Par Cor Midterm

Malakas and Maganda formed a partnership. Malakas contributed cash of P1,000,000 and computer equipment that cost P600,000. The fair value of the computer is P500,000. Malakas has notes payable on computer of P100,000 to be assumed by the partnership. Malakas is to have 60% capital interest in the partnership. Maganda contributed P900,000 only. The partners agreed to share profits and loss equally. Malakas should make an additional investment or (withdrawal of)?

• 150,000

• (150,000)

• 50,000

• (50,000)

Love and Care started a partnership. Love contributed a building that she purchased 10 years ago for P100,000. The accumulated depreciation on the building on the date of formation of the partnership is P25,000 and the fair value is P110,000. For what amount will Love’s capital account be credited on the books of the partnership?

• P100,000

• P75,000

• P110,000

• P85,000

Love and Hate formed a partnership on April 1. Love contributed cash P150,000, while Hate contributed P50,000 cash and land worth P310,000. The land was subject to a mortgage of P30,000 which was assumed by the partnership. Under the partnership agreement, Love and Hate will share profit and loss ratio of one-third and two-thirds respectively. Hate’s capital account on April 1 should be:

• P330,000

• P675,000

• P360,000

• P320,000

Statement 1: A partner by estoppel is one who is actually not a partner but represents himself as one.

Statement 2: A secret partner is one who does not take active part in the partnership business and not known as a partner

Which is true?

• Statement 1 only

• Statement 2 only

• Both statements

• None of the two statements

The person who assumes full co-ownership of a partnership including unlimited liability is a:

• Sole proprietor

• Shareholder

• Limited partner

• General partner

Forgive and Forget formed a partnership. Forgive contributed cash of P300,000 and an equipment costing P600,000. Forget contributed land costing P600,000. The current market value of the assets are as follows: equipment – P450,000; land – P750,000. The partnership will assume a P150,000 liability on the land contributed by Forget. The capital accounts will be credited as:

• Forgive – P900,000; Forget – P450,000

• Forgive – P300,000; Forget – P750,000

• Forgive – P750,000; Forget – P600,000

• Forgive – P300,000; Forget – P600,000

A partner who takes active part in the business but whose connection with the partnership is concealed to the public is known as a (an):

• Silent partner

• Secret partner

• Nominal partner

• Ostensible partner

A partnership which has failed to comply with one or more of the legal requirements for its establishment is classified as a (an)

• Open partnership

• De jure partnership

• De facto partnership

• Secret partnership

On July 1 Tender and Care formed a partnership, agreeing to share profits and losses in the ratio of 4:6 respectively. Tender contributed a parcel of land that cost 25,000. Care contributed P50,000 cash. The land was sold for P50,000 on July 1, three hours after formation of the partnership. How much should be recorded in Tender’s capital account on formation of the partnership?

• P50,000

• P20,000

• P25,000

• P10,000

On April 30, 2019, Good, Better and Best formed a partnership by combining their separate business proprietorships. Good contributed cash of P50,000. Better contributed property with a P36,000 carrying amount, a P40,000 original cost, and P80,000 fair value. The partnership assumed the P35,000 mortgage attached to the property. Best contributed equipment with a P30,000 carrying amount, a P75,000 original cost, and P55,000 fair value. The partnership agreement specified that profits and losses are to be shared equally. Which partner has the largest April 30, 2019, capital account balance?

• Good

• Better

• Best

• All capital account balances are equal