balance of Alyssa? 35. On year 2, what is the ending balance of Bea? 36. By how much did the capital of Angela change as a result of the 2-year operation? Indicate whether increase or decrease. 37. True or False: The difference between the ending capital balances of Bea and Alyssa at year 2 is greater than 20,000. PROBLEM 5 On the first year of operations, Francis and Abner Partnership decided to admit Robert as a new partner who invested 1/3 interest for P450,000 using the goodwill method. Capital balances of Francis and Abner before admission are P500,000 and P700,000 respectively. They agreed to an equal interest after admitting Robert. On the second year of operations, Francis retires from the partnership and was paid P400,000. The partnership decided to use the bonus method. 38. On year 1, what is the amount of goodwill to be recognized? 39. On year 1, what is the capital ending balance of Francis? 40. On year 2, what is the capital ending balance of Abner? 41. On year 2, what is the capital ending balance of Robert? PROBLEM 6 Mary, Adelle and Grace Partnership has the following balances: Cash Loan from Mary Land Building Machinery TOTAL P P 100,000 5,000 100,000 60,000 70,000 335,000 Loan payable to Adelle Loan payable to Grace Mary, Capital (40%) Adelle, Capital (40%) Grace, Capital (20%) TOTAL P P 15,000 20,000 80,000 100,000 120,000 335,000 They incurred liquidation expenses of P20,000 and used safe payment as method of liquidation. 42. What is the total adjusted capital balance of the partnership, net of loans? 43. How much loss was absorbed by Adelle from the loss of Mary? 44. How much loss was absorbed by Grace from the loss of Adelle? 45. How much cash was available for distribution? PROBLEM 7 Liza, Kathryn, Nadine and Julia Partnership has the following balances: Cash Non-cash assets P TOTAL P 200,000 Liabilities 1,000,000 Liza, Capital (30%) Kathryn, Capital (30%) Nadine, Capital (20%) Julia, Capital (20%) 1,200,000 TOTAL P P 600,000 240,000 150,000 110,000 100,000 1,200,000 On the first month of liquidation, half of the non-cash assets were sold at P600,000 and 80% of the liabilities were paid. P90,000 cash was distributed to partners. On the second month of liquidation, remaining non-cash assets were sold at book value and the balance of liabilities was paid. Remaining cash was distributed to partners. Due to the installment liquidation, they decided to use cash priority program as method of liquidation. 46. How much is the priority amount to be given to Liza before any other partner received cash from the distribution? 47. What is the amount of remaining cash after the first distribution? 48. What is the amount received by Julia from the first cash distribution? 49. What is the amount received by Kathryn from the second cash distribution? 50. What is the amount received by Nadine from the second cash distribution? PROBLEM 8 Company A and B were partners in a joint venture where Company A buys 20,000 shares of Company B at 20 per share. On year 1, Company B total shares are 100,000 shares and earned income amounting to 200,000 and distributed 100,000 to its venturers. On year 2, Company B incurred loss amounting to 300,000 but still able to distribute 50,000 to its venturers. They used equity method. 51. What is the amount of investment in joint venture to re recognized by Company A after the second year of operations? PROBLEM 9 Company A is an appliance company and makes a sale an appliance with a retail price of P10,000 at the end of January. The cost of the appliance to the company is 6,000. The company strikes a deal with the customer in which the customer is required to make installment payments of P2,500 each month for the appliance until the full amount is paid. 52. By the end of February, what is the balance of deferred revenue? 53. By the end of March, what is the balance of installment sales receivable? 54. By the end of April, what is the balance of cost of sales? PROBLEM 10 During 2019, the company repossessed a motorcycle which had been sold in 2015 for P90,000 and P60,000 has been collected prior to the default. The resale price of the repossessed merchandise is P20,000 after reconditioning cost of P3,000 and a normal gross profit of 30%. The company 2015 sales and cost of sales are P1,000,000 and P600,000 respectively. 55. What is the gain or loss on repossession? (Indicate whether gain or loss) PROBLEM 11 Venturer A and B were partners in a joint venture sharing 60:40 of profits and losses, respectively. Venturer A supplies goods to the value of 10,000 and inures expenses amounting to 3,000. B supplies goods to the value of 8,000 and his expenses amounting to 2,000. Venturer B sells goods on behalf of the joint venture and realizes 32,000 sales and is entitled to a commission of 10% on sales. They used proportionate consolidation method. 56. What is the profit to be distributed to Venturer B? Problem 12 On January 1, 2019, Jaguar Enterprises obtained a contract to construct a building. It was estimated at the beginning of the contract that it would take three years to complete the project at an expected cost of P400,000. The contract price was P500,000. The following information describes the status of the job at the close of production each year: Actual costs incurred Estimated costs to complete Billings on contract Collections on contract Year 1 P209,100 200,900 225,000 220,000 Year 2 P220,000 60,000 225,000 220,000 Year 3 P60,000 0 0 60,000 57. What is the revenue to date as of year 1? 58. What is the cost to date as of year 2? 59. What is the gross profit for year 3? 60. What is the balance of construction in progress presented in the balance sheet as of second year? (Indicate whether asset or liability) Lucky guess!! (Plus 2, Plus 1 or nothing) Name: Description: ...
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