Advance Accounting 1

Topics: Balance sheet, Asset, Accounts receivable Pages: 22 (2576 words) Published: November 16, 2012
Joint Venture103

CHAPTER 6

SOLUTIONS TO MULTIPLE CHOICES

6-1: a
Assets per Jessica Company- balance sheetP3,550,000
Jessica’s proportionate interest in assets of JV (50%) 1,000,000
Total assets of JessicaP4550,000

6-2: a Total liabilities only of Jenny Co.

6-3: b

6-4: b
Investment of Heart P80,000
Profit share:
Sales150,800
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 JVP88,064

6-5: a
CashP190,000
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 assetP222,096

6-6: a
Sales7,200
Cost of sales
PurchasesP10,000
Merchandise inventory, end (50% of P10,000)__5,000_5,000

Gross profit2,200
Expenses___500

Net profitP 1,700

104Chapter 6

6-7: b
Original investment (cash)P10,000
Profit share (P1,700 / 2)___850

Balance of Investment accountP10,850

6-8: a
Joint venture account before profit distribution (credit balance)P 9,000
Unsold merchandise__2,500

Joint venture profit before fee to SalasP11,500

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

TotalP 4,000

6-10: b
SalasSalve

Balance before profit distributionP  500 (dr)P 2,000 (cr)
Profit share:Sabas (P10,000 x 40%)4,000
Salve (P10,000 x 35%)_______3,500

BalanceP 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 DanteP19,500

6-12: b
Edwin Capital:
Debits: Balance before profit distributionP14,000
Credits: Profit share__4,500

Due from Edwin (debit balance)P  9,500

Joint Venture105

Settlement to Ferdie (Balance of capital account)
Debits:P  –0–
Credits:Balance before profit distributionP16,000
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 settlementP30,000
Due from Edwin__9,500P39,500
Credits:Due to Ferdie_20,500

BalanceP19,000

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 JerryP 6,600
Joint venture profit after fee (P6,600 / 110%)__6,000
Fee to JerryP   600

6-14: d
Harry CapitalIsaac 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 settlementsP 2,800P  3,000

6-15: b
SalesP14,000
Cost of sales:
Merchandise inventory, beg (contributions)P14,000
Freight300
Purchases__4,000

Goods available for saleP18,300
Merchandise inventory, end (P8,300/2)__4,15014,150

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 jackP  8,475

106Chapter 6

SOLUTIONS TO PROBLEMS

Problem 6 – 1

Books of Blanco (Manager)Books of Ablan

JV Cash100,000Investment in JV90,000
Joint Venture90,000Merchandise inventory90,000
Cash100,000
Ablan Capital90,000

Joint Venture60,000
JV cash...
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