16. On October 31,2019. Payton and Allen formed a partnership called Beyond the Arc with each partner contributing the following items at cost:
Payton Allen
Cash P100,000 50,000
Building 400,000
Inventory 200,000
Mortgage Payable 200,000
Accounts Payable 150,000
The partners agreed that the building and inventory should be recorded at fair value of P500,000 and P300,000 respectively. They have also agreed that the capital interests would be equal through the bonus method. Profit sharing will also be equal between the two partners.
At what amount will each partner's capital be recorded upon formation?
a. Payton - P400,000; Allen - P200,000
b. Payton - P300,000; Allen - P100,000
c. Payton - P200,000; Allen - P200,000
d. Payton - P300,000; Allen - P300,000
17. As of the year ending December 31,2019, Beyond the Arc incurred losses amounting to P20,000 as there was no revenue during the two-month period and only recorded depreciation amounting to P20,000. On the same date, the partnership admitted Curry, with him investing cash amounting to P500,000 for a 1/3 interest. The partnership is contemplating whether to use the bonus or asset revaluation method in admitting Curry.
If bonus method is to be used in admitting Curry, the bonus will be
o P233,000 from Curry to old partners
o P140,000 from the old partners to Curry
o P140,000 from Curry to old partners
o P300,000 from Curry to old partners
18. If asset revaluation is to be used in admitting curry, the asset revaluation(impairment should be)
o a.P350,000 each to old partners
o b. P420,000 to Curry
o c. P210,000 to each to old partners
o d. P450,000 each to old partners
19. The partners then agreed to use the asset revaluation method effected to the building in admitting Curry. They have also agreed that Curry is to receive an annual salary of P75,000, while Allen is to receive 20% bonus. Payton will receive a 15% interest in his capital balance as of the beginning of the year. The rest of the profit is to be shared equally. Beyond the Arc earned P300,000 during 2020. The partners contemplated on how Allen's bonus will be applied.
What was the profit distribution for curry considering that the bonus is based on net income before salary, interest and bonus?
o P 105,000
o P112,500
o P75,000
o d. P90,000
20. What was the profit distribution for Payton considering that the bonus is based on net income after salary, interest and bonus?
o P146,667
o P116,667
o P105,000
o P131,111
21. What was the profit distribution for Allen considering that bonus is based in net income only after bonus?
o P90.000
o P86,667
o P75,000
o P83,333