CHAPTER 6 - Joint Venture 103 CHAPTER 6 SOLUTIONS TO...

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Joint Venture 103 CHAPTER 6 SOLUTIONS TO MULTIPLE CHOICES 6-1: a Assets per Jessica Company- balance sheet P3,550,000 Jessica’s proportionate interest in assets of JV (50%) 1,000,000 Total assets of Jessica P4550,000 6-2: a Total liabilities only of Jenny Co. 6-3: b 6-4: b Investment of Heart P80,000 Profit share: Sales 150,800 Cost of sales (150,800 ÷ 125%) 120,640 Gross profit 30,160 Expenses 10,000 Net Profit 20,160 Profit/loss ratio x 40% 8,064 Balance of investment in JV P88,064 6-5: a Cash P190,000 Merchandise inventory 29,360 Accounts receivable 150,800 Total assets 370,160 Sweet Co’s, proportionate interest x 60% Sweet Company’s share in total asset P222,096 6-6: a Sales 7,200 Cost of sales Purchases P10,000 Merchandise inventory, end (50% of P10,000) __5,000 _5,000 Gross profit 2,200 Expenses ___500 Net profit P 1,700
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104 Chapter 6 6-7: b Original investment (cash) P10,000 Profit share (P1,700 / 2) ___850 Balance of Investment account P10,850 6-8: a Joint venture account before profit distribution (credit balance) P 9,000 Unsold merchandise __2,500 Joint venture profit before fee to Salas P11,500 Joint venture profit after fee to Salas (P11,500 / 115%) P10,000 6-9: b Fee of Salas (P10,000 x 15%) P 1,500 Profit share of Salas (P10,000 x 25%) _2,500 Total P 4,000 6-10: b Salas Salve Balance before profit distribution P 500 (dr) P 2,000 (cr) Profit share:Sabas (P10,000 x 40%) 4,000 Salve (P10,000 x 35%) ______ _3,500 Balance P 3,500 (cr) P 5,500 (cr) 6-11: d Joint venture account balance before profit distribution (debit) P 6,000 Joint venture profit (P4,500 x 3) _13,500 Cost of unsold merchandise (inventory) taken by Dante P19,500 6-12: b Edwin Capital: Debits: Balance before profit distribution P14,000 Credits: Profit share __4,500 Due from Edwin (debit balance) P 9,500
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Joint Venture 105 Settlement to Ferdie (Balance of capital account) Debits: P –0– Credits:Balance before profit distribution P16,000 Profit share __4,500 _20,500 Due to Ferdie (credit balance) P20,500 Settlement to Dante (balance of JV Cash account) Debits: Balance before cash settlement P30,000 Due from Edwin __9,500 P39,500 Credits:Due to Ferdie _20,500 Balance P19,000 6-13: a JV account balance before profit distribution (cr) P 4,600 Unsold merchandise (required dr balance after profit distribution) __2,000 Joint venture profit before fee to Jerry P 6,600 Joint venture profit after fee (P6,600 / 110%) __6,000 Fee to Jerry P 600 6-14: d Harry Capital Isaac Capital Balances before profit distribution (P 200) P 1,800 Profit distribution: Harry P6,000 x 50%) 3,000 Isaac (P6,000 x 20%) 1,200 Cash settlements P 2,800 P 3,000 6-15: b Sales P14,000 Cost of sales: Merchandise inventory, beg (contributions) P14,000 Freight 300 Purchases __4,000 Goods available for sale P18,300 Merchandise inventory, end (P8,300/2) __4,150 14,150 Gross profit (loss) (150) Expenses (P400 + P200) __600 Net profit (loss) P( 750 ) 6-16: c Contributions to the Joint Venture (P5,000 + P8,000) P13,000 Loss share (P750 x 50%) ( 375) Unsold merchandise taken (withdrawal) ( 4,150 ) Final settlement to jack P 8,475
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106 Chapter 6 SOLUTIONS TO PROBLEMS Problem 6 – 1 Books of Blanco (Manager) Books of Ablan JV Cash 100,000 Investment in JV 90,000 Joint Venture 90,000 Merchandise inventory 90,000 Cash 100,000 Ablan Capital 90,000 Joint Venture 60,000 JV cash 60,000 Joint Venture 20,000 JV cash 20,000 JV cash 200,000 Joint Venture 200,000 Computation of JV Profit Total debit to JV P170,000 Total credit to JV P200,000 Credit balance (Profit) P 30,000 Distribution Joint Venture 30,000 Investment in JV 15,000 Profit from JV 15,000 Profit from JV
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CHAPTER 6 - Joint Venture 103 CHAPTER 6 SOLUTIONS TO...

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