Jv-answer.docx

1. B Solutions: Profit or loss is computed as follows: Merchandise – A Purchases - A's cash Merchandise – B Freight - in – B Expenses – C

Salaries expense - C

Bonus expense**

800 400 1600 80 800

Joint operation 3200 Sales – C 840

Unsold inventory charged to C*

360

Profit before salary and bonus - Credit balance

240

Profit after salary but before bonus - Credit balance

192

Profit after salary and bonus

120

48

*Unsold inventory: (₱1,600 plus ₱80 freight-in) multiplied by one-half. 2. C Solution: Profit is allocated to the joint operators as follows: Allocation to: Profit before salary and bonus Salary to C Bonus to C** Profit after salary and bonus Interest on capital: A - (300 x 10%) B - (420 x 10%) Profit after interests on capital Allocation (24 ÷ 3) Net share - as allocated

A

B

C 120 48

120 168 (32) 88

**Bonus is computed as follows: P B = P 1 + Br B = 240 – (240 ÷ 1.25%) = 48

Cash settlement is determined as follows: Inventory contributed by A Cash contribution Net share in profit Cash settlement – receipt

Joint operation - A 400 800 88 1,288

Inventory contributed Freight paid Net share in profit Cash settlement – receipt

Joint operation - B 1,600 80 136 1,816

(32) 136

(32) 136

Totals 360 (120) (48) 192 (120) (168) (96) 96 -

Joint operation – C 800 136 96

Expenses paid Net share in profit Cash settlement - receipt

840

Cost of inventory taken

Problem 10 The joint operation’s profit is computed as follows: Joint operation 16 56 48 88 80

Account with A Account with B

Profit is allocated as follows: Allocation to: Profit before bonus Bonus to A (80 x 10%) Profit after bonus Equal allocation (72 ÷ 3) As allocated

Account with C Unsold inventory Profit before bonus - credit balance

A

B

C

24 24

24 24

8 24 32

Cash settlement is determined as follows: Joint operation – A Contributions 16 Net share in profit 32

88

Inventory taken

40

Cash settlement - payment

Joint operation – B 48 24 72

Contributions Net share in profit Cash settlement – receipt Joint operation – C

Net share in profit

56

Withdrawals

32

Cash settlement - payment

24

Cash settlement – Reconstruction of accounts

Totals 80 (8) 72 (72) -