CPA Review School of the Philippines

Manila
Practical Accounting Problems 2
First Pre-board Examination
Multiple choices: mark fully with pencil no. 2 the letter of your choice on the answer sheet provided.
Make the mark Dark but do not use too much pressure. Erasures are strictly not allowed.
1. The following amounts were taken from the statements of affairs for ABC Company:
Unsecured liabilities with priority
Stockholders equity
Estimated liquidation that have not been entered
In the accounting records
Unsecured liabilities without priority
Loss on realization of asset

131, 250
472, 500
59, 060
1, 181, 250
590, 625

How much is the total free assets?

a. P, 1004, 060
b. P1, 021, 685
c. P1, 063, 125
d. P1, 135, 315
2. J and P formed a joint venture to purchase and sell a special type of merchandise. The ventures
agreed to contribute cash of P30, 000 each to be used in purchasing the merchandise and to
share profits and losses equally. They also agreed that each shall record his purchases, sales and
expenses in their own books
Upon termination of the joint venture, the following data are made available:
J
P
Joint venture
P26, 000 CR
P23, 400 CR
Inventory taken
800
2, 500
Expenses paid from JV cash
1, 200
2, 200
How much cash is to be received by J in the final settlement?
a. P52, 700
b. P55, 550
c. P56, 350
d. P56, 750
3. Partners A, B and C shares profits and losses in the ratio of 5:3:2 at the end of very unprofitable
year, they decided to liquidate the firm. The partner capital account balances at this time are as
follows A, P616, 000; P697, 200; C, P420, 000. The liabilities accumulate to P840, 000, including

a loan of P280, 000 from A. The cash balance is P168, 000 all the partners are personally solvent.
The partners to sell the asset in instalment
If B received P100, 800 from the first distribution of cash how much did C receive at that time?
a. P56, 000
b. P22, 400
c. P33, 600
d. P61, 600
4. Peace inc. Uses the percentage of completion method in recognizing income in 2010 the
company was engaged by World on a fixed price contract to build a 10 story building
On January 1, 2011, a fire damaged the accounting records of Peace. The following data were
taken from the salvage files:
12/13/2010
12/13/2011
Architects estimated cost of completion
1, 875, 000
2, 000, 000
Cost incurred
750, 000
Percentage of completion
60%
Income recognized to date
125, 000
300, 000
What is the percentage of completion in 2010?
a. 40%
b. 25%
c. 30%
d. 20%
5. Jack and Jill agreed on a joint venture to purchase and sell custom made items. They agreed to
contribute P50, 000 each to be used in purchasing the merchandise, share equally in any gain or
loss and record their venture transaction in their individual books, upon the termination of the
venture the following information were available:
Joint venture account credit balance: jack P36, 000; Jill P40, 400
Cost of custom made items taken by: Jack P3, 000; Jill P5, 800
Expenses paid: by Jack P3, 700; Jill P4, 600
Compute for the joint venture profit:
a. P76, 400
b. P84, 700
c. P67, 600
d. P85, 200
6. Wall clock Inc. Sold stock by giving a trade discount of 10% to all its customers. On May 1 2010
five units sold to Mr. Mark. The company accepted a used cock as trade in and granted an
allowance of P20, 000 the current market value of the computer is P24, 000. The balance was
payable as follows 20% of the balance paid at the time of sale. The rest is payable in 10 months

starting in June 1, 2010 after six months of paying Mr. Mark defaulted in the payment of
December, 1, 2010. He five units of clock were repossessed with appraised value of P31, 000
before reconditioning cost. The reconditioning cost of clock P20, 000 and a 15% gross profit rate
was normal from the sale of used clocks operating expenses for the year was P10, 760.
What is the net income (loss) for 2010?
a. 33, 440
b. (26, 840)
c. 35, 720
d. 26, 600
7. Enteng Company acquired all of Agimat corporations assets and liabilities on October 2, 2009 in
a business combination at that date. AgIMAT reported asset with a book value of P2, 496, 000
and liabilities of P1, 424, 000. ENTENG noted that AGIMAT had P160, 000 of research and
development costs at the acquisition date that did not appear of any value ENTENG also
determined that patents developed by AGIMAT had a fair value of P480, 0000 but had not been
recorded by AGIMAT. Except for building and equipment ENTENG determined the fair value of
all other asset and liabilities reported by AGIMAT approximately the recorded amount. In
recording the transfer of asset and liabilities in its books, ENTENG recorded goodwill of P372,
000. ENTENG paid P2, 068, 000 to acquire AGIMATs asset and liabilities if the book value of
AGIMATs building and equipment was P1, 364, 000. What was their fair value?
a. 1, 508, 000
b. 144, 000
c. 304, 000
d. 1, 668, 000
8. The accounts of the partnership of X, Y and Z at the end of its fiscal year on November 30, 2010
as follows:
Cash
Other non cash assets
Loan to R
Liabilities

P103, 750
707, 500
15, 000
262, 500

loan from S
X, Capital (30%)
Y, Capital (50%)
T, Capital (20%)

P20, 000
266, 250
136, 250
141, 250

If in the first distribution, Y received P50, 000 which of the following is incorrect?
a. Total amount distributed to partners is P336, 250
b. Total amount paid to creditors is P262, 500
c. Total amount realized from the non cash asset is P598, 750
d. X received an amount equal to P187, 500
9. On December 31, 2009, Joan a franchisor entered into a franchising agreement with Irish
charging Irish a franchise fee of P1, 000, 000. Upon signing of the contract, a non refundable
down payment of P250, 000 is paid with the balance payable in three equal annual instalment
starting 2010. Joan had already performed 99.9% of the services as of Feb. 1,2010 at a cost of

P300, 000 Joan was able to collect the first instalment payment in 2010 but the collectability of
the remaining balance is still doubtful.
In its 2010 income statements, Joan should recognize profit of:
a. P1, 000, 000
b. P175, 000
c. P250, 000
d. P350, 000
10. During 2009, Canlubang construction Inc. Started a constructions job with a total contract price
of P600, 000. The job was completed on December 20, 2010. Additional data are as follows:
2009
2010
Actual cost incurred to date
P225, 000
P480, 000
Estimated remaining cost
225, 000
Progress billings
240, 000
300, 000
Collections
200, 000
400, 000
Under the percentage of completion method, what amount should Canlubang Constructions
recognizes as gross profit for 2010?
a. P0
b. P45, 000
c. P80, 000
d. P120, 000
11. On July 1, 2010. Mary Ann Inc. acquired most of the outstanding common stock of Pepito
Company for cash. The incomplete working paper elimination entries on that date for the
consolidated statements of financial position of Many Ann, Inc. And its subsidiary are shown
below:

E(1) stockholders equity- Pepito

Investment in Pepito
Non-controlling interest

975, 000

E (2) inventories
25, 000
Equipment
125, 000
Patent
24, 500
Goodwill
?
Investment in Pepito
Non-controlling interest

633, 750
341, 250

187, 500
?

Assuming NCI is measured at fair value. What is the amount of goodwill to be reported in the
consolidated statements of financial position on Jul 1, 2010 if there is a control premium of P27, 500?

a. P71, 654
b. P128, 769
c. P99, 154
d. P113, 962
12. On January 2, 2010, POKEMON signed an agreement to operate as a franchise of DIGIMON for
an initial franchise fee of P10, 000, 000 for 10 years. Of this amount P2, 000, 000 was paid when
the agreement was signed and the balance payable in four equal amount payments beginning
on December 30, 2010. POKEMON signed a non interest bearing note for the balance.
POKEMON rating indicates that it can be borrow money at 24% for a loan of this type. PV of an
annuity of 1 for 4 periods at 24$ is 2.4 assume that the substantial services amounting to 1, 020,
000 had already been rendered by DIGIMON and that additional indirect franchise cost of P272,
000 was also incurred if the collection of the note is not reasonably assured, the realized gross
profit for the year ended Dec. 31, 2010 is:
a. 5, 780, 000
b. 2, 420, 800
c. 2, 148, 800
d. 5, 508, 000
13. On December 1, 2009, LOJ Inc. Authorized Siber Company to operate as a franchise for an initial
franchise fee of P150, 000. Of this amount P60, 000 was received upon signing the agreement
and the balance, represented by a note, is due in three annual payments of P30, 000 each
beginning December 31, 2010. The present value on December 31, 209 for three annual
payments appropriately discounted at P72, 000. According to the agreement, the nonrefundable down payment represents a fair measure of the services already performed by LOJ
and substantial future services are still to be rendered. However, collectability of the note is
reasonably certain
LOJs December 31, 2009 balance sheet should report unearned franchise fee from Cloe
Company in the amount of
a. P132, 000
b. P90, 000
c. P60, 000
d. P72, 000
14. On January 1, 2011. Mr. CPA got the franchise of Jollibee. The franchise agreement provides a
P500, 000 initial franchise fee, payable P100, 000 upon signing of the franchise contract and the
balance in four annual instalments starting December 31, 2011. At present values using 12% as
discount rate, the four instalments would approximate P199, 650. The fees once paid are not
refundable; the franchise may cancel subject to the provisions of the agreement. Should there
be unpaid franchise fees attributed to the balance of the initial franchise fee, it would become
due and demandable upon cancellation. Further the franchisor is entitled to a 5% continuing fee
on gross sales payable monthly within the first ten days of the following month. The first year of
operations yielded gross sales of P9 million. The collectability of the note is not assured
On December 31, 2011 what is the earned franchise fee

a. P550, 000
b. P749, 650
c. P650, 000
d. P950, 000
15. On January 1, 2011, A acquired a 50% interest in B for P60 million. A already held a 20% interest
which had been acquired fro P20 million but which was valued at P24 million at January 1, 2011.
The fair value of the NCI at January 1, 2011 was P30 million and the fair value of the identifiable
net assets of B was P110 million. How much is the goodwill to be recognized as a result of the
business combination?
a. 3, 000, 000
b. 7, 000, 000
c. 0
d. 4, 000,000
16. On May 1, 2009, JAO builders obtained a contract to builds a building. The building was to built
at a total cost of P10, 000, 000 and is scheduled for completion on May 2011. The contract
contains a penalty clause to the effect that the other party was to deduct of P20, 000 fom the
contract price for each week of delay. Completion was delayed five weeks. Below are data
pertaining to the construction period?

Cost incurred
Estimated cost to complete
Progress billings

2009
1, 000, 000
4, 000, 000
800, 000

2010
3, 680, 000
520, 000
8, 700, 000

2011
620, 000
2, 400, 000

Using the percentage of completion method, what is the realized gross profit (loss) for the year
2011?
a. 650, 000
b. (70, 000)
c. (20, 000)
d. 480, 000
17. Joy is trying to decide whether to accept a bonus of 25% of net income after salaries and bonus
or a salary of P243, 750 plus a bonus of 10% of net income after salaries and bonus as a means
of allocating profit among the partners. Salaries traceable to the other partners are estimated to
be P450, 000. What amount of income would be necessary so that Joy would consider the
choices to be equal?
a. P2, 750, 000
b. P3, 156, 250
c. P2, 275, 000
d. P2, 993, 750
18. The following statements of financial position for the partnership of CC, DD and EE were taken
from the books on October 1, 2010

Asset
Cash
Other assets

1, 000, 000
4, 000, 000

liabilities and capital

liabilities
2, 000, 000
CC, Capital
1, 200, 000
DD, Capital
950, 000
EE, Capital
850, 000
5, 000, 000

Total assets
5, 000, 000
The partners agreed to distribute profits as follows:
a. Annual salaries to CC and DD of P50, 000 each
b. Annual interest of 5% on beginning capital
c. Bonus of 15% to CC based on income after salaries interest and bonus
d. Remaining profit: 25% to CC, 35% to DD and 40% to EE
The partnership began its operations on October 1,2010 and net income for the year ended Dec.
31, 2010 is P695, 000 which of the following is true?
a. The bonus to CC is P58, 040
b. Net income after salaries interest and bonus is P386, 960
c. DDs total share in the net income is P216, 875
d. EEs share on the profit after salaries, interest and bonus is P135, 430
19. Angels Corp. Reported the following accounts for the year just ended 2011:
Instalment receivable begs. Sales of 2011
Instalments receivable beg. Sales of 2011
Deferred gross profit end, 2010
Deferred gross profit end 2011
Regular sales
Cost of regular sales

2, 610, 000
1, 560, 000
380, 000
840, 000
1, 400, 000
1, 050, 000

The gross profit rate on instalment sales was 10% higher than regular sales. For 2011, the gross
profit on instalments sales was 3% lower than in 2010. Total realized gross profit for 2011 is
a. P252, 700
b. P286, 300
c. P602, 700
d. P636, 300
20. A home office ships inventory to its branch at 125% of cost during 2010. The required balance of
the unrealized intercompany profit account is P438, 750 for year 2009. During year 2010, the
home office sent merchandise to the branch costing 3, 920, 00. At the start of the year 2011.
The branch balance sheet shows P1, 575, 000 inventory that was acquired from the home office
a. 856, 250
b. 1, 103, 750
c. 907, 750
d. 1, 025, 000

21. On January 2, 2010 F group sold used equipment for P150, 000 resulting into gain of P45, 000 on
that date G paid P25, 000 cash and P125, 000, 10% interest bearing note. And was payable in
three annual instalments of P41, 667 beginning January 2, 2011. F appropriately accounted for
the sale under the instalments method. G made a timely payment of the first instalments on
January 2, 2011 of P54, 167 which includes an interest of P12, 500 what amount of deferred
gross profit should F report at December 31, 2011?
a. 28, 750
b. 25, 000
c. 30, 000
d. 37, 500
22. Ding, Dong and Dang decided to disclose their partnership on May 31, 2010. On this date their
capital balances were as follows:
Ding P87, 500
Dong 105, 000
Dang 35, 000
The following provision for sharing profits and losses is provided in the agreement income is
distributed only as far as it is available:
1. Ding, who is the managing partner gets a salary of P180, 000 a year; the remaining partner
gets a salary of P72, 000 each
2. Interest is imputed on the average capital balances at 12% per annum
3. Any remaining profits and losses are to be shared 3:2:5
The average capital balances during the period ended were P70, 000, P85, 000 and P27, 500 for
Ding, Dong and Dang respectively.
The net income from January to May 31, 2010 was P121, 500 also before liquidation on May
(inclusive of customer deposits amounting to P4, 000). Liquidation expenses of P7, 500 was paid
for Dong to receive P126, 400 in full settlement of his interest in the partnership how much
must be realized from the sale of the partnership non-cash assets
a. P408, 500
b. P416, 000
c. P457, 000
d. P402, 375
23. The Yvonne Inc. Opened an agency in Sampaloc, manila in 2008 the following is a summary of
the transaction of the agency;
Sales orders sent to Home office
Sales orders filled by Home office in 2008
Freight to shipment to agency
Collection net of 2% discount
Selling expenses paid from the agency working fund

55, 000
46, 500
1, 100
39, 690
2, 820

Administrative expenses charged to agency

Samples shipped to agency
Cost
Inventory. December 31, 2008

5% of sales
2, 000
1, 100

The company maintains its gross margin on agency sales at 30% excluding cost on shipment to
agency. The agency net income must be:
a. 4, 995
b. 5, 390
c. 5, 995
d. 6, 390
24. J, F and K formed a joint venture to purchase a piece of lot and to erect an apartment building
for sale. J is to manage the venture hence. He will receive a bonus of 10% of the venture gain
before deducting the bonus as expenses. Any remaining gain or loss is to be divided equally
among the venture. The venture is completed on August 31, 2010. On this date, the accounts of
F and K shows the following balances:
Account with J
Account with F
Account with K

56, 000CR

56, 000Cr
112, 000cr

63, 000Dr.

There are unused constructions supplies which J agreed to take over at its cost of 147, 000 final
settlements with the ventures will require payments as follows:
a. J pays K P39, 200 and F pays K P49, 000
b. J pays K P89, 600 and F P50, 400
c. J pays F P50, 400 and K pays J P107, 800
d. J pays F P124, 600 and K pays J P50, 400
25. Anna and Janna are partner sharing profits and losses in the ratio of 6:4 respectively. On January
2 the partner decided to admit Hannah as a new partner upon her investment of P96, 000 on
this date the interest in the partnership of Anna and Janna are as follows: Anna P138, 000; Janna
P111, 600 assuming that the new partner is given interests in the firm. The agreed capital of
the partnership is P360, 000. The admission of a new partner will result to which of the
following:
a. Goodwill is P20, 400
b. Bonus from Janna is P2, 400
c. Bonus to Hannah is P6, 000
d. Capital balance of Anna after admission is P150, 240
26. On June 1, 2011 the following payments were made by company A to the former owners and
officers of Company B
Cash paid, for settlement of pre-existing relationship
PN issued, for remuneration for future employee services

P300, 000
1, 200, 000

Cash paid, for reimbursement for paying

The acquirers acquisition costs

800, 000

Also company A issued 300, 000 shares with par value of P10 per share and market price of P45
per share in exchange for 60% ownership of the outstanding shares of company B the net assets
of Company B on this date is P24, 375, 000. Company opted to use the partial goodwill method
in this transaction in addition, Company A incurred the following expenditures cost to issue
equity amounting to P900, 000. Professional fees paid to independent values. P280, 000.
Professional fees paid to lawyers taking part in the negotiation process- P350, 000. Fess to
accountant of processing SEC registration of shares P60, 000. Fees to advisors and bankers P230,
000 since the parties cannot agree on true value of the acquire on the date of acquisition they
contractually agreed that additional consideration of P8, 000, 000 will be paid in the event the
net earnings of Company B reaches an average of p27, 000, 000 monthly for the next 6 months.
On June 1, an estimate of the fair value of the liability is 2, 750, 000 it is assets as a possible
obligation the payment did not materialize due to underperformance against the target during
this period
What should be the amount of goodwill (gain) in the December 31, 2011 consolidated
statements of financial position as a result of this acquisition?
a. 2, 450, 000
b. 75, 000
c. (P1, 125, 000)
d. 1, 625, 000
27. The following information is available concerning random Inc. On the date the company entered
bankruptcy proceedings:
Account
Cash
Accounts receivable
Inventory
Prepaid expenses
Building net
Equipment net
Goodwill
Wages payable
Taxes payable
Accounts payable
Notes payable
Common stock
Deficit

balance per books

5, 720
104, 520
56, 000
8, 600
118, 000
11, 200
15, 300
5,000
3, 620
158, 000
30, 300
144, 000
21, 580

Inventory with a book value of 40, 000 is a security for notes of P20, 200 the other notes are
secured by the equipment
Expected realizable values of the assets are:
Accounts receivable
Inventory
Buildings
Equipment

P88, 200
37, 000
45, 000
4, 000

What is the expected amount of cash partially secured creditors will receive?
a. P10, 100
b. P5, 468
c. P9, 468
d. P9, 788
28. Ghost Fighter corp. operates a branch in Baguio city. At close of the business on Dec. 31, 2010
Baguio branch account in the home office books showed a debit balance of P485, 600 the
interoffice accounts were in agreement at the beginning of the year. For purposes of reconciling
the inter office accounts, the following facts were ascertained
a. A branch customer remitted P10, 000 to the home office. The home office recorded this
cash collection on Dec. 21, 2010 upon receiving a credit memo the branch recorded the
transaction twice on Dec. 23, 2010
b. A home office customer remitted P12, 000 to the branch. The branch inadvertently
recorded this transaction on Dec. 26, 2010 as a transfer of cash from the home office. The
home office made no entry during the year.
c. Branch collections of P75, 000 were deposited for the account of the home office on Dec.
29, 2010; sixty percent was credited on the home office bank account as of Jan. 9, 2011 and
the balance was returned to the depositor marked NSF
d. Merchandise shipments of P200, 000 made by the home office on Dec. 28, 2010 were
received by the branch on Jan. 24, 2011. However, only ninety percent of this shipment was
charged by the home office to Baguio branch; the balance was debited to other branch
Compute the unadjusted balance of the home office current account as of Dec. 31, 2010
a. 442, 600
b. 232, 600
c. 242, 600
d. 212, 600
29. Prominence Inc. Is a contractor for the fabrication of motor service centres at the end of 2010
the following projects were in progress

Project 1
Project 2
Project 3

Contract price
P3, 800, 000
9, 000, 000
13, 250, 000

cost incurred
2, 070, 000
5, 670, 000
1, 800, 000

estimated cost to complete

1, 380, 000
2, 430, 000
10, 200, 000

During the year 2011, the following cost was incurred:

Project 1- P1, 030, 000 (estimated cost to complete, P776, 000)
Project 2- P2, 580, 000 (project completed)
Project 3- P5, 700, 000 (estimated cost to complete P5, 000, 000)
Project 4- P1, 500, 000 (contract price, P7, 200, 000; estimated cost to complete, P4, 500, 000)
Using the zero profit method, the total gross profit to be reported in 2011 would be:
a. P0
b. P675, 000
c. P750, 000
d. P825, 000
30. XYZ company is engaged in merchandising both at home office in mania and branch in Davao.
Selected accounts in the trial balances of the home office. And the branch at December 31, 2010
follows:
Debits
Inventory, January
Branch current
Purchases
Shipment from Home office
Freight in from home office
Sundry expenses

Home office
115, 000
291, 500
950, 000

250, 000

branch
57, 750

525, 000
27, 500
125, 000

Credits
Home office current
266, 500
Sales
775, 000
700, 000
Shipments to branch
550, 000
Allowance for overvaluation of branch inventory
Jan. 1
5, 000
Additional information:
Davao branch receives all its merchandise from the home office. The home office bills the goods
at cost plus 10% mark up. At December 31, 2010 a shipment with a billing rice of P25, 000 was in
transit to the branch. Freight on this shipment was P1, 250 which is to be treated as part of
inventory
December 31, 2010 inventories, excluding the shipment in transit was:

Home office at cost

Davao branch at billed value (excluding freight of P2, 600)

150, 000
52, 000

Refer to data above the true net income of the branch:

a. 52, 350
b. 57, 350
c. 62, 350
d. 67, 350
31. Examination of the reciprocal accounts between Manila Home office and Cebu branch shows
the following:
I.
P10, 000 advertising expense of another branch was erroneously charged by the home
office to Cebu branch
II.
Cebu recorded shipment of merchandise form Home office amounting to P75, 000 twice
III.
Home office recorded cash transfer of P65, 700 from Cebu branch as coming from
Davao branch
IV.
Transfer of equipment from Home office amounting to P53, 000 was not recorded by
the branch
V.
Cebu recorded a debit memo from Home office of P5, 540 as P5, 450
How much is the net adjustment to Cebu branch current account and to the Home office current
account?
Cebu branch current account

home office account

a. P75, 700DR
P20, 910 DR
b. 75, 700CR
21, 910DR
c. 75, 700DR
21, 910 CR
d. 65, 700 CR
22, 000 CR
32. On April 1, 2011, the R and R company paid P30, 000, 000 to the number stockholders of S&S to
acquire 75% ownership interest (representing 135, 000 shares outstanding of S&S) in a
transaction properly accounted for as acquisition on this date, the asset and liabilities of S&S
company were as follows:
Cash
Inventories
Plant asset
Liabilities

1, 200, 00
7, 500, 000
31, 000, 000
13, 500, 000

Furthermore it was determined that the merchandise inventory of S&S company had a fair
market value of P8, 250, 000 and the plant assets of P25, 650, 000 what should be the amount
reflected as goodwill (gain) by R&R company in its separate financial statements as a result of
the business combination?

The NCI is initially measured at fair value Quoted price on the date of acquisition of S&S shares
is at P175, 000 per share.
a. P0
b. P16, 275, 000
c. P13, 800, 000
d. P18, 400, 000
33. On January 1, 2010 congratulation Inc. Issues 12, 000 shares of its P10 par value stock to acquire
the net assets of successful Inc. Underlying book value and fair value information for the balance
sheet items of successful at the time of acquisition are as follows:
Book value
fair value
Cash
P80, 000
P80, 000
Accounts receivable
120, 000
120, 000
Inventory
60, 000
115, 000
Land
50, 000
70, 000
Building and equipment
400, 000
350, 000
Less: accumulated depreciation (120, 000)
Total assets
590, 000
735, 000
Accounts payable
30, 000
30, 000
Bonds payable
200, 000
180, 000
Common stock (P5 par value) 150, 000
Additional paid in capital
70, 000
Retained earnings
140, 000
Total liabilities and equities
590, 000
Successful Inc. Shares were selling at P18 and congratulations Inc. Were selling at P50 just
before the merger announcement. Additional cash payment made by congratulations Inc. In
completing the acquisition were:
Brokers fee paid to firm that located successful
Engagement fee on agreed upon procedures for share issuance
Legal fees for the merger
Cost of SEC registration of congratulations shares

P15, 000
10, 000
12, 000
7, 000

What is the amount of additional paid in capital by congratulations related to the issuance of
shares?
a. P463, 000
b. P436, 000
c. P448, 000
d. P473, 000
34. Cinco a partner of Antonio and Danna decided to withdraw from the ACD partnership Cincos
shares in the profit and losses was 25% while that of Antonio and Danna are 50% and 25%

respectively. In the final settlement of his interest he was paid 9500, although the capital
balance before his retirement was only 85, 000 the 10, 000 difference implied that an
equipment of the partnership was undervalued prior to recording Cincos withdrawal and
adjustment was made by the partnership to bring the equipment to its fair value
The total of partner capital before any adjustment and before Cinco withdrawal was 340, 000
what would be the partnerhip net asset after the withdrawal of Cinco?
a. 285, 000
b. 245, 000
c. 295, 000
d. 325, 000
35. The following data were taken from the statement of realization and liquidation of ABC corp. For
the quarter ended June 30, 2010
Asset to be realized
Supplementary credits
Liabilities to be liquidated
Supplementary charges
Liabilities not liquidated
Liabilities liquidated
Assets acquired
Assets realized
Liabilities assumed
Assets not realized

P160, 000
220, 000
160, 000
196, 000
60, 000
200, 000
80, 000
60, 000
100, 000
180, 000

The ending capital balances of capital stock and retained earnings are P200, 000 and P36, 000
respectively. How much is the ending balance of cash?
a. P118 000
b. P70, 000
c. P116, 000
d. P90, 000