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Financial Accounting Reporting

This document contains a practice exam for a financial accounting and reporting course. It includes 5 multiple choice questions that cover topics such as: [1] calculating interest on a partner's capital account balance; [2] determining a partner's share of partnership profits based on a profit sharing agreement; [3] deciding whether to accept a salary or salary plus bonus; [4] calculating a partner's capital balance after purchasing another partner's interest; and [5] determining the cash contribution needed for a new partner to obtain a certain ownership percentage in a partnership.

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99 views

Financial Accounting Reporting

This document contains a practice exam for a financial accounting and reporting course. It includes 5 multiple choice questions that cover topics such as: [1] calculating interest on a partner's capital account balance; [2] determining a partner's share of partnership profits based on a profit sharing agreement; [3] deciding whether to accept a salary or salary plus bonus; [4] calculating a partner's capital balance after purchasing another partner's interest; and [5] determining the cash contribution needed for a new partner to obtain a certain ownership percentage in a partnership.

Uploaded by

lc
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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NATIONAL UNIVERSITY – Manila

Financial Accounting and Reporting

Name: ___________________________ Score:________________


Section:________________________ Date:_________________
Schedule:_______________________

Finals: Seatwork No. 1

1. The partnership agreement of Reid and Simm provides that interest at 10% per year is to be credited
to each partner on the basis of weighted-average capital balances. A summary of Simm’s capital account
for the year-ended December 31, 2019, is as follows:

Balance, January 1 P140,000


Additional investment, July 1 40,000
Withdrawal, August 1 (15,000)
Balance, December 31 165,000

What amount of interest should be credited to Simm’s capital account for 2019?

2. XYZ partnership provided for the following in their distribution of profits and losses:

First: X to receive 10% of net income up to P100,000 and 20% of the amount in excess thereof.
Second: Y and Z each to receive 5% of the remaining income in excess of P150,000 after X’s
share
Finally: The balance is to be distributed equally to the three partners.

If the partnership earned a net income of P250,000 , what is the total share of Partner X?

3. Jay is trying to decide whether to accept a salary of P50,000 or salary of P30,000 plus a bonus of 10%
of net income after salaries and bonus as a means of allocating profit among partners. Salaries traceable
to the other partner are estimated to be P90,000. What amount of income would be necessary so that
Krish Jay would consider choices to be equal?

4. Ram purchases 50% of Lark’s capital interest in the D and L partnership for P22,000. If the capital
balances of Kim and Lark are P40,000 and P30,000, respectively, Ram’s capital balance following the
purchase is?

5. Mary admits Jane as a partner in the business. Balance sheet accounts of Mary just before the
admission of Jane show: Cash, P26,000, Accounts Receivable, P120,000, Merchandise Inventory,
P180,000 and Accounts Payable, P62,000. It was agreed that for purposes of establishing Mary’s
interest, the following adjustments be made: 1.) an allowance for doubtful accounts of 3% of accounts
receivable is to be established; 2.) merchandise inventory is to be adjusted upward by P25,000; and 3.)
prepaid expenses of P3,600 and accrued liabilities of P4,000 are to be recognized.

If Jane is to invest sufficient cash to obtain 2/5 interest in the partnership, how much would Jane
contribute to the new partnership?

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