Name:________________________ Class: ___________ Date: ___________

PARTNERSHIP REVIEWER
TRUE/FALSE
Indicate whether the statement is true or false.
1. There are only four legal structures to form and operate a business.
2. In a general partnership, each partner is individually liable to creditors for debts incurred by
the partnership, to the extent of the partner's capital balance.
3. A partnership is a legal entity separate from its owners.
4. A partnership is subject to income taxes.
5. A disadvantage of partnerships is the mutual agency of all partners.
6. Each partnership must have a written partnership agreement.
7. Each partner may withdraw the assets he or she contributed to the partnership at any time.
8. When compared to a corporation, one of the major disadvantages of the partnership is its
limited life.
9. When compared to a corporation, one of the major advantages of a partnership is its ease of
formation.
10.
Under a Subchapter S Corporation, the IFRS allows income to pass through the
corporation to the individual stockholders without the corporation having to pay taxes on the
income.
11. A Limited Liability Corporation is a business entity form designed to overcome some of the
disadvantages of the corporation and the partnership forms.
12. For tax purposes, a Limited Liability Company may elect to be treated as a partnership.
13. The Limited Liability Company may elect to be manager managed rather than member
managed which means that only authorized members may legally bind the corporation.
14. Each partner has a separate capital and withdrawal account.
15. The chart of accounts for a partnership, with the exception of drawing and capital accounts,
does not differ from the chart of accounts for a sole proprietorship.
16. When the profit allocation is based on capital contribution, the allocation of profit
forindustrial partner is at lowest available rate of division of profit in the partnership.
17. The equity reporting for a Limited Liability Corporation is similar to that of a partnership but
the changes in capital are shown on a statement of members' equity.
18. When a partner invests noncash assets in a partnership, the assets are recorded at the
partner's book value.
19. Accounts receivable contributed to the partnership are recorded at their face value.

20. A new partner contributes accounts receivable to a partnership which appear in the ledger
of his sole proprietorship at $ 20,500 and there was an allowance for doubtful accounts of $
750. If $600 of the accounts receivables are completely worthless, the partnership accounts
receivable should be debited for $19,900.
21. One reason that distributions of income and loss are prepared is to obtain the information to
record a closing entry.
22. If nothing is stated, partnership income is divided in proportion to the individual partner's
capital balance.
23. The salary allocation to partners used in dividing net income would also appear as salary
expense on the partnership income statement.
24. If the articles of partnership provide for annual salary allowances of $36,000 and $18,000 to
X and Y respectively and net income is $30,000, X's share of net income is $20,000.
25. If the net income of a partnership is less than the total of the allowances provided by the
partnership agreement, the difference must be divided among the partners in the incomesharing ratio.
26. The amount that a partner withdraws as a monthly salary allowance does not affect the
division of net income.
27. A devotes full time and B devotes one-half time to their partnership. If the partnership
agreement is silent concerning the division of net income, A will receive a $20,000 share of a
net income of $30,000.
28.

In the distribution of income, the net income is less than the salary and interest
allowances granted, the remaining balance will be a negative amount that must be divided
among the partners as though it were a loss.

29. Details of the division of partnership income should normally be disclosed in the financial
statements.
30. Whenever a partnership is dissolved, the assets are liquidated.
31. When a partnership dissolves, a new partnership is formed and a new partnership
agreement should be prepared.
32. Many partnerships provide for the admission of new partners or withdrawals of present
partners in the partnership agreement so that the firm may continue to operate without
executing a new agreement.
33. A person may be admitted to a partnership only with the consent of all the current partners.
34. Partnership's asset accounts should be changed from cost to fair market value when a new
partner is admitted to a firm or an existing partner withdraws and dies.
35. In admitting a new partner, the company chooses to use the purchase of an interest method,
the capital interest of the new partner is obtained from the current partners and both the
total assets and total capital are increased.
36. When a new partner purchases the entire interest of an old partner, the new partner's capital
account should be credited for the amount he or she paid to the old partner.

37. If a new partner is given a 20% interest in the firm then the new partner will receive a 20%
interest in earnings.
38. When a new partner is admitted by making an investment in the partnership, the old
partners' capital accounts are always credited.
39. When a new partner is admitted by making an investment of assets in the partnership and
the new partner has to pay a premium for admission, a bonus is divided among the old
partners' capital accounts.
40. Williams has a capital balance of $42,000 after adjusting the assets to fair market value.
Mantle contributes $22,000 to receive a 30% interest in the new partnership. The bonus paid
by Mantle is $2,800.
41. When a partner withdraws from the partnership, the partnership dissolves.
42. If not enough partnership cash or other assets are available to pay the withdrawing partner,
a liability may be created for the amount owed the withdrawing partner.
43. When a partner withdraws from the partnership by selling his or her interest back to the
partnership, the remaining partners must pay the withdrawing partner a specified amount
from their personal assets.
44. X sells to A one-half of a partnership capital interest that totals $70,000 for $40,000. A's
capital account in the partnership should be credited for $40,000.
45. When a new partner is admitted to a partnership, all partnership assets should be revised to
reflect current prices.
46. If a new partner is to be admitted to a partnership and a bonus is attributed to the old
partnership, the bonus should be divided between the capital accounts of the original
partners according to their capital balances.
47. If retiring partner A sells his or her interest to B, the partnership should record the assets
paid to A in its accounts at their book values.
48. When a new partner is admitted to a partnership, bonuses attributable to either the old
partnership or to the incoming partner may be recognized in accordance with the agreement
among the partners.
49. Dissolution is the term which solely means to liquidate the partnership.
50. In a partnership liquidation, gains and losses on the sale of partnership assets are divided
among the partners' capital accounts on the basis of their capital balances.
51. If the share of losses on realization of the sale of noncash assets exceed the balance in a
partner's capital account, the resulting balance is called a deficiency.
52. In a partnership liquidation, if a partner has a debit capital balance in his or her capital
account, he or she is responsible for contributing personal assets sufficient to eliminate the
deficit.
53. The process of winding up the affairs of a partnership is referred to as realization.
54. The distribution of cash, as the final process in winding up the affairs of a partnership, is
based on the income-sharing ratio.

55. If a partner's capital balance is a debit after it has absorbed its share of the loss on
realization, the balance is referred to as a deficiency.
56. In the liquidating process, any uncollected cash becomes a loss to the partnership and is
divided among the remaining partners' capital balances based on their income-sharing ratio.
57. After all noncash assets have been converted to cash and all liabilities paid, A, B, and C have
capital balances of $10,000 (debit), $5,000 (debit), and $25,000 (credit). The cash available
for distribution to the partners is $10,000.
58. After all noncash assets have been converted to cash and all liabilities paid, A, B, and C have
capital balances of $15,000 (credit), $10,000 (debit), and $30,000 (credit). C's share of the
cash to be distributed is $30,000.

MULTIPLE CHOICE
Identify the choice that best completes the statement or answers the question.
1. FORMATION
Which of the following is characteristic of a general partnership?
a. The partners have co-ownership of partnership property.
b. The partnership is subject to income tax.
c. The partnership has an unlimited life.
d. The partners have limited liability.
2. FORMATION
Which of the following is not a characteristic of a general partnership?
a. the partnership is created by a contract
b. mutual agency
c. partners share equally in net income or net losses unless an agreement states
differently
d. dissolution occurs only when all partners agree
3. FORMATION
Which of the following is an advantage of a partnership when compared to a corporation?
a. The partnership is more likely have a net income.
b. The partnership is relatively inexpensive to organize.
c. The partnership involves fewer people to operate.
d. The partnership usually hires professional managers.
4. FORMATION
Which of the following is a disadvantage of a partnership when compared to a corporation?
a. The partnership is more likely to have a net loss.
b. The partnership is easier to organize.
c. The partnership is less expensive to organize.
d. The partnership has limited life.
5. FORMATION
An advantage of the partnership form of business organization is
a. unlimited liability
b. mutual agency
c. ease of formation

d. limited life
6. FORMATION
The characteristic of a partnership that gives the authority to any partner to legally bind the
partnership and all other partners to business contracts is called
a. unlimited liability
b. ease of formation
c. mutual agency
d. dissolution
7. FORMATION
When a limited partnership is formed
a. the partnership activities are limited
b. all partners have limited liability
c. some of the partners have limited liability
d. none of the partners have limited liability
8. FORMATION
Which of the following below is not one of the four major forms of business entities that are
discussed in this chapter?
a. sole proprietorship
b. corporation
c. partnership
d. subchapter s corporation
9. FORMATION
Which of the following below isnota characteristic of a Limited Liability Company?
a. limited life
b. limited liability
c. file articles of organization with the state government
d. avoids mutual agency
10. FORMATION
Accounting for the day-to-day activities for a partnership or Limited Liability Company is
a. the same as the accounting for any other form of business
b. the same as the accounting for a sole proprietorship only
c. is not the same as the accounting for any other form of business
d. the same as the accounting for a corporation only
11. FORMATION
When a partnership is formed, assets contributed by the partners should be recorded on the
partnership books at their
a. book values on the partners' books prior to their being contributed to the
partnership
b. fair market value at the time of the contribution
c. original costs to the partner contributing them
d. assessed values for property purposes
12.

FORMATION
As part of the initial investment, a partner contributes equipment that had originally cost
$100,000 and on which accumulated depreciation of $75,000 has been recorded. If similar
equipment would cost $150,000 to replace and the partners agree on a valuation of $40,000
for the contributed equipment, what amount should be debited to the equipment account?
a. $40,000
b. $150,000
c. $100,000
d. $75,000

13. FORMATION
As part of the initial investment, Oswald contributes accounts receivable that had a balance
of $25,000 in the accounts of a sole proprietorship. Of this amount, $1,250 is completely
worthless. For the remaining accounts, the partnership will establish a provision for possible
future uncollectible accounts of $750. The amount debited to Accounts Receivable for the
new partnership is
a. $23,000
b. $25,000
c. $24,250
d. $23,750
14. PROFIT AND LOSS ALLOCATION
Jack and Jill share income and losses in a 2:1 ratio after allowing for salaries to Jack of
$24,000 and $30,000 to Jill. Net income for the partnership is $48,000. Income should be
divided as follows:
a. Jack, $24,000; Jill, $24,000
b. Jack, $21,000; Jill, $27,000
c. Jack, $32,000; Jill, $16,000
d. Jack, $20,000; Jill, $28,000
15. PROFIT AND LOSS ALLOCATION
Fred and Ethel share income equally. During the current year the partnership net income
was $40,000. Fred made withdrawals of $12,000 and Ethel made withdrawals of $17,000.
At the beginning of the year, the capital account balances were: Fred capital, $42,000; Ethel
capital, $58,000. Fred's capital account balance at the end of the year is
a. $76,500
b. $64,500
c. $62,000
d. $50,000
16. PROFIT AND LOSS ALLOCATION
Partnership income and losses are usually divided on the basis of interest, salaries, and
stated ratios because
a. partners seldom contribute time and resources equally
b. this method reflects the amount of time devoted to the partnership by the
partners
c. it is simpler than following the legal rules
d. it prevents arguments among the partners
17. PROFIT AND LOSS ALLOCATION
A ratio of 3:2:1 is the same as
a. 30%:20%:10%
b. 1/2:1/3:1/6
c. 3/10:2/10:1/20
d. both (a) and (c)
18. DISSOLUTION-ADMISSION
C and D form a partnership in which C contributes $50,000 in assets and agrees to devote
half time to the partnership. D contributed $40,000 in assets and agrees to devote full time
to the partnership. How will C and D share in the division of income?
a. 5:8
b. 1:2
c. 1:1
d. 5:4
19. PROFIT AND LOSS ALLOCATION

X and Y have original investments of $50,000 and $100,000 respectively in a partnership.

The articles of partnership include the following provisions regarding the division of net
income: interest on original investment at 10%, salary allowances of $27,000 and $18,000
respectively, and the remainder equally. How much of the net income of $90,000 is allocated
to X?
a. $60,000
b. $43,000
c. $45,000
d. $47,000
20. PROFIT AND LOSS ALLOCATION
X and Y have original investments of $50,000 and $100,000 respectively in a partnership.
The articles of partnership include the following provisions regarding the division of net
income: interest on original investment at 10%, salary allowances of $27,000 and $18,000
respectively, and the remainder equally. How much of the net income of $50,000 is
allocated to X?
a.
b.
c.
d.

$33,333
$23,000
$25,000
$27,000

21. PROFIT AND LOSS ALLOCATION

X and Y have original investments of $50,000 and $100,000 respectively in a partnership.
The articles of partnership include the following provisions regarding the division of net
income: interest on original investment at 10%, salary allowances of $27,000 and $18,000
respectively, and the remainder equally. How much of the net loss of $10,000 is allocated to
X?
a. $10,000
b. $3,000
c. $5,000
d. $7,000
22. PROFIT AND LOSS ALLOCATION-STATEMENT OF PARTNERS EQUITY
The articles of partnership for A B Partnership provide for a salary allowance of $5,000 per
month for partner B, with the balance of net income to be divided equally. If B made an
additional investment of $10,000 during the year and withdrew $4,000 per month, and net
income for the year was $90,000, by what amount did B's capital increase during the year?
a. $85,000
b. $10,000
c. $37,000
d. $60,000
23. PROFIT AND LOSS ALLOCATION
If there is no written agreement as to the way income will be divided among partners
a. they will share income and losses equally
b. they will share income and losses according to their capital balances
c. they will share income and losses according to the time devoted to the
business.
d. there really is no partnership agreement
24. PROFIT AND LOSS ALLOCATION
Partner A has a capital balance of $20,000 and devotes full time to the partnership. Partner
B has a capital balance of $30,000 and devotes half time to the partnership. In what ratio is
net income to be divided?
a. 3:5

b. 1:1
c. 2:3
d. 1:2
25. PROFIT AND LOSS ALLOCATION
Details of the division of net income for a partnership should be disclosed
a. in the asset section of the balance sheet
b. in the partners subsidiary ledger
c. in the statement of cash flows
d. in the income statement
26. PROFIT AND LOSS ALLOCATION STATEMENT OF PARTNERS EQUITY
Deng and Dang are partners who share income in the ratio of 3:2. Their capital balances are
$40,000 and $60,000 respectively. Income Summary has a credit balance of $20,000. What
is Deng's capital balance after closing Income Summary to Capital?
a. $30,000
b. $52,000
c. $28,000
d. $32,000
27. DISSOLUTION-ADMISSION
Selma pays Sally $39,000 for her 30% interest in a partnership with total net assets of
$120,000. Following this transaction, Selma's capital account should have a credit balance
of
a. $36,000
b. $39,000
c. $33,000
d. more than $39,000
28. DISSOLUTION-ADMISSION
Nellie is admitted to an existing partnership by investing cash. Nellie agrees to pay a bonus
for her ownership interest because of the past success of the partnership. When Nellie's
investment in the partnership is recorded
a. her capital account will be credited for more than the cash she invested
b. her capital account will be credited for the amount of cash she invested
c. a bonus will be credited for the amount of cash she invested
d. a bonus will be distributed to the old partners' capital accounts.
29. DISSOLUTION-ADMISSION
Peter and Paul are partners. The partnership capital of Peter is $40,000 and Paul is $70,000.
Peter sells his interest in the partnership to Mary for $50,000. The journal entry to record the
admission of Mary as a new partner would include
a. a credit to Mary's capital for $40,000
b. a credit to Paul's capital for $10,000
c. a credit Mary's capital for $50,000
d. a credit to Mary's capital for $40,000 and a credit to Paul's capital for $10,000
30. DISSOLUTION
When a partner dies, the capital account balances of the remaining partners
a. will increase
b. will decrease
c. will remain the same
d. may increase, decrease, or remain the same
31. DISSOLUTION-WITHDRAWALS

A partner withdraws from a partnership by selling her interest to another person who
currently is not associated with the firm. As a results of this transaction, the capital account
balance of the other partners in the partnership
a. will increase
b. will decrease
c. will remain the same
d. may increase, decrease, or remain the same
32. DISSOLUTION-ADMISSION
Shaw and Hall are partners. The partnership capital for Shaw is $50,000 and for Hall is
$60,000. Thomas is admitted as a new partner by investing $40,000 cash. Thomas is given
a 20% interest in return for her investment. The amount of the bonus to the old partners is
a. $0
b. $18,000
c. $8,000
d. $10,000
33. DISSOLUTION-ADMISSION
A and B are partners who share income in the ratio of 2:1 and have capital balances of
$50,000 and $30,000 respectively. With the consent of B, X buys one half of A's interest for
$35,000. For what amount will A's capital account be debited to record admission of X to the
partnership?
a. $40,000
b. $15,000
c. $25,000
d. $35,000
34. DISSOLUTION-ADMISSION
A new partner may be admitted to a partnership by
a. inheriting a partnership interest
b. contributing assets to the partnership
c. purchasing a specific quantity of assets from the partnership
d. the consent of the majority of the current partners
35. DISSOLUTION
A change in the ownership of a partnership results in the
a. consolidating of the partnership
b. liquidating of the partnership
c. realization of the partnership
d. dissolution of the partnership
36. DISSOLUTION-ADMISSION
When a new partner is admitted to a partnership, there should be a(n)
a. revaluation of assets
b. realization of assets
c. allocation of assets
d. return of assets
37. DISSOLUTION-ADMISSION
When a new partner is admitted to a partnership, there should be a(n)
a. the total assets of the partnership increase
b. new capital account is added to the ledger for the new partner
c. the total owner's equity of the partnership increases
d. the cash received by the current partner represents the amount of the debit to
that partner's capital account.
38. DISSOLUTION-ADMISSION

When an additional partner is admitted to a partnership by contribution of assets to the

partnership
a. the total assets of the partnership do not change
b. no liabilities can be contributed at the same time
c. the amount of the cash contribution is the same as the amount of the debit to
the new partner's capital account
d. the total of the owner's equity accounts increases
39. DISSOLUTION-ADMISSION
When a new partner is admitted to a partnership
a. a bonus may be attributable to the old partner
b. a bonus may only result from more cash being given by the new partner than
the value of the of the assets being purchased
c. a bonus agreed upon by the partners is recorded as an asset so long as the
amount is within the range set by the SEC
d. a bonus is not recorded
40. DISSOLUTION-ADMISSION
The CD Partnership owns inventory that was purchased for $65,000, has a current
replacement cost of $62,500, and is priced to sell for $95,000. At what amount should the
inventory be recorded in the accounts of the new partnership if A is to be admitted?
a. $97,000
b. $62,500
c. $65,000
d. $95,000
41. DISSOLUTION-ADMISSION
Immediately prior to the admission of A, the XY Partnership assets had been adjusted to
current market prices, and the capital balances of X and Y were $40,000 and $60,000
respectively. If the parties agree that the business is worth $150,000, what is the amount of
bonus that should be recognized in the accounts at the admission of A?
a. $100,000
b. $0
c. $40,000
d. $50,000
42. DISSOLUTION-ADMISSION
Stan and Ollie are partners who share income in the ratio of 2:3 and have capital balances of
$50,000 and $30,000 respectively. Ray is admitted to the partnership and is given a 40%
interest by investing $20,000. What is Stan's capital balance after admitting Ray?
a. $20,000
b. $25,000
c. $42,000
d. $18,000
43. DISSOLUTION-ADMISSION
Stan and Ollie are partners who share income in the ratio of 2:3 and have capital balances of
$30,000 and $50,000 respectively. Ray is admitted to the partnership and is given a 10%
interest by investing $20,000. What is Ollie's capital balance after admitting Ray?
a. $56,000
b. $34,000
c. $20,000
d. $44,000
44. DISSOLUTION-WITHDRAWALS

Tim, Don, and Hans are partners with capital balances of $20,000, $30,000, and $50,000
respectively. They share income in the ratio of 3:2:1. Income Summary with a debit balance
of $30,000 is closed to the capital accounts. Don withdraws from the partnership. How
much cash does he get upon withdrawal?
a. $30,000
b. $20,000
c. $40,000
d. $24,000
45. LIQUIDATION
A and B are partners who share income in the ratio of 1:2 and have capital balances of
$40,000 and $70,000 at the time they decide to terminate the partnership. After all noncash
assets are sold and all liabilities are paid, there is a cash balance of $80,000. What amount
of loss on realization should be allocated to A?
a. $80,000
b. $10,000
c. $20,000
d. $30,000
46. LIQUIDATION
A partnership liquidation occurs when
a. a new partner is admitted
b. a partner dies
c. the ownership interest of one partner is sold to a new partner
d. the assets are sold, liabilities paid, and business operations terminated
47. LIQUIDATION
The balance sheet of Marilyn and Monroe was as follows immediately prior to the partnership
being liquidated: cash, $20,000; other assets, $160,000; liabilities, $40,000; Marilyn capital,
$60,000; Monroe capital, $80,000. The other assets were sold for $139,000. Marilyn and
Monroe share profits and losses in a 2:1 ratio. As a final cash distribution from the
liquidation, Marilyn will receive cash totalling
a. $46,000
b. $51,000
c. $60,000
d. $73 333
48. LIQUIDATION
Jimmy Jerry and Johnny decide to liquidate their partnership. All assets are sold and the
liabilities are paid. Following these transactions, the capital balances and profit and loss
percentages are as follows: Jimmy, $27,000 and 30%; Jerry, $(12,000) and 40%; Johnny,
$43,000 and 30%. Jerry is unable to contribute any assets to reduce the deficit. How much
cash will Jimmy receive as a results of the partnership liquidation?
a. $27,000
b. $21,000
c. $23,400
d. $15,000
49. LIQUIDATION
The remaining cash of a partnership (after creditors have been paid) upon liquidation is
divided among partners according to their
a. capital balances
b. contribution of assets
c. drawing balances
d. income sharing ratio

50. LIQUIDATION
A gain or loss on realization is divided among partners according to their
a. income sharing ratio
b. capital balances
c. drawing balances
d. contribution of assets
51. LIQUIDATION
A and B are partners who share income in the ratio of 3:2 and have capital balances of
$50,000 and $90,000 at the time they decide to terminate the partnership. After all noncash
assets are sold and all liabilities are paid, there is a cash balance of $90,000. How much
cash should be distributed to A?
a. $50,000
b. $20,000
c. $30,000
d. $45,000
52. LIQUIDATION
X, Y, and Z are partners, sharing income 1:2:3. After selling all of the assets for cash,
dividing losses on realization, and paying liabilities, the balances in the capital accounts are
as follows: X, $50,000 Cr.; Y, $40,000 Dr.; and Z, $30,000 Cr. How much cash is available for
distribution to the partners?
a. $120,000
b. $30,000
c. $40,000
d. $90,000

53. LIQUIDATION
X, Y, and Z are partners, sharing income 1:2:3. After selling all of the assets for cash,
dividing losses on realization, and paying liabilities, the balances in the capital accounts are
as follows: X, $50,000 Cr.; Y, $40,000 Dr.; and Z, $30,000 Cr. How much cash should be
distributed to X assuming that Y pays the deficiency?
a.
b.
c.
d.

$50,000
$20,000
$30,000
$40,000

54. LIQUIDATION
X, Y, and Z are partners, sharing income 1:2:3. After selling all of the assets for cash,
dividing losses on realization, and paying liabilities, the balances in the capital accounts are
as follows: X, $50,000 Cr.; Y, $20,000 Cr.; and Z, $30,000 Dr. Assume that after the available
cash is distributed to the partners, Z pays $15,000 of the deficiency to the firm. How much
of the $15,000 should be distributed to X?
a. $15,000
b. $0
c. $5,000
d. $10,000

55. FORMATION (additional)

Jessica and Sienna want to put up an internet caf business. Jessica is an expert in
information technology and computers but has no funds or property to invest. Sienna knows
nothing about internet and computers but she is willing to contribute the funds and property
needed. If Jessica and Sienna decide to enter into a limited partnership, who between the
two of them will be the limited partner?
a. Jessica only.
b. Sienna only.
c. Both Jessica and Sienna.
d. Neither Jessica nor Sienna: hence, they cannot enter into a limited partnership.
56. FORMATION (additional)
These statements are presented to you:
I.
A limited partner may also be general partner at the same time.
II.
An industrial partner may also be a capitalist partner at the same time.
a. Both statements are true
b. Both statements are false.
c. Only statement I is true.
d. Only statement II is true.
57. PROFIT AND LOSS ALLOCATION(additional)
Sun and Moon are partners in a business. Suns original capital was 40,000 and Moons was
60,000. They agree to salaries of 12,000 and 18,000 for Sun and Moon respectively and 10%
interest on original capital. If they agree to share remaining profits and losses on a 3:2 ratio,
what will Suns share of the income (loss) be if the net loss for the year was 10,000?
a. (12,600)
b. (14,000)
c. (6,000)
d. (10,000)
58. FORMATION (additional)
Resnel and Lana are combining their separate businesses to form a partnership. Cash
and non-cash assets are to be contributed for a total capital of P 600,000. The non-cash
assets to be contributed and the liabilities to be assumed are as follows.
Resnel
Lana
Book Value
Fair Market Value
Book Value
Fair Market Value
Accounts Receivable
40,000
40,000
Merchandise Inventory
60,000
100,000
P
40,000
P
50,000
Equipment
120,000
90,000
80,000
100,000
Accounts Payable
30,000
30,000
20,000
20,000
The partners capital accounts are to be equal after all the contributions of assets and the
assumption of liabilities. The amount of cash to be contributed by Resnel is
A
P 200,000
C
P 100,000
B
P 300,000
D
P 210,000
59. Using the information in item 39, the total assets of the partnership is
A
P 630,000
C
P 360,000
B
P 650,000
D
P 340,000
60. PROFIT AND LOSS ALLOCATION(additional)

The following income and loss allocation method recognized the services rendered by the
partners in terms of time and skill as well as the contribution made by each partner, except:
A interest allowance to partners, balance in agreed ratio
B salary allowance to partners, balance in agreed ratio
C bonus allowance to partners, balance in agreed ratio
D equally

Enjoy your journey in reviewing accounting for partnerships!!

Reviewer for corporation will be uploaded later.
God Bless you all First Maians!!
#CPAinTransit
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