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Exercise 4-2 Books of Alvin, Managing Partner Feb.

12 Joint Venture Cash Joint Venture Larry Cash Larry Joint Venture Cash Joint Venture Joint Venture Income from Joint Venture Larry 10% commission on net purchases to Alvin 25% commission on own sales Cash Larry 10,000 10,000 2,000 2,000

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Joint Venture Cash Joint Venture Sales by venturers. Joint Venture Cash Joint Venture Sales by salesmen Joint Venture Joint Venture Cash Venture expenses Joint Venture Income from Joint Venture Salaries to Roland as managing partner Joint Venture Income from Joint Venture Greg Medel 10% commission on own sales Joint Venture Income from Joint Venture Greg Medel Balance of profit divided equally

35,400,000 35,400,000

4.

14,300,000 14,300,000

14

5. 15 9,000 7,500 16,500 6. 20 3,000 3,000 7,500 4,287.50 3,212.50

684,000 684,000

72,000 72,000

20

3,540,000 490,000 1,280,000 1,770,000

2,104,000 701,334 701,333 701,333

20

2,287.50 2,287.50

Books of Larry Feb. 12

Joint Venture Alvin Joint Venture Cash Cash Alvin Joint Venture Alvin Joint Venture Joint Venture Alvin Income from Joint Venture 10% commission on net purchases to Alvin 25% commission on own sales Alvin Cash

10,000 10,000 2,000 2,000 7,500 9,000 16,500 3,000 3,000 2. 7,500 4,287.50 3,212.50 3. Joint Venture Roland Improvements on land Roland Joint Venture Sales by venturers. Roland Joint Venture Sales by salesmen Joint Venture Roland Venture expenses Joint Venture Roland Salaries to Roland as managing partner 3,000,000 3,000,000 7. Greg Medel Joint Venture Cash Final cash settlement 21,481,333 15,471,333 36,952,666

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15

20

Books of Greg 1. Joint Venture Land Medel Roland

40,300,000 19,500,000 13,000,000 7,800,000

20

35,400,000 35,400,000

20

2,287.50 2,287.50 4. 14,300,000 14,300,000

Problem 4-2 Requirement 1 Books of Roland, Managing Partner 5. 1. Joint Venture Greg Medel Land Joint Venture Cash Improvements on land 40,300,000 19,500,000 13,000,000 7,800,000 3,000,000 3,000,000

684,000 684,000

6.

72,000 72,000

2.

Joint Venture Roland Income from Joint Venture Medel 10% commission on own sales Joint Venture Roland Income from Joint Venture Medel Balance of profit divided equally 7. Cash Medel Roland Final cash settlement

3,540,000 490,000 1,280,000 1,770,000

Problem 4-2 Requirement 2 Books of the Joint Venture 1. Land Greg, Capital Medel, Capital Roland, Capital 2. Land Roland, Capital Cash Sales Cash Sales Expenses Cash Sales Land Expenses Income Summary Income Summary Roland, Capital Income Summary Greg, Capital Medel, Capital Roland, Capital Income Summary Greg, Capital Medel, Capital Roland, Capital 8. Greg, Capital Medel, Capital Roland, Capital Cash

40,300,000 19,500,000 13,000,000 7,800,000 3,000,000 3,000,000 35,400,000 35,400,000 14,300,000 14,300,000 684,000 684,000 49,700,000 43,300,000 684,000 5,716,000 72,000 72,000 3,540,000 1,280,000 1,770,000 490,000 2,104,000 701,333 701,333 701,334 21,481,333 15,471,333 12,063,334 49,016,000

2,104,000 701,334 701,333 701,333

21,481,333 15,471,333 36,952,666

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4.

Books of Medel 1. Joint Venture Greg Land Roland 2. Joint Venture Roland Improvements on land Roland Joint Venture Sales by venturers. Roland Joint Venture Sales by salesmen Joint Venture Roland Venture expenses Joint Venture Roland Salaries to Roland as managing partner Joint Venture Roland Greg Income from Joint Venture 10% commission on own sales Joint Venture Roland Greg Income from Joint Venture Balance of profit divided equally 7. Greg Cash Roland Final cash settlement

40,300,000 19,500,000 13,000,000 7,800,000 3,000,000 3,000,000

5.

6.

7. 3. 35,400,000 35,400,000

4.

14,300,000 14,300,000

5.

684,000 684,000

6.

72,000 72,000

3,540,000 490,000 1,280,000 1,770,000 Books of Greg 1. Investment in Joint Venture Land 2. 2,104,000 701,334 701,333 701,333 3. Investment in Joint Venture Income from Joint Venture Cash Investment in Joint Venture 19,500,000 19,500,000 1,981,333 1,981,333 21,481,333 21,481,333

21,481,333 15,471,333 36,952,666

Books of Medel 1. Investment in Joint Venture Land 2. Investment in Joint Venture Income from Joint Venture

13,000,000 13,000,000 2,471,333 2,471,333

3.

Cash Investment in Joint Venture

15,471,333 15,471,333

Books of Roland 1. Investment in Joint Venture Land 2. Investment in Joint Venture Cash Investment in Joint Venture Income from Joint Venture Cash Investment in Joint Venture

Books of Yolly 1. Joint Venture Merchandise Inventory Beth 2. Marissa Joint Venture Joint Venture Marissa Joint Venture Marissa Merchandise Inventory Beth Joint Venture Joint Venture Income from Joint Venture Beth Interest on investment. Joint Venture Marissa Commission on sales. Joint Venture Income from Joint Venture Beth Marissa Allocation of the balance. Cash Beth Marissa

104,000 44,000 60,000 160,000 160,000 7,000 7,000 40,000 40,000 10,000 7,500 17,500 1,560 660 900

7,800,000 7,800,000 3,000,000 3,000,000 1,262,334 1,262,334 12,063,334 12,063,334 5. 4. 3.

3.

4.

Problem 4-3 Books of Marissa 1. Joint Venture Yolly Beth 2. Joint Venture Accounts Receivable Joint Venture Joint Venture Cash Joint Venture Joint Venture Accounts Receivable Joint Venture Joint Venture Cash Yolly Beth Joint Venture Joint Venture Yolly Beth Interest on investment. Joint Venture Income from Joint Venture Commission on sales. Joint Venture Yolly Beth Income from Joint Venture Allocation of the balance. Yolly Beth Cash Joint Venture Cash 6. 104,000 44,000 60,000 160,000 160,000 153,000 7,000 160,000 40,000 40,000 10,000 7,500 17,500 1,560 660 900 9. 7.

8,000 8,000

3.

8.

16,940 5,646 5,647 5,647

4.

5.

40,306 59,047 99,353

6.

Books of Beth 1. Joint Venture Yolly Merchandise Inventory 2. Marissa Joint Venture Joint Venture Marissa Joint Venture Marissa Yolly Merchandise Inventory Joint Venture Joint Venture Yolly Income from Joint Venture Interest on investment.

104,000 44,000 60,000 160,000 160,000 7,000 7,000 40,000 40,000 10,000 7,500 17,500 1,560 660 900

7.

8,000 8,000

3. 16,940 5,646 5,647 5,647 4.

8.

5. 40,306 59,047 13,647 113,000

9.

6.

7.

Joint Venture Marissa Commission on sales. Joint Venture Yolly Income from Joint Venture Marissa Allocation of the balance. Yolly Cash Marissa

8,000 8,000

3.

Investment in Joint Venture Income from Joint Venture P660 + P5,646 = P6,306 Cash Investment in Joint Venture

6,306 6,306

8.

16,940 5,646 5,647 5,647

4.

40,306 40,306

Books of Beth 1. Investment in Joint Venture Merchandise Inventory 2. Merchandise Inventory Investment in Joint Venture Investment in Joint Venture Income from Joint Venture P900 + P5,647 = P6,6,547 Cash Investment in Joint Venture

60,000 60,000 7,500 7,500 6,547 6,547

9.

40,306 59,047 99,353

Requirement 2 Books of the Joint Venture 1. Merchandise Yolly, Capital Beth, Capital 2. Accounts Receivable Sales Cash Uncollectible Accounts Expense Sales Discount Accounts Receivable Expenses Cash Yolly, Capital Beth, Capital Merchandise Sales Merchandise Sales Discounts Doubtful Accounts Expense Expenses Income Summary Income Summary Yolly, Capital Beth, Capital Marissa, Capital Yolly, Capital Beth, Capital Marissa, Capital Cash

3. 104,000 44,000 60,000 160,000 160,000 153,000 4,300 2,700 160,000 40,000 40,000 10,000 7,500 17,500 160,000 86,500 2,700 4,300 40,000 26,500 26,500 6,306 6,547 13,647 40,306 59,047 13,647 113,000 4.

59,047 59,047

3.

Books of Marissa 1. Investment in Joint Venture Income from Joint Venture P8,000 + P5,647 = P13,647 2. Cash Investment in Joint Venture

13,647 13,647

13,647 13,647

4.

5.

Problem 4-4 1. Merchandise Inventory Joint Venture 2. Joint Venture Income from Joint Venture Bonus = 10% (NI B) Bonus = 10% (P53,636.20 B) = P4,785 Joint Venture Income from Joint Venture Santi Romy Distribution of balance 30%, 50%, and 20% to Noel, Santi, and Romy, respectively. 3. Santi Romy Cash Final cash settlement.

10,571.20 10,571.20 4,785 4,785

6.

47,851.20 14,355.36 23,925.60 9,570.24

7.

22,863.60 18,628.24 41,491.84

8.

Books of Yolly 1. Investment in Joint Venture Merchandise Inventory 2. Merchandise Inventory Investment in Joint Venture

44,000 44,000 10,000 10,000

Problem 4-5 Books of Leo 1. Joint Venture Income from Joint Venture Bonus = 20% (NI B) Bonus = 20% (P24,000 B) = P4,000

4,000 4,000

2.

Income from Joint Venture Mandy Joint Venture Interest on deficiency and excess Leo = P10,000 x 12% x 6/12 = P600 Mandy = P5,000 x 12% x 6/12 = P300 Joint Venture Income from Joint Venture Niel Mandy Balance of profit divided in the ratio of 4:4:2 to Leo, Niel, and Mandy, respectively

600 300 300

6.

Capital of Tan Unsold merchandise taken by Tan Share on the venture income (P135,000* / 3) Amount received by Tan in final settlement * Credit balance in the Joint Venture account Unsold merchandise taken by Tan Venture income Salaries to Reyes Remainder divided equally 15% (P115,000 B) = P15,000 Credit balance in the Joint Venture account Unsold merchandise purchased by Soriente Net profit before bonus Bonus to Soriente [ 15% (P115,000 B) Net profit after bonus P100,000 x 40% = P40,000 Santos (P 5,000) 40,000 P35,000

P270,000 ( 105,000) 45,000 P210,000 P150,000 105,000 P255,000 120,000 P135,000

3.

20,300 8,120 8,120 4,060 7. 8. B C.

Books of Mandy 1. Joint Venture Leo 2. Leo Income from Joint Venture Joint Venture Joint Venture Leo Niel Income from Joint Venture

4,000 4,000 600 300 300 20,300 8,120 8,120 4,060 11. 4,000 4,000 600 300 300 20,300 8,120 8,120 4,060 MULTIPLE CHOICE 13. D C 9. 10. C B

P 90,000 25,000 P115,000 15,000 P100,000

3.

Account balances Share in venture profit Cash settlement Sales Less Sales discounts Net sales Cost of sales: Contributed merchandise Less Returned merchandise Gross profit Operating expenses (P6,450 + P58,650) Net income Less Bonus (P41,250 x 25/125) Net income after bonus P41,250 x 25/125 = P8,250

Salazar P20,000 35,000 P55,000 P240,000 4,050 P235,950

Books of Niel 1. Joint Venture Leo 2. Leo Mandy Joint Venture Joint Venture Leo Income from Joint Venture Mandy

P156,000 26,400

3.

129,600 P106,350 65,100 P 41,250 8,250 P 33,000

12.

1.

Total credits in the Joint Venture account Less Total debits in the Joint Venture account Gain (excess of credit over debit) Merchandise contribution Add Share in the gain (P60,600 x 2/10) Final settlement to Minda

P258,100 197,500 P 60,600 P 85,000 12,120 P 97,120

2.

Merchandise contribution Merchandise returns Interest on original capital Balance of profit divided equally Cash settlement 14. A Purchases Expenses Balance, end Joint Venture 300,000 Sales 34,500 225,000 559,500

Iona P66,000 ( 15,000) 990 10,220 P62,210

Paula P90,000 ( 11,400) 1,350 10,220 P90,170

3.

The account of Melissa has a debit balance, thus, she has to make payment.. The account of Nancy has a debit balance, thus, she has to make payment. The account of Olivia has a credit balance, thus, she has to receive payment. P150,000 + P105,000 = P255,000 P120,000 + (135,000/3) = P165,000 15. B

559,500

559,500

4. 5.

C C

Sales revenue is a credit entry in the Joint Venture account. The total of the purchases, expenses and the ending balance is equal to total sales revenue. The ending balance is the sum of the credit balances of Marc and Martin of P120,000 and P105,000. P236,500 x 50% = P118,250

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17. 18.

B D

Investment of Marc Cost of unsold goods assumed by Marc Share in the joint venture gain: Credit balance in the JV account Unsold goods assumed by the partners JV gain Share of Marc Cash settlement to Marc P12,000 P2,500 = P9,500 Contribution Less Share on loss (P12,000 P2,500) Additional loss to Debbie Cash distribution

P150,000 ( 4,500) P225,000 11,500 P236,500 50%

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118,250 P263,750 Ellie P2,000 4,750 (P2,750) 2,750 Total

19.

Valdez Receipts P789,200 Less Investment 300,000 Revenue P489,200 Sale of non-cash assets Total revenue Less Expenses disbursements (P622,750 + P706,950) Joint venture profit

Debbie P10,000 4,750 P 5,250 ( 2,750) P 2,500 Ramos P654,250 300,000 P354,250

Proceeds from sale of shares; 4,500 x P44 5,000 x P25 6,000 x P28 7,600* x P35 Cost of the shares (see # 1) Loss from sale of the shares Expenses (3,000 + 4,700) Dividend revenue Number of shares after stock dividend Less shares sold on November 5 Shares entitled to cash dividend Dividend per share Net loss Share of Roxas on the venture loss * Contributed shares Shares sold on Oct. 20 Remaining shares Shares received as stock dividend (20% x 15,500) Shares sold on Nov. 5 and 22 Shares sold at P35

P198,000 125,000 168,000 266,000

P757,000 800,000 P 43,000 ( 7,700)

18,600 5,000 13,600 x P1

13,600 P 37,100 x 6/20 P11,130

P 943,450 600,000 P1,543,450 1,329,750 P 213,750 27. D C

20,000 4,500 15,500 3,100 (11,000) 7,600

20. 21. B Debit to Joint Venture account: Investment of Santos (12,000 shares @ P45) Investment of Cruz (8,000 shares @ P45) Managers fee [ 1% (176,000 + 240,000 + 133,000 +261,625)] Miscellaneous expenses Credit to Joint Venture account: Sales (4,000 @ P44) Sales (6,000 @ P40) Cash dividend [(12,000 + 8,000 4,000 6,000) x P2] Sales (3,500 @ P38) Sales [(10,000 3,500) x 115% = 7,475 shares x P35] Net loss of the venture (P909,606.25 P830,625) 22. D Investment of Cruz (8,000 shares @ P45) Less Share in JV net loss (P78,981.25 x 8/20) Share of Cruz after distribution of proceeds Loss upon the investment of shares (8,000 shares @ P10) Share in JV loss Loss of Cruz on the disposition of Palawan Oil Co. shares

20,000 4,500 = 15,500 x 20% = 3,100 Investment (10,000 shares @ P40) Share on the joint venture loss (P37,100 x 1/2 ) Share of Silverio on the distribution of proceeds Loss upon contribution of the shares [(P40 P62) x 4,000] Share on the JV loss (P37,100 x 4/20) Tans loss on disposition of his investment in Golden Copper P400,000 18,550 P381,450 P88,000 7,420 P95,420

28. P540,000.00 360,000.00 8,106.25 1,500.00 P909,606.25 P176,000.00 240,000.00 20,000.00 133,000.00 261,625.00 P830,625.00 P 78,981.25 P360,000.00 31,592.50 P328,407.50 P 80,000.00 31,592.50 P 111,592.50

29.

23.

Loss on the disposition of the shares of Cruz is the total of the loss upon investment of the shares (i.e. P45 P55 = P10 per share) and the share on the net loss of the dissolved joint venture. 24. 25. A A 20,000 shares x P40 MV = P800,000 20,000 4,500 + 15,500 x 120% = 18,600 5,000 = 13,600 x P1 = P13,600

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