Acctg13_Midterm_Quiz-Answer-key.pdf | Quizzes Advanced Accounting

Acctg 13

Midterm Quiz 1

1. Hunt, Rob, Turman and Kelly own a publishing company that they operate as a partnership. The partnership

agreement includes the following:

• Hunt receives a salary of P10,000 and a bonus of 3% of income after all bonuses.

• Rob receives a salary of P5,000 and a bonus of 2% of income after all bonuses.

• All partners are to receive 10% interest on their average capital balances.

The average capital balances are Hunt, P25,000; Rob, P22,500; Turman, P10,000 and Kelly, P23,500. Any remaining

profit and losses are to be allocated among the partners.

a. Hunt, P20,725; Rob, P14,975; Turman, P7,725; Kelly, P9,075

b. Hunt, P14,000; Rob, P8,250; Turman, P1,000; Kelly, P2,350

c. Hunt, P19,850; Rob, P14,600; Turman, P8,350; Kelly, P9,700

d. Cannot be determined.

2. PP and QQ are partners operating a chain of retail stores. The partnership agreement provides for the

following:

PP QQ

Salaries ………………………………………………… P5,000 P2,500

Interest on capital balances ………………… 10% 10%

Bonus …………………………………………………… 20% of net income

before interest but

after bonus & salaries

Remainder ……………………………………………. 30% 70%

The income summary account for year 2019 shows a credit balance of P25,000 before any deductions. Average

capital balances for PP and QQ are P25,000 and P37,500, respectively. The share of PP and QQ in the P25,500 net

income would be:

a. PP, P12,031.25; QQ, P13,468.75 c. PP, P11,750; QQ, P13,750

b. PP, P13,275.75; QQ, P12,229.25 d. PP, P13,125; QQ, P12,375

3. XX and YY formed a partnership on January 2, 2019 and agreed to share profits and loss in the ratio of 90%

and 10%, respectively. XX contributed capital of P6,250. YY contributed no capital but has a specialized

expertise and manages the firm full time. There were no withdrawals during the year. The partnership

agreement provides for the following:

• Capital accounts are to be credited annually with interest at 5% of the beginning capital

• YY is to be paid a salary of P250 a month

• YY is to receive a bonus of 20% of net income calculated before deducting his salary and interest on both

capital accounts

• Bonus, interest, and YY’s salary are to be considered as partnership expenses

The partnership’s income statement for 2019 follows:

Revenues …………………………………………………………………………… P24,112.50

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Acctg 13 Midterm Quiz 1

Hunt, Rob, Turman and Kelly own a publishing company that they operate as a partnership. The partnership agreement includes the following:

Hunt receives a salary of P10,000 and a bonus of 3% of income after all bonuses.
Rob receives a salary of P5,000 and a bonus of 2% of income after all bonuses.
All partners are to receive 10% interest on their average capital balances. The average capital balances are Hunt, P25,000; Rob, P22,500; Turman, P10,000 and Kelly, P23,500. Any remaining profit and losses are to be allocated among the partners. a. Hunt, P20,725; Rob, P14,975; Turman, P7,725; Kelly, P9, b. Hunt, P14,000; Rob, P8,250; Turman, P1,000; Kelly, P2, c. Hunt, P19,850; Rob, P14,600; Turman, P8,350; Kelly, P9, d. Cannot be determined.

PP and QQ are partners operating a chain of retail stores. The partnership agreement provides for the following: PP QQ Salaries ………………………………………………… P5,000 P2, Interest on capital balances ………………… 10% 10% Bonus …………………………………………………… 20% of net income before interest but after bonus & salaries Remainder ……………………………………………. 30% 70% The income summary account for year 2019 shows a credit balance of P25,000 before any deductions. Average capital balances for PP and QQ are P25,000 and P37,500, respectively. The share of PP and QQ in the P25,500 net income would be: a. PP, P12,031.25; QQ, P13,468.75 c. PP, P11,750; QQ, P13, b. PP, P13,275.75; QQ, P12,229.25 d. PP, P13,125; QQ, P12,
XX and YY formed a partnership on January 2, 2019 and agreed to share profits and loss in the ratio of 90% and 10%, respectively. XX contributed capital of P6,250. YY contributed no capital but has a specialized expertise and manages the firm full time. There were no withdrawals during the year. The partnership agreement provides for the following:

Capital accounts are to be credited annually with interest at 5% of the beginning capital
YY is to be paid a salary of P250 a month
YY is to receive a bonus of 20% of net income calculated before deducting his salary and interest on both capital accounts
Bonus, interest, and YY’s salary are to be considered as partnership expenses The partnership’s income statement for 2019 follows: Revenues …………………………………………………………………………… P24,112.

Less: Expenses (including salary, interest, and bonus)…… 12,425. Net Income ………………………………………………………………………… 11,687. What is YY’s 2019 bonus? a. P2,922.00 c. P3,750. b. P3,000.00 d. P3,934.

How much is the total share of YY on the 2019 partnership net income? a. P7,084.50 c. P7,918. b. P7,162.50 d. P8,097.
The Trading Company, a partnership, was formed on January 1, 2019, with four partners, DD, EE, FF, and GG. Capital contributions were as follows: DD, P25,000; EE, P12,500; FF, P12,500; GG, P10,000. The partnership agreement provides that partners shall receive 5% interest in the amounts of their capital contributions. In addition, DD is to receive a salary of P2,500 and EE a salary of P1,500. The agreement further provides that FF shall receive a minimum of P1,250 per annum from the partnership and GG a minimum of P3,000 per annum, both including amounts allowed as interest on capital and their respective shares of profits. The balance of the profits is to be shared in the following proportions: DD, 30%; EE, 30%; FF, 20%; and GG, 20%. Calculate the amount that must be earned by the partnership during 2019, before any charges for interest on capital or partners’ salaries, in order that DD may receive an aggregate of P6, including interest, salaries and share of profits. a. P 8,333.33 c. P15,333. b. P 15,000.00 d. P16,166.
Derha, a senior partner in a law firm, has a 30% participation in the firm’s profit and losses. During 2018, Derha withdrew P130,000 against her capital but contributed property with a fair value of P25,000. Derha’s capital increased by P15,000 during 2018. The net income of the partnership for 2018 is a. P150,000 c. P.350, b. P400,000 d. P550,
Elmo, Fred and Greg invest P40,000, P30,000 and P25,000 respectively, in a partnership on June 30, 2017. They agree to divide net income or loss as follows: A. Interest at 10% on beginning capital account balances B. Salaries of P10,000, P8,000 and P6,000, respectively to Elmo, Fred and Greg, respectively. C. Remaining net income or loss is divided equally D. A minimum of P18,000 of income is guaranteed to Greg regardless of the result of operations. E. If the net income for the year ended June 30, 2018 before interest and salaries allowances to partners was P44,000, the amount of the net income credited to Elmo is: a. P21,875 c. P18, b. P20,000 d. P14,
X, Y and Z are partners with average capital balances during 2018 of P120,000, P60,000 and P40,000, respectively. Partners receive 10% interest on their average capital balances. After deducting salaries of P30,000 to X and P20,000 to Y, the residual profit or loss is divided equally. In 2018 the partnership sustained a P33,000 loss before interest and salaries to partners. By what amount should X’s capital account change? a. P7,000 increase c. P11,000 decrease b. P35,000 decrease d. P42,000 increase
A partnership begins first year with the following capital balances: Arthur, capital P 60, Baxter, capital 80, Cartwright, capital 100,

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