1. A, B, and C are forming a partnership.

The fair value of the assets contributed is P60,000, P80,000,

and P100,000 respectively. In addition, A and B agree that C’s experience is worth P30,000. The
partners desire to apply the bonus method where applicable. What is the total capital recorded at
the date the partnership is formed?

2. A, B, and C are decided to engage in a real estate venture as a partnership. A invested P100,000
cash and B provided office equipment that is carried on his books at P82,000. The partners agree
that the equipment has a fair value of P110,000. There is a P30,000 note payable remaining on the
equipment to be assumed by the partnership. Although C has no physical assets to invest in the
partnership, both A and B believe that his experience as a real estate appraiser is a valuable skill
needed by the partnership and is a basis for granting her a capital interest in the partnership.
Assuming each partner is to receive an equal capital interest in the partnership, under the bonus
method, what should be recorded as the capital for C at the formation of the partnership?

3. The capital balance for A is P131,250 and for B is P45,000. These two partners share profits and
losses 70% to A and 30% to B. A needs money and agrees to assign 20% of his interest in the
partnership to C for P30,000. C invests another P27,750 in cash into the partnership for a 25%
ownership. The bonus method will be used. What is A’s capital after C’s investment?

4. A, B, and C are partners in the company with profit and loss ratio of 5:2:3. The three partners have
capital account balances of P80,000, P30,000, P20,000. The partnership have available P60,000
cash and P150,000 non-cash assets. The partners agreed to dissolve the partnership after selling
all non-cash assets for P40,000. Assume that all partners are insolvent. On dissolution of the
partnership, how much cash A should receive?

5. A partnership had cash amounting to 50,000 and non-cash assets with a book value and fair value
of 160,000. The capital balances of A, B, and C are P70,000, P30,000, and P50,000. Assuming
profits and losses are allocated equally, how much cash would A receive on the P50,000 of cash
available be distributed?

6. Jeyms, Nadyne and Issa formed a partnership on January 1, 2019, with investments of P100,000,
P150,000 and P200,000, respectively. For division of income, they agreed to (1) Interest of 10% of
the beginning capital balance each year, (2) Annual compensation of P10,000 to Nadine and (3)
sharing the remainder of the income or loss in a ratio of 20% for James and 40% each for Nadine
and Issa. Net Income was P150,000 in 2019 and P180,000 in 2020. Each partner withdrew P1,000
for personal use every month during 2014 and 2015. What was Issa’s capital balance at the end of
2019?

7. Kathniel partnership has the following accounting Amounts: sales of P70,000, Cost of Good sold of
P40,000, Operating expenses of P10,000, salary allocation to partners of P13,000, interest paid to
banks of P2,000 and Partners’ withdrawals of P8,000. What is the amount of partnership net
income (loss)?

8. Elsa Droga, a partner in the Tok-heng partnership, has a 30% participation in partnership profits
and losses. Droga’s capital account had a net decrease of P60,000 during the calendar year 2020.
During 2020, Elsa withdrew P130,000 (charged against capital account) and contributed property
valued at P25,000 to the partnership. What was the net income of the Tok-heng Partnership for
2020?
9. Edward and Marco are partners operating an electronics repair shop. For 2020, net income, after
salaries expense of P150,000 was P50,000. Edward and Marco have salary allowances of P90,000
and P60,000, respectively, and remaining profits and losses are shared 6:4. The division of salaries
and share of profits in total to Edward and Marco would be?

10. Marina is a partner in a local partnership. The profit and loss sharing agreement includes an interest
allocation of 7% on the invested capital. The capital account of Marina reveals that she had a
beginning capital account balance of P50,000. She made a temporary withdrawal of P10,000 on
May 1 and invested P25,000 on October 31. Rounded to the nearest peso, what is Marina’s
weighted average capital balance?

11. On December 31, 2019, the Marine Company showed a cash and cash equivalents balance of
P1,467,000 which includes the following: demand deposit of P480,000; time deposit of P338,300
that cannot be withdrawn until after March 30, 2017; undeposited customer’s check, P30,000;
customer NSF check, P2,000; deposit of P130,000 in foreign bank – unavailable; overdraft of
P10,000 in another bank; time deposit of P30,000 in a closed loan association; cash advances to
officers, P24,000.

What is the correct “cash and cash equivalents” balance for December 31, 2019 statement of
financial position?

12. Pine Co. reported a total cash and cash equivalents of P5,630,000 on December 31, 2019, which
includes the following:
a. A check from customer that is dated January 10, 2017 in the amount of P96,500.
b. A commercial paper of P1,680,000 which is due in 90 days.
c. Three certificates of deposits, each totaling P250,000. These certificates of deposit have a
maturity of 120 days.
d. Currency and coins on hand amounted to P12,750.

How much is the correct amount of cash and cash equivalents that Pine Co. should report in its
December 31, 2019 statement of financial position?

13. Bond Company reported petty cash fun which comprised the following:
Coins and currency P2,800
Paid vouchers:
Transportation P700
Gasoline 400
Office supplies 600
Postage stamps 200
Due from employees 1,200 3,100
Manager’s check returned by bank marked “NSF” 2,000
Check drawn by the entity to the order of petty cash custodian 1,900

What is the correct amount of petty cash fund for statement presentation purposes?
14. On March 1, 2019, Sunder Co. established a petty cash account and designated Alex Smith as
petty cash custodian. The original amount included in the petty cash fund custodian. The original
amount included in the petty cash fund is P20,000. During the month of March, the following
disbursements were made from the fund:
Office supplies P7,820
Postage 3,640
Transportation 2,370

The balance in the petty cash box is P5,000. If there was no replenishment made on March 31, 2019,
what is the amount of petty cash fund to be recorded for the correct balance of petty cash fund?

15. The following information pertains to Dex Corp. as of December 31, 2019:
Cash balance per bank statement P3,250,000
Deposit in transit 1,300,000
Checks outstanding (including certified check of P200,000) 500,000
Customer note collected by bank for Dex 340,000
NSF checks of customers returned by bank 170,000
Bank service charge shown in December bank statement 15,000
Error made by Dex in recording a check that cleared the bank in December
(check was drawn in December for P80,000 but recorded at P8,000) 72,000

What is the cash balance per ledger on December 31, 2019?

16. Tonic Company received the bank statement for the month of April which included the following
information:
Bank service charge for April P15,000
Check deposited by Tonic during April was not collectible and has
been marked “NSF” by the bank and returned 40,000
Deposits made but not yet recorded by bank 130,000
Checks written and mailed but not yet recorded by bank 100,000

The entity found a customer check for P35,000 payable to the entity that had not yet been
deposited and had not been recorded. The general ledger showed a bank account balance of
P920,000.

What is the adjusted cash in bank on April 30?

17. The July bank statement of Fiction Company showed an ending balance of P187,387. During July,
the bank charged back NSF checks totaling P3,056, of which P1,865 had been redeposited and
cleared by July 31. Deposits in transit on July 31 were P20,400. Outstanding checks on July 31
were P60,645, including a P10,000 check which was the bank had certified on July 25. On July 10,
the bank charged Fiction’s account for P2,300 which should have been charged against the
account of Faction Corporation; the bank did not detect the error. During July, the bank collected
notes for Fiction, the proceeds were P8,684 and bank charges for this service were P19.
How much is the adjusted cash in bank balance of Fiction Company as of July 31, 2019?

18. Fiddle Co. Reported a balance of P43,000 in its Cash account at the end of September. There were
P20,000 deposits in transit and P15,000 outstanding checks. The bank statement showed a
balance of P50,000 including a note with a face value of P15,000 and P6,000 service charge.
 Assuming there were no other transactions, how much is the interest on the note collected by the
bank?

19. Ruby Co. estimated that 5% of year-end accounts receivable will be uncollectible. The total credit
sales for the year 2020 were P4,780,000. Accounts receivable as of January 1, 2020 amounted to
P648,200. Total collection for 2020 related to the receivables was P2,240,000. What amount should
Ruby Co., report as net realizable value of accounts receivable at December 31, 2020?

20. The following information was taken from the records of Chris Co. as of November 30, 2020:

Age Amount Percentage

Uncollectible
Not due P4,835,000 0%
1 – 30 days past due 1,753,000 1%
31 – 60 days past due 990,000 2%
61 – 90 days past due 670,000 3%
Over 90 days 245,000 8%
Chris had an unadjusted credit balance of P65,000 in its allowance for doubtful accounts as of that
date. How much is the required adjustment in the allowance for doubtful accounts as of November
30, 2020?

21. Andre Company sold merchandise on credit to Homer Corporation for P3,500,000 on May 1, 2020
with terms of 3/10, net/30. On May 8, 2020, Andre Company received a payment from Homer
amounting to P902,100. Andre received another payment of P809,950 and P620,800 on May 10
and May 11, respectively. On May 20, 2020, Homer Corporation paid the remaining balance on its
account, if discount is allowed on partial payment, what was the total amount of sales discounts
given to Homer Corporation during May 2020?

22. After reviewing the aging schedule of its accounts receivable at December 31, 2020, Jerry
Company found out that the net realizable value of the accounts receivable at that date was
P120,500. Additional information were as follows:

Accounts receivable at December 31, 2020 P167,000

Allowance for doubtful accounts at January 1, 2020-credit balance 23,000
Accounts written-off as uncollectible at October 1, 2020 17,300
Recovery in 2016 for accounts written-off in 2019 6,500

How much is the doubtful accounts expense of Jerry Company for the year ended December 31,
2016?

23. White Company sold a building on January 1, 2020 for P7,000,000. The entity received a cash
down payment of P1,000,000 and a 4-year, 12% note for the balance. The note is payable in equal
annual payments of principal and interest of P1,975,400, payable on December 31 of each year
until 2023. If payment was collected as scheduled, what is the balance of the note receivable in the
statement of financial position as of December 31, 2021?
24. Yellow Company has a 12% note receivable amounting to P2,400,000 dated September 1, 2020.
Annual payment of P800,000 principal plus accrued interest is due every August 31 of 2021, 2022,
2023. What is the balance of note receivable on August 31, 2020?

25. Maroon Company sold a delivery truck on December 31, 2020 to Green Company in exchange for
a non-interest bearing note requiring 3 annual payments of P600,000. Green made the first
payment on December 31, 2019. The market interest rate for similar note at the issuance date was
10%. What is the carrying value of the note receivable on December 31, 2021?

26. Orange Company sold equipment on January 1, 2020 with a carrying amount of P5,400,000 in
exchange for a P7,500,000 non-interest bearing note due on January 1, 2025. There was no
established selling price for the equipment. The prevailing rate of interest for a note of this type on
the date of issuance was 12%. What amount should be reported as interest income on December
31, 2021?

27. Meredith had the following transactions during December 2020:

Inventory shipped on consignment to Cristina Company P1,800,000
Freight paid by Meredith 90,000
Inventory received on consignment from Izzie Company 1,200,000
Freight paid by Izzie Company 50,000

No sales of consigned goods were made in December 2020. What amount should be included in
inventory on December 31, 2020?

28. Sloan & Grey Company incurred the following costs in relation to a certain product:
Direct Materials and Labor P180,000
Variable production overhead 25,000
Factory administrative costs 15,000
Fixed production costs 20,000

What is the correct measurement of the product?

29. The following was taken from accounting records of Karev Company for the year ended December
31, 2020:
Raw materials purchased P335,000
Direct labor payroll 172,000
Factory overhead 93,000
Freight Out 45,000
Increase in work in process inventory 75,000
Decrease in raw material inventory 55,000

What is the amount of goods manufactured?

30. On June 1, 2020, Bailey Company sold merchandise with a list price of P5,000,000 to Shepherd
Company on account. Bailey allowed trade discounts of 30% and 20%. Credit terms were 2/10,
n/30 and the sale was made FOB shipping point. Bailey prepaid P200,000 of delivery costs for
Shepherd as an accommodation. On June 11, 2020, on what amount was received by Bailey from
Shepherd as remittance in full?
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