21) After operating for five years, the books of the partnership of KK and LL showed the following balances:

Net assets   130,000

KK, capital     85,000
LL, capital     45,000
If liquidation takes place at this point and the net assets are realized at bookvalue, the partners are entitled to:
a. KK receive P97,500 & LL to receive P32,500
b. KK receive P85,000 & LL to receive P45,000
c. KK receive P65,000 & LL to receive P65,000
d. KK receive P90,000 & LL to receive P40,000

22) Jessup Construction, Inc. has consistently used the percentage-of-completion method of recognizing income.
During 2008, Jessup started work on a P1,500,000 fixed-price construction contract. The accounting records
disclosed the following data for the year ended December 31, 20x7:
Costs incurred      465,000
Estimated cost to complete   1,085,000
Progress billings      550,000
Collections      350,000
How much loss should Jessup have recognized in 20x7?
a. P100,000
b. P50,000
c. P15,000
d. P85,000

23) Partnership of T, U and V and their profit and loss ratios were as follows:
Assets P  500,000 
T, loan   P    20,000
T, capital (30%)   140,000
U, capital (30%)   120,000
V, capital (40%)   180,000
Total equities   460,000
T decided to retire from the partnership and by mutual agreement, the assets were adjusted to their current fairvalue
of P625,000. The partnership paid P200,000 cash for T’s equity in the partnership, exclusive of the loanwhich was
repaid in full.
The capital balances of U and V, respectively, after T’s retirement from the partnership was:
a. P146,250 and P218,750
b. P139,286 and P205,714
c. P147,857 and P217,143
d. P94,286 and P145,714

24) C and D have just formed a partnership. C contributed cash of P88,000 and building that cost P400,000. The
building had been used in his sole proprietorship and had been 50% depreciated. The current fair value of the
equipment is P188,000 with attached mortgage payable amounting to P46,000 to be assumed by the partnership. The
partners agreed on a profit and loss ratio of 50% each. C is to have a 60% interest in the partnership. D contributed
only the merchandise inventory from his sole proprietorship carried at P500,000 on a first-in- first-out basis.The
current fair value of the merchandise is P470,000.
To consummate the formation of the partnership C should make additional cash investment or (withdrawal) of:
a. P463,000
b. P475,000
c. P263,000
d. P520,000

25) Brand Constructions began operation in 20x8. Construction activities for the first year is shown below. All
contract are with different customers, and any work remaining at December 31, 20x8 is expected to be completed in
20x9. Brand uses the cost-to-cost percentage of completion in accounting for its projects.
Actual costs to
Project Contract price Billings to dateCollections to date Additional cost to complete
date
One 560,000 360,000        340,000      450,000          130,000
Two 670,000 220,000        210,000      126,000          504,000
 Three 520,000 500,000        440,000      330,000  
Totals 1,750,000 1,080,000        990,000      906,000          634,000
Assume that Branch uses the cost recovery method instead, calculate the aggregate net profit recognized in the 20x8
income statement for these projects.

a. P190,000
b. P230,000
c. P170,000
d. P178,000

Calculate the amount of current liability recognized in the 20x8 balance sheet.
a. P24,000
b. P86,000
c. P-0-
d. P70,000

Calculate the amount of inventory recognized as a current asset in the 20x8 balance sheet.
a. P24,000
b. P86,000
c. P-0-
d. P70,000

Calculate the aggregated net profit recognized in the 20x8 income statement for these projects.
a. P250,000
b. P158,000
c. P178,000
d. P210,000

26) SS, TT, UU, and VV, partners to a law firm, shares profits at ratio of 4:3:1:1. On June 30, relevant partners’
accounts follow:
  Advances (Dr) Loans (Cr) Capital (Cr)
                    
SS        10,000
-           50,000
                              
TT
-          15,000 80,000
U                          
            22,000
U -   55,000
V          
            18,000
V   75,000
On this day, cash of P60,000 is declared as available for distribution to partners as profits.  Who among the partners
will benefit from the P60,000 cash distribution?
a. All of the partners
b. TT, UU and VV
c. TT and VV
d. TT only
27) Echo Corporation purchased 25 percent of Foxtrot Company's stock on January 1, 20x7 for P600,000. At the
acquisition date, Foxtrot has equipment with market value of P250,000 greater than the book value. On that date,
Echo Corporation gives the ability to have joint control with another entity over Foxtrot Company's. the equipment
has an estimated remaining life of 10 years. In 20x7, Foxtrot has net income of P320,000 and pays P80,000 of
dividends.
Assuming that the investor (joint venture) does not prepare consolidated financial statements, the investment
account in Echo's financial records at the end of 20x7 is:
a. P600,000
b. P673,750
c. P660,900
d. P653,750
 28) Golf and Hotel enter into a contract to speculate on the stock market, each using approximately their personal
cash. The earnings are to be divided equally, and settlement is to be made at the end of the year after securities have
been sold. A summary of the monthly brokerage statements for the year follows:
  Golf Hotel
Total of all purchases confirmations P  45,000 P   18,000
Total of all sales confirmations        48,700        16,800
Interest charged on margin
accounts                80               50
Dividends credited to accounts                40             100
Final settlement will require payments as follows:
a. Golf pays Hotel P2,405
b. None
c. Golf and Hotel receive P1,255 each
d. Golf receives from Hotel P1,150

29) On January 3, 20x8, Lincoln Services, Inc., signed an agreement authorizing Lisa Company to operate as a
franchisee over a 20-year period for an initial franchise fee of P100,000 received when the agreement was signed.
Lisa commenced operations on July 1, 20x8, at which date all of the initial services required of Lincoln had been
performed. The agreement also provides that Lisa must pay a continuing franchise fee equal to 5% of the revenue
from the franchise annually to Lincoln. Lisa's franchise revenue for 20x8 was P800,000. For the year ended
December 31, 20x8, how much should Lincoln record as revenue from franchise fees in respect of the Lisa
franchise?
a. P90,000
b. P45,000
c. P42,500
d. P140,000

30) The partnership agreement between N, O, and P provide for the following profit sharing arrangement: bonus
of20% on net income before bonus to N, interest of 15% on average capital balances, remainder, 5:3:2 for N, O and
P, respectively. The average capital balances of N, O and P are
P250,000, P330,000 and 500,000 respectively.
The share of N, O and P in the net income of P180,000 should be
a. P67,500; P43,500; and P69,000
b. P90,000; P54,000; and P36,000
c. P60,000; P60,000; and P60,000
d. P64,500; 44,100; and P71,400

31) On May 1, 20x7, Green Construction Company entered into a fixed-price contract to construct an apartment
building for P3,000,000. Green appropriately accounts for this contract under the percentage-of-completion method.
Information relating to the contract is as follows:
  20x7 20x8
At December 31:    
% of completion 20% 60%
Total estimated costs to completeP2,250,000 P2,400,000
Income recognized (cumulative)       150,000      360,000
What is the amount of contract costs incurred during the year ended December 31, 20x8?
a. P1,440,000
b. P990,000
c. P600,000
d. P960,000
32) Golf and Hotel enter into a contract to speculate on the stock market, each using approximately their personal
cash. The earnings are to be divided equally, and settlement is to be made at the end of the year after securities have
been sold. A summary of the monthly brokerage statements for the year follows:
  Golf Hotel
Total of all purchases confirmations P  45,000 P   18,000
Total of all sales confirmations        48,700        16,800
Interest charged on margin
accounts                80               50
Dividends credited to accounts                40             100
The joint operation profit (loss) is:
a. P2,510
b. P2,640
c. P-0-
d. (P3,370)

33) The following data were taken from the records of Sweet Serendipity Co. before the accounts are closed for the
year ended December 31, 20x7. The company uses the installment method of recognizing revenue and it sells goods
exclusively on installment basis.
For the year ended:
 
12/31/20x512/31/20x612/31/20x7
Installment Sales ? P500,000 P600,000
Cost of Goods Sold 300000 ? ?
Balances as of:
 
12/31/20x512/31/20x612/31/20x7
Installment AR,
P350,000 P125,000 P35,000
20x5
Installment AR,
  P307,500 P140,000
20x6
Installment AR,
    P490,000
20x7
DGP, 20x5 P122,500 P43,750 P43,750
DGP, 20x6   P123,000 P120,000
DGP, 20x7     P210,000

34) On January 20x7, a customer defaulted and Sweet Serendipity repossessed the merchandise. The merchandise
was assessed to have a cost of P4,200 after costs of reconditioning amounting to P800. The repossessed merchandise
was purchased by the customer in 20x6 and the said customer still owed the company a certain amount at the date of
repossession.
How much was the realized gross profit and loss on repossession in 20x7?
a. P137,000 ; P3,300
b. P134,000 ; P300
c. P134,000 ; P1,100
d. P137,000 ; P4,100

35) Maggy Corporation filed a voluntary bankruptcy petition on August 1, 20x7, and the statement of affairs reflects
the following information:
  Book value Fair value
Assets pledged for fully secured liabilities P   50,000 P  45,000
Assets pledged for partially secured
60,000     35,000
liabilities
Free assets       70,000 65,000
Unsecured liabilities with priority       20,000  
Fully secured liabilities       30,000  
Partially secured liabilities       40,000  
Unsecured liabilities without priority       75,000  
The amount that will be paid to creditors with priority is
a. P20,000
b. P16,000
c. P14,000
d. P15,000
What is the gross profit rate?
a. 40%
b. 33%
c. 35%
d. 30%
36) On June 30, 20x7, the condensed balance sheet for the partnership of DD, EE, and FF together with their
respective profit and loss sharing percentages was as follows:
Assets, net of liabilities P    350,000
   
DD, capital (30%)      150,000
EE, capital (35%)      104,000
 FF, capital (35%)        96,000
  P    350,000
GG is admitted as a new partner with a 20% interest in the capital of the new partnership for cash payment of
P105,000. Total goodwill implicit in the transaction is to be recorded. Immediately after admission of GG, DD’s
capital account balance should be:
a. P154,400
b. P171,000
c. P129,000
d. P150,000

37) Because of inability to pay its debts, the Lou Gi Manufacturing Company has been forced into bankruptcy as of
April 1, 20x7. The balance sheet on the date shows:
Assets Liabilities & Equity
Cash P   2,700Accounts Payable P 52,500
Accounts Receivable     39,350Notes Payable- Bank     15,000
Notes Receivable     18,500Notes Payable- Suppliers     51,250
Merchandise Invty.     87,850Accrued Wages       1,850
Prepaid Insurance          950Accrued Taxes       4,650
Land and Buildings     61,250Mortgage Bonds Payable     90,000
Equipment     48,800Common Stock- P100 par    75,000
    Retained Earnings  (30,850)
Total P259,400 Total P259,400
 
Additional information:
 Accounts receivable of P16,950 and notes receivable of P12,500 are expected to
be collectible. The good notes are pledged to the bank.
 Merchandise inventory are expected to bring in P45,100 when sold under
bankruptcy conditions.
 Land and buildings have an appraised value of P95,000. They serve as security on
the bonds.
 The current value of the equipment, net of disposal cost is P9,000.
The estimated net loss/net gain on asset disposal is:
a. P111,900
b. P78,150
c. P77,200
d. P33,750

38) Will Enterprises, which began operations on January 1, appropriately uses the installment method of accounting.
The following information is available for its first year:
Gross profit on sales 40%
Deferred gross profit at December 31 120,000
Cash collected, including down payments 225,000
What is the total amount of Will's installment sales for the first year?
a. P345,000
b. P300,000
c. P525,000
d. P425,000

39) Seahawks, Inc. had the following consignment transactions during December:
Inventory shipped on consignment to Ashe Company    18,000
Freight paid by Seahawks         900
Inventory received on consignment from Fenn
Company    12,000
Freight paid by Fenn         500
 No sales of consigned goods were made through December 31. Seahawks' December 31 balance sheet should
include consigned inventory at
a. P18,000
b. P12,000
c. P12,500
d. P18,900

40) C & J Construction, Inc. has consistently used the percentage-of-completion method of recognizing income.
Last year C & J started work on a P4,500,000 construction contract, which was completed this year. The accounting
records disclosed the following data for last year:
Progress billings   1,650,000
Costs incurred   1,350,000
Collections   1,050,000
Estimated cost to complete   2,700,000
How much income should C & J have recognized on this contract last year?
a. P300,000
b. P350,000
c. P105,000
d. P150,000

41) G, H, and I invest P50,000, P35,000 and P20,000 respectively, in a partnership on June 30, 20x7. They agree to
divide net income or loss as follows:
1. Interest at 10% on beginning capital account balances
2. Salaries of P15,000, P10,000 and P5,000, respectively to G, H and I
3. Remaining net income or loss divided equally
4. A minimum of P25,000 of income guaranteed to I.
If the net income for the year ended June 30,20x7 before interest and salary allowances to partners was P75,000, the
amount of the net income credited to E is:
a. P21,750
b. P28,250
c. P31,500
d. P25,000

42) W, a senior partner in an accounting firm, has a profit share of 40% and 30% interest in 20x7. During 20x7, W
withdrew P160,000 against his capital but invested property with a fair value of P70,000. If W's ending capital is
P80,000 lesser than his capital beginning, how much is the partnership net income or net loss for 20x7?
a. (P10,000)
b. P25,000
c. (P25,00)
d. P10,000
43) Paras Company began operations on January 2, 20x7, and appropriately used the installment sales method of
accounting. The following data are available for 20x7 and 20x8:
  20x7 20x8
Installment sales P3,000,000P3,600,000
Gross profit on sales 30% 40%
Cash collections
from:    
20x7 sales P1,000,000P1,200,000
20x8 sales                 -    1,400,000
 
The realized gross profit for 20x8 is
a. P1,440,000
b. P1,040,000
c. P920,000
d. P2,600,000