Reference no: EM132951956

Question - Partners E, F, G had capital balances of P 120,000; P 155,000; and P 115,000, respectively. The partnership generated a net loss of P 140,000 during the year. The partners share profit and loss 2:5:1, respectively.

Due to disagreement, partner F wanted out of the partnership. Before retirement, the value of inventory increased from P 85,000 to P 97,000. The partners decided to pay partner F P 70,000 upon retirement.

1. What amount should be reported as the capital balance of partner E after the retirement of partner F?

a. 84,667

b. 89,000

c. 91,333

d. 87,000

2. What amount should be reported as capital balance of partner G after the retirement of partner F?

a. 93,333

b. 99,500

c. 100,667

d. 98,500

3. Assume that an equipment is overvalued, how much is the overvaluation of the equipment?

a. 5,000

b. 2,500

c. 8,000

d. 4,000

4. In relation to the 3rd question, what amount should be reported as the capital balance of partner E after the retirement of partner F?

a. 91,333

b. 84,667

c. 89,000

d. 86,000