CHAPTER SUGGESTED ANSWERS EXERCISES Exercise - Paulo, Edwin and Marco Worksheet Summarizing Joint Venture Transactions May 12 to 26, 2008 Construction of stand Purchases Additional purchases Sales Stand taken by Edwin Unsold merchandise taken by Marco Net profit Joint Venture Debit Credit P 3,000 30,000 60,000 P153,000 2,000 4,000* P 93,000 P159,000 66,000 _ P159,000 P159,000 Distribution of profit: Permit paid by Paulo Commission Balance – shared 50%, 10% and 40% Share in net income Totals Cash settlement * Purchases Cost of sales (P153,000 / 180%**) Inventory, end Value upon which participants can purchase inventory Value assigned to the inventory taken by Lito Paulo Debit Edwin Credit Debit P 30,000 45,000 P 80,000 P 75,000 _ P 80,000 29,815 P109,815 P 1,530 24,000 9,285 P 34,815 P109,815 _ P109,815 Debit P10,000 P33,000 2,000 P 80,000 P90,000 85,000 P 5,000 x 80% P 4,000 Marco Credit Credit P 3,000 5,000 P40,000 P35,000 P10,000 _ P35,000 P35,000 P 9,900 1,857 P11,757 P21,757 13,243 P35,000 4,000 P44,000 P 8,000 _ P44,000 P44,000 P12,000 7,428 P19,428 P27,428 16,572 P44,000 ** If markup is 80% of cost, then sales is 180% of cost AA1 - Chapter (2008 edition) page Exercise – Books of Jolly To set up inventory, end (should be set up before recognizing gain or loss) Joint Venture Invty Joint Venture 110,000 To recognize gain or loss, shared 4:2:2 NI=P50,000 + P110,000 Joint Venture Income from JV Bernie Sonny 160,000 To record settlement with Sonny* Sonny JV Cash Income from JV Bernie 78,000 * Books of Bernie 110,000 80,000 40,000 40,000 Interest of Sonny (P38,000 + P40,000) Bonus to Jolly and Bernie (P78,000 x 20%) Cash settlement to Sonny 62,400 10,400 5,200 Jolly Joint Venture 110,000 Joint Venture Jolly Income from JV Sonny 160,000 Sonny Jolly Income from JV 78,000 Books of Sonny 110,000 80,000 40,000 40,000 72,800 5,200 Jolly Joint Venture 110,000 Joint Venture Jolly Bernie Income from JV 160,000 Cash Loss from JV Bernie Jolly 110,000 80,000 40,000 40,000 62,400 15,600 72,000 150,000 P78,000 15,600 P62,400 The bonus to Jolly and Bernie represents a gain to them and a loss to Sonny The P15,600 bonus shall be shared by Jolly and Bernie in the ratio of 4:2 The, the sharing is as follows: Jolly – P15,600 x 4/6 = P10,400; Bernie – P15,600 x 2/6 = P5,200 AA1 - Chapter (2008 edition) page Problem 4-1 Dario, Val, and Rene Worksheet Summarizing Joint Venture Transactions August - 10, 2008 Construction of stand Purchases Payment of permit to operate Additional purchases Sales Fire extinguishers divided among venturers Unsold merchandise taken by Dario Net profit Joint Venture Debit Credit 1,000 10,000 500 15,000 45,000 26,500 19,759 46,250 Distribution of profit: Cleaning of lawn of Rene Commission Balance -75% to Dario and 25% to Val Totals Cash settlement Purchases P10,000 + P15,000 Cost of Sales P45,000/200% Inventory end Inventory value taken by Dario 1,250 46,250 Dario Debit Debit Rene Credit Debit Credit 500 10,000 15,000 3,333 1,250 19,583 5,000 20,000 3,333 21,000 23,333 5,000 6,000 938 27,938 23,333 27,938 23,333 8,000 312 13,312 10,020 23,333 10,000 3,334 10,000 13,334 10,500 46,250 19,583 8,355 27,938 P25,000 22,500 P 2,500 X 50% P 1,250 Val Credit P 1,000 10,000 500 4,000 13,334 1,666 15,000 15,000 15,000 ... P15,600 bonus shall be shared by Jolly and Bernie in the ratio of 4:2 The, the sharing is as follows: Jolly – P15,600 x 4/6 = P10,400; Bernie – P15,600 x 2/6 = P5,200 AA1 - Chapter (2008 edition) page...AA1 - Chapter (2008 edition) page Exercise – Books of Jolly To set up inventory, end (should be set up... Additional purchases Sales Fire extinguishers divided among venturers Unsold merchandise taken by Dario Net profit Joint Venture Debit Credit 1,000 10,000 500 15,000 45,000 26,500 19,759 46,250