Solution Manual and Test Bank Advanced Accounting by Guerrero & Peralta 2 CHAPTER 06
Joint Venture
103
CHAPTER 6
SOLUTIONS TO MULTIPLE CHOICES
6-1: a
Assets per Jessica Company- balance sheet
Jessica’s proportionate interest in assets of JV (50%)
Total assets of Jessica
6-2: a
P3,550,000
1,000,000
P4550,000
Total liabilities only of Jenny Co.
6-3: b
6-4: b
Investment of Heart
Profit share:
Sales
Cost of sales (150,800 ÷ 125%)
Gross profit
Expenses
Net Profit
Profit/loss ratio
Balance of investment in JV
P80,000
150,800
120,640
30,160
10,000
20,160
x 40%
8,064
P88,064
6-5: a
Cash
Merchandise inventory
Accounts receivable
Total assets
Sweet Co’s, proportionate interest
Sweet Company’s share in total asset
P190,000
29,360
150,800
370,160
x 60%
P222,096
6-6: a
Sales
Cost of sales
Purchases
Merchandise inventory, end (50% of P10,000)
7,200
P10,000
__5,000
_5,000
Gross profit
Expenses
2,200
___500
Net profit
P 1,700
104
Chapter 6
6-7: b
Original investment (cash)
Profit share (P1,700 / 2)
P10,000
___850
Balance of Investment account
P10,850
Joint venture account before profit distribution (credit balance)
Unsold merchandise
P 9,000
__2,500
Joint venture profit before fee to Salas
P11,500
Joint venture profit after fee to Salas (P11,500 / 115%)
P10,000
6-8: a
6-9: b
Fee of Salas (P10,000 x 15%)
Profit share of Salas (P10,000 x 25%)
P 1,500
_2,500
Total
P 4,000
6-10: b
Salas
Salve
Balance before profit distribution
Profit share:Sabas (P10,000 x 40%)
Salve (P10,000 x 35%)
P 500 (dr) P 2,000 (cr)
4,000
______
_3,500
Balance
P 3,500 (cr) P 5,500 (cr)
6-11: d
Joint venture account balance before profit distribution (debit)
Joint venture profit (P4,500 x 3)
P 6,000
_13,500
Cost of unsold merchandise (inventory) taken by Dante
P19,500
Edwin Capital:
Debits: Balance before profit distribution
Credits: Profit share
P14,000
__4,500
6-12: b
Due from Edwin (debit balance)
P 9,500
Joint Venture
105
Settlement to Ferdie (Balance of capital account)
Debits:
Credits: Balance before profit distribution
Profit share
P –0–
P16,000
__4,500
Due to Ferdie (credit balance)
_20,500
P20,500
Settlement to Dante (balance of JV Cash account)
Debits: Balance before cash settlement
Due from Edwin
Credits: Due to Ferdie
P30,000
__9,500
Balance
P39,500
_20,500
P19,000
6-13: a
JV account balance before profit distribution (cr)
Unsold merchandise (required dr balance after profit distribution)
P 4,600
__2,000
Joint venture profit before fee to Jerry
Joint venture profit after fee (P6,600 / 110%)
Fee to Jerry
P 6,600
__6,000
P 600
6-14: d
Harry Capital
Balances before profit distribution
Profit distribution:
Harry P6,000 x 50%)
Isaac (P6,000 x 20%)
(P 200)
Cash settlements
P 2,800
Isaac Capital
P 1,800
3,000
1,200
P 3,000
6-15: b
Sales
Cost of sales:
Merchandise inventory, beg (contributions)
Freight
Purchases
P14,000
300
__4,000
Goods available for sale
Merchandise inventory, end (P8,300/2)
P18,300
__4,150
Gross profit (loss)
Expenses (P400 + P200)
Net profit (loss)
P14,000
14,150
(150)
__600
P( 750)
6-16: c
Contributions to the Joint Venture (P5,000 + P8,000)
Loss share (P750 x 50%)
Unsold merchandise taken (withdrawal)
P13,000
( 375)
( 4,150)
Final settlement to jack
P 8,475
106
Chapter 6
SOLUTIONS TO PROBLEMS
Problem 6 – 1
Books of Blanco (Manager)
JV Cash
Joint Venture
Cash
Ablan Capital
100,000
90,000
Investment in JV
Merchandise inventory
90,000
Investment in JV
Profit from JV
15,000
90,000
100,000
90,000
Joint Venture
JV cash
60,000
Joint Venture
JV cash
20,000
JV cash
Joint Venture
Books of Ablan
60,000
20,000
200,000
200,000
Computation of JV Profit
Total debit to JV
Total credit to JV
P170,000
P200,000
Credit balance (Profit)
P 30,000
Distribution
Joint Venture
Profit from JV
Ablan capital
Ablan capital
JV cash
Cash
JV cash
30,000
15,000
15,000
105,000
105,000
155,000
155,000
Cash
Investment in JV
15,000
105,000
105,000
Joint Venture
107
Problem 6 – 2
Books of the Joint Venture
1.
2.
3.
4.
Computer equipment
Ella capital
Fabia capital
105,000
60,000
45,000
Purchases
Supplies
Diaz capital
80,000
2,000
Expenses
Diaz capital
9,000
Cash
82,000
9,000
150,000
Sales
5.
6.
7.
8.
150,000
Expenses
Cash
30,000
Merchandise inventory
Ella capital
20,000
Fabia capital
Cash
10,000
30,000
20,000
10,000
Adjusting and closing entries:
(a)
(b)
Expenses
Supplies
Sales
500
500
150,000
Income summary
150,000
Income summary
Merchandise inventory
Purchases
77,500
2,500
Income summary
Expenses
39,500
Distribution of profit:
Income summary
Diaz capital
Ella capital
Fabia capital
80,000
39,500
33,000
11,000
11,000
11,000
108
Chapter 6
Books of Diaz
(1)
(2)
(3)
Investment in Joint Venture
Cash
82,000
Investment in Joint Venture
Cash
9,000
82,000
9,000
To record profit share:
Investment in Joint Venture
Profit from Joint Venture
11,000
11,000
Books of Ella:
(1)
(2)
(3)
Investment in Joint Venture
Computer equipment
60,000
Investment in Joint Venture
Merchandise inventory
20,000
60,000
20,000
To record profit share:
Investment in Joint Venture
Profit from Joint Venture
11,000
11,000
Books of Fabia:
(1)
(2)
Investment in Joint Venture
Computer equipment
45,000
Cash
10,000
45,000
Investment in Joint Venture
(3)
10,000
To record profit share:
Investment in Joint Venture
Profit from Joint Venture
11,000
11,000
Joint Venture
109
Problem 6 – 3
(1)
No Separate Set of Joint Venture Books is Used
Books of Duran (Manager)
May 1:
7:
Joint Venture
Castro capital
Cash
12,500
JV cash
Bueno capital
10,000
26: Joint Venture
JV cash
12,000
500
10,000
9,500
9,500
30: JV accounts receivable
Joint Venture
16,000
June 30: JV cash
JV accounts receivable
15,000
27: JV cash
Joint Venture
16,000
15,000
9,000
9,000
30: To record unsold merchandise taken by Duran:
Merchandise inventory
Joint Venture
3,000
3,000
To record profit distribution:
Joint Venture
Profit from JV
Bueno capital
Castro capital
6,000
2,000
2,000
2,000
To record settlements:
Bueno capital
Castro capital
JV cash
Cash
Accounts receivable
JV accounts receivable
12,000
14,000
24,500
1,500
1,000
1,000
110
Chapter 6
Books of Bueno
May 7:
Investment in Joint Venture
Cash
June 30: Investment in Joint Venture
Profit from Joint Venture
Cash
10,000
10,000
2,000
2,000
12,000
Investment in Joint Venture
12,000
Books of Castro
May 1:
Investment in Joint Venture
Merchandise inventory
June 30: Investment in Joint Venture
Profit from Joint Venture
Cash
12,000
12,000
2,000
2,000
14,000
Investment in Joint Venture
(2)
14,000
A Separate Set of Books is used:
Books of the Joint Venture
May 1:
7:
Merchandise inventory
Castro capital
Duran capital
12,500
Cash
10,000
12,000
500
Bueno capital
26: Purchases
Cash
30: Accounts receivable
Sales
June 20: Cash
10,000
9,500
9,500
16,000
16,000
15,000
Accounts receivable
27: Cash
15,000
9,000
Sales
9,000
Joint Venture
111
June 30: Closing entries:
Sales
25,000
Income summary
Income summary
Merchandise inventory, end
Merchandise inventory
Purchases
25,000
19,000
3,000
12,500
9,500
Distribution of profit:
Income summary
Bueno capital
Castro capital
Duran capital
6,000
2,000
2,000
2,000
Settlements to Venturers:
Bueno capital
Castro capital
Duran capital
Merchandise inventory
Accounts receivable
Cash
12,000
14,000
2,500
3,000
1,000
24,500
Books of Duran (Manager/Operator)
May 1:
Investment in Joint Venture
Cash
June 30: Investment in Joint Venture
Profit from Joint Venture
Cash
500
500
2,000
2,000
2,500
Investment in Joint Venture
Books of Bueno and Castro (Same as in No. 1 requirement)
2,500
112
Chapter 6
Problem 6 – 4
(1)
Books of Seiko (Manager/Operator)
April 1:
May:
June:
JV Cash
Notes payable – PNB
Roles capital
Timex capital
August:
34,000
34,000
34,000
Joint venture
Cash
Rolex capital
64,100
Rolex capital
JV cash
30,000
Joint venture
Cash
Rolex capital
Timex capital
July:
102,000
16,300
7,800
30,000
111,400
37,400
64,700
9,300
Cash
Rolex capital
Timex capital
JV cash
40,000
15,000
10,000
Joint venture
Cash
Rolex capital
Timex capital
55,770
Cash
Rolex capital
Timex capital
JV cash
45,000
67,000
13,500
Joint venture
Cash
Rolex capital
Timex capital
30,600
65,000
13,970
31,240
10,560
125,500
9,730
16,560
4,310
To record sales:
JV cash (P421,000 x 96%)
Joint venture
404,160
404,160
Joint Venture
113
To record payment of loan to PNB:
Notes payable – PNB
Rolex capital
Timex capital
Joint venture (Interest expense)
JV cash
34,000
34,000
34,000
8,000
110,000
To record distribution of profit:
Joint venture
Gain from JV (30%)
Rolex capital (60%)
Timex capital (10%)
134,290
40,287
80,574
13,429
Computed as follows:
Total debits tot he JV account
Total credits to the JV account
P269,870
_404,160
Gain (credit balance)
P134,290
To record settlement:
Cash
Rolex capital
Times capital
JV cash
32,687
128,874
14,099
175,660
Computations:
Settlement to Rolex - Balance of capital account:
Debits: June
July
August
Payment of note payable
P30,000
15,000
67,000
_34,000
P146,000
Credits: April 1
May
June
July
August
Profit share
P34,000
47,800
64,700
31,240
16,560
_80,574
__274,874
Credit balance
P 128,874
114
Chapter 6
Settlement to timex – Balance of capital account
Debits: July
August
Payment of loan
P 10,000
13,500
__34,000
P 57,500
Credits: April 1
June
July
August
Profit share
P 34,000
9,300
10,560
4,310
__13,429
_71,599
Credit balance
P 14,099
Settlement to Seiko – Balance of JV cash account
Debits: April 1
Loan proceeds
P102,000
_404,160
P506,160
Credits: June
July
August
Payment of loan
P 30,000
65,000
125,500
_110,000
_330,500
Balance of JV cash
Less: Settlement to Rolex
Settlement to Timex
P128,874
__14,099
175,660
Settlement to Seiko
(2)
_142,973
P 32,687
Partial Balance Sheet
June 30, 2008
Books of Seiko (Manager/operator)
Current assets:
Investment in joint Venture:
Joint Venture assets:
Cash
Joint Venture
Less: Equity of other venturers
(P116,500 + P43,300)
Current liabilities:
Notes payable – PNB
P 72,000
_175,500
P247,500
_159,800
87,700
34,000
Joint Venture
115
Computation of balances as of June 30, 2008:
JV Cash
April 1 P102,000
Balance P 72,000
P30,000
Joint Venture
June
May
June
P 64,100
_111,400
Balance P175,500
Notes Payable
P34,000
Rolex capital
April
June
P 30,000
_______
P 34,000
47,800
__64,700
P 30,000
P146,500
April 1
May
June
P116,500
Timex capital
P34,000
__9,000
April
June
P43,300
Problem 6 – 5
Consolidated Balance Sheet
Cash
Receivables
Inventory
Other assets
P 61,000
122,000
102,500
__40,500
Total assets
P326,000
Accounts payable
Other liabilities
Capital stock
Retained earnings
P 61,000
96,500
50,000
_118,500
Total liabilities and stockholders' equity
P326,000
Consolidated Income Statement
Sales
Cost of sales
P246,750
_124,750
Gross profit
Operating expenses
122,000
__58,250
Consolidated net income
P 63,750
116
Chapter 6
Problem 6 –6
(a)
Journal entries on venture books
June 15:
Cash
1,000,000
MacDo
Initial contribution at 6%
July 1:
Aug 1:
1,000,000
Land
2,400,000
Mortgage payable
Cash
Purchased land for cash and 6% mortgage.
Cash
1,100,000
MacDo
Additional contribution at 6%.
Land
1,100,000
950,000
Cash
Paid for improvements.
Sept 30:
Oct 31:
Nov 30:
Dec 31:
1,650,000
750,000
950,000
Mortgage payable
Interest expense- Mortgage
Cash
Reduced mortgage and paid interest.
250,000
3,750
Mortgage payable
Interest expense- Mortgage
Cash
Reduced mortgage and paid interest.
400,000
8,000
Mortgage payable
Interest expense- Mortgage
Cash
Reduced mortgage and paid interest.
300,000
7,500
253,750
408,000
Mortgage payable
200,000
Interest expense- Mortgage
21,000
Cash
Reduced mortgage and make semi-annual
interest payment.
307,500
221,000
Joint Venture
31:
117
Cash
2,600,000
Sales
Sales to date.
31:
31:
31:
31:
2,600,000
Commissions
Cash
P2,600,000 x 5%
130,000
Expenses
Cash
Paid expenses
628,100
Interest expense- Venturer
MacDo
6% on P1,000,000 from June 15 to
December 31, and on P1,100,000
from August 1 to December 31.
Sales
130,000
628,100
60,000
60,000
2,600,000
Land (cost of land sold)
Expenses
Commissions
Interest expense- mortgage
Interest- venturer
Income summary
To close income and expense accounts.
31:
31:
1,145,000
628,100
130,000
40,250
60,000
596,650
Income summary
MacDo
MacEn
To divide gain, 60:40.
596,650
MacDo
801,650
596,650
238,660
Cash
Payment on account.
(b)
801,650
Journal entries on MacDo’s books:
June 15:
Aug 1:
Investment in Joint Venture
Cash
Initial contribution.
1,000,000
Investment in Joint Venture
Cash
Additional contribution.
1,100,000
1,000,000
1,100,000
118
Chapter 6
Dec 31:
31:
31:
Investment in Joint Venture
Interest income
Interest earned on cash advanced.
60,000
60,000
Investment in Joint Venture
Gain on Joint Venture
60% of gain on venture.
357,990
Cash
801,650
357,990
Investment in Joint Venture
Repayment in part of advances.
(c)
801,650
MacDo and MacEn Joint Venture
Income Statement
For the period from June 15 to December 31, 2008
Sales
Cost of land sold:
Land
Improvements
Total
Unsold land
Gross profit
Expenses:
Advertising and office expenses
Interest on mortgage
Interest on advances
Commissions
Net gain
Distributions:
MacDo (P596,650 x 60%)
MacEn (P596,650 x 40%)
P2,600,000
P2,400,000
950,000
P3,350,000
2,205,000
P 628,100
40,250
60,000
130,000
1,145,000
1,455,000
858,350
P 596,650
P 357,990
238,660
Mac Do and MacEn Joint Venture
Balance Sheet
December 31, 2008
Assets
Cash
Land
Total Assets
P 250,000
2,205,000
P2,455,000
Liabilities and equity:
Mortgage payable
MacDo
MacEn
Total liabilities and equity
P 500,000
1,716,340
238,660
P2,455,000
Joint Venture
119
Venturers equity (interest)
Invested
Shares:
Gain
Interest on advances
Commissions
Total
Balances
Withdrawn
Equity (interests)
MacDo
P2,100,000
MacEn
Total
P2,100,000
P 357,990
60,000
P238,660
P 596,650
60,000
130,000
786,650
2,886,650
(931,650)
P1,955,000
417,990
2,517,990
(801,650)
P1,716,340
130,000
368,660
368,660
(130,000)
P238,660
103
CHAPTER 6
SOLUTIONS TO MULTIPLE CHOICES
6-1: a
Assets per Jessica Company- balance sheet
Jessica’s proportionate interest in assets of JV (50%)
Total assets of Jessica
6-2: a
P3,550,000
1,000,000
P4550,000
Total liabilities only of Jenny Co.
6-3: b
6-4: b
Investment of Heart
Profit share:
Sales
Cost of sales (150,800 ÷ 125%)
Gross profit
Expenses
Net Profit
Profit/loss ratio
Balance of investment in JV
P80,000
150,800
120,640
30,160
10,000
20,160
x 40%
8,064
P88,064
6-5: a
Cash
Merchandise inventory
Accounts receivable
Total assets
Sweet Co’s, proportionate interest
Sweet Company’s share in total asset
P190,000
29,360
150,800
370,160
x 60%
P222,096
6-6: a
Sales
Cost of sales
Purchases
Merchandise inventory, end (50% of P10,000)
7,200
P10,000
__5,000
_5,000
Gross profit
Expenses
2,200
___500
Net profit
P 1,700
104
Chapter 6
6-7: b
Original investment (cash)
Profit share (P1,700 / 2)
P10,000
___850
Balance of Investment account
P10,850
Joint venture account before profit distribution (credit balance)
Unsold merchandise
P 9,000
__2,500
Joint venture profit before fee to Salas
P11,500
Joint venture profit after fee to Salas (P11,500 / 115%)
P10,000
6-8: a
6-9: b
Fee of Salas (P10,000 x 15%)
Profit share of Salas (P10,000 x 25%)
P 1,500
_2,500
Total
P 4,000
6-10: b
Salas
Salve
Balance before profit distribution
Profit share:Sabas (P10,000 x 40%)
Salve (P10,000 x 35%)
P 500 (dr) P 2,000 (cr)
4,000
______
_3,500
Balance
P 3,500 (cr) P 5,500 (cr)
6-11: d
Joint venture account balance before profit distribution (debit)
Joint venture profit (P4,500 x 3)
P 6,000
_13,500
Cost of unsold merchandise (inventory) taken by Dante
P19,500
Edwin Capital:
Debits: Balance before profit distribution
Credits: Profit share
P14,000
__4,500
6-12: b
Due from Edwin (debit balance)
P 9,500
Joint Venture
105
Settlement to Ferdie (Balance of capital account)
Debits:
Credits: Balance before profit distribution
Profit share
P –0–
P16,000
__4,500
Due to Ferdie (credit balance)
_20,500
P20,500
Settlement to Dante (balance of JV Cash account)
Debits: Balance before cash settlement
Due from Edwin
Credits: Due to Ferdie
P30,000
__9,500
Balance
P39,500
_20,500
P19,000
6-13: a
JV account balance before profit distribution (cr)
Unsold merchandise (required dr balance after profit distribution)
P 4,600
__2,000
Joint venture profit before fee to Jerry
Joint venture profit after fee (P6,600 / 110%)
Fee to Jerry
P 6,600
__6,000
P 600
6-14: d
Harry Capital
Balances before profit distribution
Profit distribution:
Harry P6,000 x 50%)
Isaac (P6,000 x 20%)
(P 200)
Cash settlements
P 2,800
Isaac Capital
P 1,800
3,000
1,200
P 3,000
6-15: b
Sales
Cost of sales:
Merchandise inventory, beg (contributions)
Freight
Purchases
P14,000
300
__4,000
Goods available for sale
Merchandise inventory, end (P8,300/2)
P18,300
__4,150
Gross profit (loss)
Expenses (P400 + P200)
Net profit (loss)
P14,000
14,150
(150)
__600
P( 750)
6-16: c
Contributions to the Joint Venture (P5,000 + P8,000)
Loss share (P750 x 50%)
Unsold merchandise taken (withdrawal)
P13,000
( 375)
( 4,150)
Final settlement to jack
P 8,475
106
Chapter 6
SOLUTIONS TO PROBLEMS
Problem 6 – 1
Books of Blanco (Manager)
JV Cash
Joint Venture
Cash
Ablan Capital
100,000
90,000
Investment in JV
Merchandise inventory
90,000
Investment in JV
Profit from JV
15,000
90,000
100,000
90,000
Joint Venture
JV cash
60,000
Joint Venture
JV cash
20,000
JV cash
Joint Venture
Books of Ablan
60,000
20,000
200,000
200,000
Computation of JV Profit
Total debit to JV
Total credit to JV
P170,000
P200,000
Credit balance (Profit)
P 30,000
Distribution
Joint Venture
Profit from JV
Ablan capital
Ablan capital
JV cash
Cash
JV cash
30,000
15,000
15,000
105,000
105,000
155,000
155,000
Cash
Investment in JV
15,000
105,000
105,000
Joint Venture
107
Problem 6 – 2
Books of the Joint Venture
1.
2.
3.
4.
Computer equipment
Ella capital
Fabia capital
105,000
60,000
45,000
Purchases
Supplies
Diaz capital
80,000
2,000
Expenses
Diaz capital
9,000
Cash
82,000
9,000
150,000
Sales
5.
6.
7.
8.
150,000
Expenses
Cash
30,000
Merchandise inventory
Ella capital
20,000
Fabia capital
Cash
10,000
30,000
20,000
10,000
Adjusting and closing entries:
(a)
(b)
Expenses
Supplies
Sales
500
500
150,000
Income summary
150,000
Income summary
Merchandise inventory
Purchases
77,500
2,500
Income summary
Expenses
39,500
Distribution of profit:
Income summary
Diaz capital
Ella capital
Fabia capital
80,000
39,500
33,000
11,000
11,000
11,000
108
Chapter 6
Books of Diaz
(1)
(2)
(3)
Investment in Joint Venture
Cash
82,000
Investment in Joint Venture
Cash
9,000
82,000
9,000
To record profit share:
Investment in Joint Venture
Profit from Joint Venture
11,000
11,000
Books of Ella:
(1)
(2)
(3)
Investment in Joint Venture
Computer equipment
60,000
Investment in Joint Venture
Merchandise inventory
20,000
60,000
20,000
To record profit share:
Investment in Joint Venture
Profit from Joint Venture
11,000
11,000
Books of Fabia:
(1)
(2)
Investment in Joint Venture
Computer equipment
45,000
Cash
10,000
45,000
Investment in Joint Venture
(3)
10,000
To record profit share:
Investment in Joint Venture
Profit from Joint Venture
11,000
11,000
Joint Venture
109
Problem 6 – 3
(1)
No Separate Set of Joint Venture Books is Used
Books of Duran (Manager)
May 1:
7:
Joint Venture
Castro capital
Cash
12,500
JV cash
Bueno capital
10,000
26: Joint Venture
JV cash
12,000
500
10,000
9,500
9,500
30: JV accounts receivable
Joint Venture
16,000
June 30: JV cash
JV accounts receivable
15,000
27: JV cash
Joint Venture
16,000
15,000
9,000
9,000
30: To record unsold merchandise taken by Duran:
Merchandise inventory
Joint Venture
3,000
3,000
To record profit distribution:
Joint Venture
Profit from JV
Bueno capital
Castro capital
6,000
2,000
2,000
2,000
To record settlements:
Bueno capital
Castro capital
JV cash
Cash
Accounts receivable
JV accounts receivable
12,000
14,000
24,500
1,500
1,000
1,000
110
Chapter 6
Books of Bueno
May 7:
Investment in Joint Venture
Cash
June 30: Investment in Joint Venture
Profit from Joint Venture
Cash
10,000
10,000
2,000
2,000
12,000
Investment in Joint Venture
12,000
Books of Castro
May 1:
Investment in Joint Venture
Merchandise inventory
June 30: Investment in Joint Venture
Profit from Joint Venture
Cash
12,000
12,000
2,000
2,000
14,000
Investment in Joint Venture
(2)
14,000
A Separate Set of Books is used:
Books of the Joint Venture
May 1:
7:
Merchandise inventory
Castro capital
Duran capital
12,500
Cash
10,000
12,000
500
Bueno capital
26: Purchases
Cash
30: Accounts receivable
Sales
June 20: Cash
10,000
9,500
9,500
16,000
16,000
15,000
Accounts receivable
27: Cash
15,000
9,000
Sales
9,000
Joint Venture
111
June 30: Closing entries:
Sales
25,000
Income summary
Income summary
Merchandise inventory, end
Merchandise inventory
Purchases
25,000
19,000
3,000
12,500
9,500
Distribution of profit:
Income summary
Bueno capital
Castro capital
Duran capital
6,000
2,000
2,000
2,000
Settlements to Venturers:
Bueno capital
Castro capital
Duran capital
Merchandise inventory
Accounts receivable
Cash
12,000
14,000
2,500
3,000
1,000
24,500
Books of Duran (Manager/Operator)
May 1:
Investment in Joint Venture
Cash
June 30: Investment in Joint Venture
Profit from Joint Venture
Cash
500
500
2,000
2,000
2,500
Investment in Joint Venture
Books of Bueno and Castro (Same as in No. 1 requirement)
2,500
112
Chapter 6
Problem 6 – 4
(1)
Books of Seiko (Manager/Operator)
April 1:
May:
June:
JV Cash
Notes payable – PNB
Roles capital
Timex capital
August:
34,000
34,000
34,000
Joint venture
Cash
Rolex capital
64,100
Rolex capital
JV cash
30,000
Joint venture
Cash
Rolex capital
Timex capital
July:
102,000
16,300
7,800
30,000
111,400
37,400
64,700
9,300
Cash
Rolex capital
Timex capital
JV cash
40,000
15,000
10,000
Joint venture
Cash
Rolex capital
Timex capital
55,770
Cash
Rolex capital
Timex capital
JV cash
45,000
67,000
13,500
Joint venture
Cash
Rolex capital
Timex capital
30,600
65,000
13,970
31,240
10,560
125,500
9,730
16,560
4,310
To record sales:
JV cash (P421,000 x 96%)
Joint venture
404,160
404,160
Joint Venture
113
To record payment of loan to PNB:
Notes payable – PNB
Rolex capital
Timex capital
Joint venture (Interest expense)
JV cash
34,000
34,000
34,000
8,000
110,000
To record distribution of profit:
Joint venture
Gain from JV (30%)
Rolex capital (60%)
Timex capital (10%)
134,290
40,287
80,574
13,429
Computed as follows:
Total debits tot he JV account
Total credits to the JV account
P269,870
_404,160
Gain (credit balance)
P134,290
To record settlement:
Cash
Rolex capital
Times capital
JV cash
32,687
128,874
14,099
175,660
Computations:
Settlement to Rolex - Balance of capital account:
Debits: June
July
August
Payment of note payable
P30,000
15,000
67,000
_34,000
P146,000
Credits: April 1
May
June
July
August
Profit share
P34,000
47,800
64,700
31,240
16,560
_80,574
__274,874
Credit balance
P 128,874
114
Chapter 6
Settlement to timex – Balance of capital account
Debits: July
August
Payment of loan
P 10,000
13,500
__34,000
P 57,500
Credits: April 1
June
July
August
Profit share
P 34,000
9,300
10,560
4,310
__13,429
_71,599
Credit balance
P 14,099
Settlement to Seiko – Balance of JV cash account
Debits: April 1
Loan proceeds
P102,000
_404,160
P506,160
Credits: June
July
August
Payment of loan
P 30,000
65,000
125,500
_110,000
_330,500
Balance of JV cash
Less: Settlement to Rolex
Settlement to Timex
P128,874
__14,099
175,660
Settlement to Seiko
(2)
_142,973
P 32,687
Partial Balance Sheet
June 30, 2008
Books of Seiko (Manager/operator)
Current assets:
Investment in joint Venture:
Joint Venture assets:
Cash
Joint Venture
Less: Equity of other venturers
(P116,500 + P43,300)
Current liabilities:
Notes payable – PNB
P 72,000
_175,500
P247,500
_159,800
87,700
34,000
Joint Venture
115
Computation of balances as of June 30, 2008:
JV Cash
April 1 P102,000
Balance P 72,000
P30,000
Joint Venture
June
May
June
P 64,100
_111,400
Balance P175,500
Notes Payable
P34,000
Rolex capital
April
June
P 30,000
_______
P 34,000
47,800
__64,700
P 30,000
P146,500
April 1
May
June
P116,500
Timex capital
P34,000
__9,000
April
June
P43,300
Problem 6 – 5
Consolidated Balance Sheet
Cash
Receivables
Inventory
Other assets
P 61,000
122,000
102,500
__40,500
Total assets
P326,000
Accounts payable
Other liabilities
Capital stock
Retained earnings
P 61,000
96,500
50,000
_118,500
Total liabilities and stockholders' equity
P326,000
Consolidated Income Statement
Sales
Cost of sales
P246,750
_124,750
Gross profit
Operating expenses
122,000
__58,250
Consolidated net income
P 63,750
116
Chapter 6
Problem 6 –6
(a)
Journal entries on venture books
June 15:
Cash
1,000,000
MacDo
Initial contribution at 6%
July 1:
Aug 1:
1,000,000
Land
2,400,000
Mortgage payable
Cash
Purchased land for cash and 6% mortgage.
Cash
1,100,000
MacDo
Additional contribution at 6%.
Land
1,100,000
950,000
Cash
Paid for improvements.
Sept 30:
Oct 31:
Nov 30:
Dec 31:
1,650,000
750,000
950,000
Mortgage payable
Interest expense- Mortgage
Cash
Reduced mortgage and paid interest.
250,000
3,750
Mortgage payable
Interest expense- Mortgage
Cash
Reduced mortgage and paid interest.
400,000
8,000
Mortgage payable
Interest expense- Mortgage
Cash
Reduced mortgage and paid interest.
300,000
7,500
253,750
408,000
Mortgage payable
200,000
Interest expense- Mortgage
21,000
Cash
Reduced mortgage and make semi-annual
interest payment.
307,500
221,000
Joint Venture
31:
117
Cash
2,600,000
Sales
Sales to date.
31:
31:
31:
31:
2,600,000
Commissions
Cash
P2,600,000 x 5%
130,000
Expenses
Cash
Paid expenses
628,100
Interest expense- Venturer
MacDo
6% on P1,000,000 from June 15 to
December 31, and on P1,100,000
from August 1 to December 31.
Sales
130,000
628,100
60,000
60,000
2,600,000
Land (cost of land sold)
Expenses
Commissions
Interest expense- mortgage
Interest- venturer
Income summary
To close income and expense accounts.
31:
31:
1,145,000
628,100
130,000
40,250
60,000
596,650
Income summary
MacDo
MacEn
To divide gain, 60:40.
596,650
MacDo
801,650
596,650
238,660
Cash
Payment on account.
(b)
801,650
Journal entries on MacDo’s books:
June 15:
Aug 1:
Investment in Joint Venture
Cash
Initial contribution.
1,000,000
Investment in Joint Venture
Cash
Additional contribution.
1,100,000
1,000,000
1,100,000
118
Chapter 6
Dec 31:
31:
31:
Investment in Joint Venture
Interest income
Interest earned on cash advanced.
60,000
60,000
Investment in Joint Venture
Gain on Joint Venture
60% of gain on venture.
357,990
Cash
801,650
357,990
Investment in Joint Venture
Repayment in part of advances.
(c)
801,650
MacDo and MacEn Joint Venture
Income Statement
For the period from June 15 to December 31, 2008
Sales
Cost of land sold:
Land
Improvements
Total
Unsold land
Gross profit
Expenses:
Advertising and office expenses
Interest on mortgage
Interest on advances
Commissions
Net gain
Distributions:
MacDo (P596,650 x 60%)
MacEn (P596,650 x 40%)
P2,600,000
P2,400,000
950,000
P3,350,000
2,205,000
P 628,100
40,250
60,000
130,000
1,145,000
1,455,000
858,350
P 596,650
P 357,990
238,660
Mac Do and MacEn Joint Venture
Balance Sheet
December 31, 2008
Assets
Cash
Land
Total Assets
P 250,000
2,205,000
P2,455,000
Liabilities and equity:
Mortgage payable
MacDo
MacEn
Total liabilities and equity
P 500,000
1,716,340
238,660
P2,455,000
Joint Venture
119
Venturers equity (interest)
Invested
Shares:
Gain
Interest on advances
Commissions
Total
Balances
Withdrawn
Equity (interests)
MacDo
P2,100,000
MacEn
Total
P2,100,000
P 357,990
60,000
P238,660
P 596,650
60,000
130,000
786,650
2,886,650
(931,650)
P1,955,000
417,990
2,517,990
(801,650)
P1,716,340
130,000
368,660
368,660
(130,000)
P238,660