CHAPTER 6

1. Books of JV
Oct. 1 Cash 1,050,000
Butch 350,000
Alex 350,000
Roy 350,000

3 Purchases 1,000,000
Operating Expenses 200,000
Cash 700,000
Accounts Payable 500,000

6 Rent 150,000
Cash 150,000

31 Cash 500,000
Operating Expenses 50,000
Sales 550,000

Nov. 2 Rent 150,000

Cash 150,000

22 Operating Expenses 75,000

Cash 75,000

30 Cash 750,000
Sales 750,000

Dec. 1 Rent 150,000

Cash 150,000

25 Operating Expenses 125,000

Cash
125,000
26 Commission 50,000
Cash 50,000

30 Cash 1,500,000
Sales 1,500,000

Jan. 2 Accts Payable 500,000

Cash 500,000

4 Alex 20,000
Roy 40,000
Purchases 60,000

5 Sales 2,800,000
Purchases 940,000
Operating Expenses 450,000
Rent 450,000
Commission 50,000
Alex 303,333
Roy 303,333
Butch 303,334

Alex 633,333
Butch 613,333
Roy 653,334
Cash 1900,000

Butch Alex
Roy
Investment in JV 350,000 350,000 350,000
Cash 350,000 350,000 350,000

Merchandise 20,000 40,000

24
 Investment In JV 20,000 40,000

Cash 50,000
Commission Income 50,000

Investment in JV 303,334 303,333 303,333

Income from JV 303,334 303,333 303,333

Cash 653,334 633,333 613,333

Investment from JV 653,334 633,333 613,333

Ex. 2. Books of Mac Books of Donald

Joint Operation 600,000 Joint Operation 600,000

Cash 300,000 Cash 300,000
Donald 300,000 Mac 300,000

Cash 600,000 Cash 550,000

Donald 550,000 Mac 600,000
Joint Operation 1,150,000 Joint Operation 1,150,000

Joint Operation 310,000 Joint Operation 310,000

Cash 115,000 Cash 195,000
Donald 195,000 Mac 115,000

Merchandise 45,000 Merchandise 45,000

Donald 45,000 Mac 45,000
Joint Operation 90,000 Joint Operation 90,000

Joint Operation 330,000 Joint Operation 330,000

Income 166,250 Income 163,750
Donald 163,750 Mac 166,250

Donald 63,750 Cash 63,750

Cash 63,750 Mac 63,750
Mac Donald Total
5% com 30,000 27,500 57,500
Balance 1:1 136,250 136,250 272,500
Total 166,250 163,750 330,000
Operators Equity Mac Donald
Contributions 415,000 495,000
Sales withheld (600,000) (550,000)
Profit share 166,250 163,750
Goods withdrawn (45,000) (45,000)
Dr Bal / Cr. Bal (63,750) 63,750

Credit balance will mean a capital credit representing a right to recover. Dr balance is similar to deficiency, must pay.

Ex. 3. Pepes Books

Pilars Books
1. Joint Operation 150,000 50,000
Cash 150,000 50,000

3. Cash 125,000 150,000

Joint Operation 125,000 150,000

4. Cash 15,000
Joint Operation 15,000

5. Joint Operation 45,000 45,000

Income from JO 45,000 45,000

To prove Pepes equity:

Investment 150,000
Purchase returns (15,000)
Income from Operation 45,000
Sales Withheld (125,000)
55,000 Pilar pays:

25
 6. Cash 55,000
Joint Operation 55,000

Joint Operation 55,000

Cash 55,000
Joint operation should be a zero balance.
Ex. 4 Books of Dan Books of Ed Books of Fe
1) JO Cash 750,000 Dan 750,000 Dan 750,000
Cash 250,000 Dan 250,000 Dan 250,000
Ed 250,000 Cash 250,000 Cash 250,000
Fe 250,000 Fe 250,000 Ed 250,000

2)Joint Op 600,000 Joint operation 600,000 600,000

JO Cash 600,000 Dan 600,000 600,000
3)Joint Op 75,000 Joint operation 75,000 75,000
JO Cash 75,000 Dan 75,000 75,000

4) JO Cash 700,000 Dan 700,000 700,000

Joint Op 700,000 Joint Operation 700,000 700,000
6) Merchandise 120,000 Dan 120,000 120,000
Joint Operation 120,000 Joint Operaton 120,000 120,000
7) Joint Operation145,000 145,000 145,000
Income 58,000 43,500 43.500
Ed 43,500 43.500
Fe 43,500 43.500
Dan 58,000 58,000

8) Cash 188,000 293,500 293,500

Ed 293,500 293,500
Fe 293,500 293,500
JO Cash 775,000
Dan 587,000 587,500

Ex.5. Books of P Books of N Books of O

N 5,000 Merchandise 5,000 N 5,000
Joint Operation 5,000 Joint Operation 5,000 Joint Operation5,000
Loss from JV 10,000 Loss Loss
N 10,000 O N
O 10,000 P P
Joint Operation 30,000 Joint Operation 30,000 Joint Operation 30,000
Accounts Recble 5,000
Cash 10.000 O 3,000 Cash 3,000
O 3,000 Cash 3,000 N 3,000
N 3,000
JO Cash 10,000 To prove: 12,000-15,000= -3,000 N Pays
JO Accts Rec 5,000 13,000-10,000= +3,000 O receives
Ex. 6. Joint Operation Balance (2,000 + 9,000)= P11,000
Profit Share: Charlie (.2 x 14,000) P 2,800 Henry (.25 x 12,000) P 3,000
(.25 x 16,000) 4,000 (.4 x 1,200) 480
(.6 x 1,200) 720 P3,480
P7,520
Who pays: Charlie (14,000 -16,000 + 7,520) = P5,520 equity
Henry (3,480 + 3,000 12,000) = (P5,520) must pay
Ex. 7. Books of A
Get the balance of Joint Operation= P11,600 credit balance

Joint Operation 11,600

Inc fr JO 4,570 (11,600/1.1= 1,055+3,515)
B 3,515
C 3,515

26
 B 7,715
C 12,215
Cash 19,930
To Prove As Accountability:
Cash sales withheld 30,500
Investment (6,000)
Share in income (4,570)
Withdrawal ( 30,500)
19,930
Books of B
Joint Operation 11,600
A 4,570
Income from JO 3,515
C 3,515
Cash 7,715
C 12,215
A 19,930
To Prove Bs equity:
Investment 10,500
Share in income 3,515
Withheld sales (6,300)
7,715

8. In the books of N and O, why is Ps equity P10,000 only? In the books of P, the balancing figure is on the credit side
representing Ps equity of P25,000 but it should be decreased by his accountability which is P15,000 in the form of
Joint Operation AR and Cash.
Additional entries in each book for the unsold goods taken over by N:
Books of P Books of N Books of O
N 5,000 Merchandise 5,000 N 5,000
Joint Operation 5,000 Joint Operation 5,000 Joint Operation 5,000

Balances will change again as follows:

N O P
Debit Credit Debit Credit Debit Credit
Joint Operation Cash 10,000
JO Accts Recble 5,000
N 7,000 7,000
O 13,000 13,000
P 10,000 10,000
Joint Operation 30,000 30,000 30,000
Balancing figure represents
equity of each operator 7,000 13,000 25,000

Additional entries to record loss and close joint operation account:

Books of P Books of N Books of O
Loss from JV 10,000 Loss 10,000 Loss 10,000
N 10,000 O 10,000 N 10,000
O 10,000 P 10,000 P 10,000
Joint Operation 30,000 Joint Operation 30,000 Joint Operation 30,000

Balances will change as follows (Note that Ps account will be closed in the books of N and O:
N O P
Debit Credit Debit Credit Debit Credit
Joint Operation Cash 10,000
JO Accts Recble 5,000
N 3,000 7,000
O 3,000 13,000
Balancing figures 3,000 3,000 15,000

Last entry will show recovery as follows:

Books of P Books of N Books of O
Accounts Recble 5,000
Cash 10.000 O 3,000 Cash 3,000
O 3,000 Cash 3,000 N 3,000
N 3,000
JO Cash 10,000
JO Accts Recble 5,000
27
Exercise 9.
A. Joint Operation
Cars 6,000,000 Sales 4,000,000
Cars 7,000,000 6,000,000
Import Chg 800,000 5,000,000
Expenses 200,000 Returns 2.000,000
Marketing 2,000,000
1,500,000

Profit 2,500,000

A Company C Company V Company

6,000,000 6,000,000 5,000,000 7,000,000 4,000,000 3,000,000
2,000,000 1,500,000

3) Table for profit distribution:

V A C
Bonus (.25 x 2,500,000) 625,000
3% Commission on cars 180,000 210,000
Remainder 1,485,000 x 6:7:3 278,437.5 556,875 649,687.5
Total profit share 903,437.5 736,875 859,687.5

4) V A C
Cars/cash contributed 3,000,000 6,000,000 7,000,000
Sales withheld (4,000,000) (6,000,000) (5,000,000)
Returns (2,000,000) (1,500,000)
Profit share 903,437.5 736,875 859,687.5
(P96,562.5) (1,263,125) 1,359,687.5

PROBLEM A

B.
BOOKS OF Red BOOKS OF Bon

Joint Operation 1,000,000 Joint Operation 1,000,000

Cash 500,000 Cash 500,000

Tad 500,000 Red 500,000

Joint Operation 50,000 Joint Operation 500,000

Cash 50,000 Red 50,000

Cash 500,000 Cash 500,000

AR 500,000 AR 500,000

Bon 1 ,250,000 Red 1,250,000

Joint Operation 2,250,000 Joint Operation 2,250,000

Joint Operation 75,000 Joint Operation 75,000

Bon 75,000 Cash 75,000

Merchandise 20,000 Merchandise 13,000

28
 Bon 13,000 Red 20,000

Joint Operation 33,000 Joint Operation 33,000

Joint operation 1,158,000 Joint operation 1,158,000

Income fr Joint Operation 571,500 Income fr Joint Operation 586,500

Bon 586,500 Red 571,500

Cash 101,500 Red 101,500

Bon 101,500 Cash 101,500

a)
b) Joint Operation Red
1,000,000 2,250,000 1,000,000 500,000
50,000 33,000 20,000 50,000
75,000 571,500
Balance 1,158,000 Balance 101,500
c)
d) Bon
1,250,000 500,000
13,000 75,000
586,500
Balance 101,500
e)
f) Profit Table
Profit of P1,158,000 Red Bon

6% commission (135,000) P 60,000 75,000

Remainder equally (1,023,000) 511,500 511,500

571,500 586,500

Test I. Nos. 2, 4,5,6,7, and 9 are true.

1. False. IFRS 11 should be 10.
3. False because it could be either A and B or B and C. Control should be joint and not collective.
8. False. Always should be either or
10. False. P40,000 should be P10,000 only.

PROBLEM A.
Sales P240,000
Sales discounts 4,050
Net sales P235,950
Cost of sales
(P66,000 + 90,000 15,000 11,400) 129,600
Gross profit 106,350
Expenses ( 58,650)
Receivables written off ( 6,450)
Net profit before bonus P 41,250
Bonus to B
Bonus = 25% x (P41,250 bonus)
= P10,312.50 - .25 bonus
1.25 Bonus = P10,312.50
Bonus = P10,312.50 /1.25
= P8,250 8,250
Net profit after bonus P 33,000

Answer: D P62,210 & P90,170

Bert Oscar Xavier Total
Contributed merchandise - P( 66,000) P(90,000) P156,000
Net sales P235,950 (235,950)
Write-off ( 6,450) 6,450
Unsold merchandise 15,000 11,400 ( 26,400)

29
 Expense ( 58,650) 58,650
Bonus ( 8,250) 8,250
Interest on investments
P66,000 x 6% x 3/12 ( 990) 990
P90,000 x 6% x 3/12 ( 1,350) 1,350
Net profit after bonus &
interest
(P33,000 P990 P1,350) ( 10,220) ( 10,220) (10,220) 30,660
Cash settlement from (to) P152,380 P( 62,210) P(90,170) P 0

B.
BOOKS OF Red BOOKS OF Bon
Joint Operation 500,000 Joint Operation 500,000
Cash 500,000 Cash 500,000

Joint Operation 50,000

Cash 50,000

Cash 500,000 Cash 625,000

AR 500,000 AR 625,000
Joint Operation 1,000,000 Joint Operation 1,250,000

Joint Operation 75,000

Cash 75,000

Cash 500,000 Cash 625,000

AR 500,000 AR 625,000

Merchandise 20,000 Merchandise 13,000

Joint Operation 20,000 Joint Operation 13,000

Joint operation 571,500 Joint operation 588,500

Income fr Joint Operation 571,500 Income fr Joint Operation 586,500

Cash 101,500 Red 101,500

Bon 101,500 Cash 101,500
Joint Operation Joint Operation
500,000 1,000,000 500,000 1,250,000
50,000 20,000 75,000 13,000

Balance 470,000 Balance 688,000

Profit Table
Profit of P1,158,000 Red Bon
6% commission (135,000) P 60,000 75,000
Remainder equally (1,023,000) 511,500 511,500
571,500 586,500

D. Joint Operation
Stallconstructed by Xeres 5,000 Sales withheld by Xeres 75,000
Purchases by Xeres 40,000 Sales withheld by Yohan 90,000
Purchases by Yohan 50,000 Sales withheld by Zhuken 50,000
Operating Expenses by Zhuken 6,000 Stall dismantled & taken by Xeres 3,500
Taxes and Licenses paid by Zhuken 5,000 Mdse taken over by Xeres 2,500
Purchases by Zhuken 29,000 Mdse taken over by Yohan 5,000
Mdse taken over by Zhuken4,000
135,000 230,000
Profit P95,000

Table to distribute profit X Y Z Total

10% commission 4,000 5,000 2,900 11,900
Rem 2:2:1 33,240 33,240 16,620 83,100
37,240 38,240 19,520 95,000
Equity (Accountability)
X Y Z
Investment 45,000 50,000 40,000

30
 Profit share 37,240 38,240 19,520
Withheld (81,000) (95,000) (54,000)
1,240 (6,760) 5,520

X Y Z
Inventory 2,500 Inventory 5,000 Inventory 4,000
Y 5,000 X 2,500 X 2,500
Z 4,000 Z 4,000 Y 5,000
Joint Operation 11,500 JointOperation 11,500 Joint Operation 11,500

Joint Operation 95,000 Joint Operaton 95,000 Joint Operation95,000

Income fr joint Oper 37,240 Income Income
38,240 19,520
Y 38,240 X X
37,240 37,240
Z 19,520 Z Y
19,520 38,240
Z
Record cash settlement:
X Y Z

Cash 1,240 X 1,240 Cash 5,520

Z 5,520 Z 5,520 X 1,240
Y 6,760 Cash 6,760 Y 6,760

MULTIPLE CHOICE:
1. 1) J O balance 90,000
Unsold merchandise to T 25,000
115,000
Less Bonus of T 15,000
Net Income 100,000
Share of T at 25% 25,000
Answer: C (15,000 + 25,000)= P40,000

2) R S
Profit Share 40,000 35,000
Add Credit Balance 20,000
Less Debit Balance 5,000 ______
35,000 55,000
Answer: B

2. 1) Joint Operation P70,000

Less Unsold 10,000
JV Loss P60,000
Answer: B

2) C, Capital P40,000
Share in loss (72,000/3) 24,000
P16,000
Answer: C

3. Sales P150,000
Cost of Sales P120,000
Freight 3,000
Expenses 15,000 138,000
Profit P 12,000
Answer: D

4. Total Debits P118,000

Total Credits 50,000
Lizas Equity P 68,000
Answer: A

5. Total receipts P15,034,500

Total disbursements 13,297,000
Net Income P 1,737,500
Binan (60%) P 1,042,500
Sucat P 695,000

6..

31
 Investment in Joint Operation X Capital Y,
Capital
1) 200 4) 3,400 4) 3,400 1) 200 4) 5,200 2) 1,000
2) 5,000 5,200 5) 60 2) 4,000 5) 60 8) 2,250
3) 100 1,200 7) 50 8) 1,870
6) 100
7) 50
Profit 4,650 2,560 2,010

Z Capital
4) 200 3) 100
6) 100 5) 120
8) 530

Balance 550

Profit Distribution: X Y Z Total

Z for service 50 P 50
40%com on sales 1,360 2,080 480 3,920
Remainder 3:1 510 170 680
1,870 2,250 530 P 4,650

7.
Investment in Joint Operation LL Capital MM Capital
L 16,000 (1) 18,000 16,000 32,000
N 32,000 1,200 Profit 3,600
Profit 3,600
JV bef P & L 30,000 Unsold 40,000
Bonus 1,200
Rem Profit 10,800 20,800 35.600

NN Capital
(1) 18,000 Profit 3,600
Bal 14,400

LL pays MM P35,600 and in turn receives from LL P14,400.

32