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Module 1 Exercises.docx - Module 1: Partnership Exercise 1...

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Exercise 1 (True or False)1.The assets contributed to (and related liabilities assumed by the partnership are measured in thepartnership books at fair value.2.A bonus given to a partner is treated as an adjustment to the capital accounts of the otherpartners.3.No bonus is allocated to any partner when the partnership incurred loss during the period.4.Salaries are nevertheless provided to the partners, if stipulated in the partnership agreement,even if the partnership if the incurs loss.5.The total assets of a partnership most likely increases when an incoming partner purchases theinterest of an existing partner.6.The insanity of a partner causes dissolution of a partnership.7.The total assets of a partnership will most likely increase when a new partner is admitted byinvesting directly to the partnership.8.Liquidation is the termination of business operations or the winding up of affairs. It issynonymous with partnership dissolution.9.During liquidation, the deficiency in the capital balance of an insolvent partner is absorbed by thesolvent partners.10.During liquidation, the owners’ interests are settled first before creditors’ interest.Exercise 21.A and B formed a partnership. The partnership agreement stipulates the following:Annual salary allowances of P200,000 for A and P120,000 for B. Salary allowances are to bewithdrawn by the partners throughout the period and are to be debited to their respectivedrawings account.The partners share profits equally and losses on a 60:40 ratio.During the period the partnership earned profit of P400,000 before salary allowances.How much is the share of B in the partnership profit?2.Giron operated a specialty shop that sell fishing equipment and accessories. His post closingtrial balance on December 31, 2011 is as follows:DebitCreditCashP36,000Accounts Receivable150,000Allowance for uncollectible accountsP16,000Inventory440,000Equipment135,000Accumulated Depreciation75,000Accounts Payable30,0001Module 1: Partnership
Giron, Capital640,000Giron plans to enter into partnership with hersister Yu effective January 1, 2012. Profits and losses willbe shared equally. Giron is to transfer all assets andliabilities of his shop to the partnership after revaluationYu will invest cash equal to Giron’s investment after revaluation. The agreed values are as follows:accounts receivable (net), P140,000; inventory, P460,000; equipment (net), P124,000.

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Term
Spring
Professor
MARIA
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