Solution manual advanced accounting by baysa lupisan chapter 04

AA1 - Chapter – Joint Ventures (2005) Suggested Answers page Exercise 4-2 Books of Alvin, Managing Partner Feb 12 14 15 20 20 20 Joint Venture Cash 10,000 Joint Venture Larry 2,000 Cash Larry Joint Venture 9,000 7,500 Cash Joint Venture 3,000 Joint Venture Income from Joint Venture Larry 10% commission on net purchases to Alvin 25% commission on own sales 7,500 Cash Larry Books of Larry Feb 12 Joint Venture Alvin 14 15 20 20 20 10,000 2,000 16,500 3,000 4,287.50 3,212.50 2,287.50 2,287.50 10,000 10,000 Joint Venture Cash 2,000 Cash Alvin Joint Venture 7,500 9,000 Alvin Joint Venture 3,000 Joint Venture Alvin Income from Joint Venture 10% commission on net purchases to Alvin 25% commission on own sales 7,500 Alvin Cash 2,000 16,500 3,000 4,287.50 3,212.50 2,287.50 2,287.50 AA1 - Chapter – Joint Ventures (2005) Suggested Answers page Problem 4-2 Requirement Books of Roland, Managing Partner Joint Venture Greg Medel Land Joint Venture Cash Improvements on land 40,300,000 19,500,000 13,000,000 7,800,000 3,000,000 3,000,000 Joint Venture Cash Joint Venture Sales by venturers 35,400,000 Joint Venture Cash Joint Venture Sales by salesmen 14,300,000 Joint Venture Joint Venture Cash Venture expenses Joint Venture Income from Joint Venture Salaries to Roland as managing partner 35,400,000 14,300,000 684,000 684,000 72,000 72,000 Joint Venture Income from Joint Venture Greg Medel 10% commission on own sales 3,540,000 Joint Venture Income from Joint Venture Greg Medel Balance of profit divided equally 2,104,000 Greg Medel Joint Venture Cash Final cash settlement 490,000 1,280,000 1,770,000 701,334 701,333 701,333 21,481,333 15,471,333 36,952,666 AA1 - Chapter – Joint Ventures (2005) Suggested Answers Books of Greg Joint Venture Land Medel Roland Joint Venture Roland Improvements on land page 40,300,000 19,500,000 13,000,000 7,800,000 3,000,000 3,000,000 Roland Joint Venture Sales by venturers 35,400,000 Roland Joint Venture Sales by salesmen 14,300,000 Joint Venture Roland Venture expenses Joint Venture Roland Salaries to Roland as managing partner 35,400,000 14,300,000 684,000 684,000 72,000 72,000 Joint Venture Roland Income from Joint Venture Medel 10% commission on own sales 3,540,000 Joint Venture Roland Income from Joint Venture Medel Balance of profit divided equally 2,104,000 Cash Medel Roland Final cash settlement 490,000 1,280,000 1,770,000 701,334 701,333 701,333 21,481,333 15,471,333 36,952,666 AA1 - Chapter – Joint Ventures (2005) Suggested Answers Books of Medel Joint Venture Greg Land Roland Joint Venture Roland Improvements on land page 40,300,000 19,500,000 13,000,000 7,800,000 3,000,000 3,000,000 Roland Joint Venture Sales by venturers 35,400,000 Roland Joint Venture Sales by salesmen 14,300,000 Joint Venture Roland Venture expenses Joint Venture Roland Salaries to Roland as managing partner 35,400,000 14,300,000 684,000 684,000 72,000 72,000 Joint Venture Roland Greg Income from Joint Venture 10% commission on own sales 3,540,000 Joint Venture Roland Greg Income from Joint Venture Balance of profit divided equally 2,104,000 Greg Cash Roland Final cash settlement 490,000 1,280,000 1,770,000 701,334 701,333 701,333 21,481,333 15,471,333 36,952,666 AA1 - Chapter – Joint Ventures (2005) Suggested Answers page Problem 4-2 Requirement Books of the Joint Venture Land Greg, Capital Medel, Capital Roland, Capital Land Roland, Capital 40,300,000 19,500,000 13,000,000 7,800,000 3,000,000 3,000,000 Cash Sales 35,400,000 Cash Sales 14,300,000 Expenses Cash Sales Land Expenses Income Summary 35,400,000 14,300,000 684,000 684,000 49,700,000 43,300,000 684,000 5,716,000 Income Summary Roland, Capital 72,000 Income Summary Greg, Capital Medel, Capital Roland, Capital 3,540,000 Income Summary Greg, Capital Medel, Capital Roland, Capital 2,104,000 Greg, Capital Medel, Capital Roland, Capital Cash 72,000 1,280,000 1,770,000 490,000 701,333 701,333 701,334 21,481,333 15,471,333 12,063,334 49,016,000 AA1 - Chapter – Joint Ventures (2005) Suggested Answers Books of Greg Investment in Joint Venture Land 3 19,500,000 19,500,000 Investment in Joint Venture Income from Joint Venture 1,981,333 Cash Investment in Joint Venture 21,481,333 Books of Medel Investment in Joint Venture Land page 1,981,333 21,481,333 13,000,000 13,000,000 Investment in Joint Venture Income from Joint Venture 2,471,333 Cash Investment in Joint Venture 15,471,333 2,471,333 15,471,333 Books of Roland Investment in Joint Venture Land 7,800,000 Investment in Joint Venture Cash 3,000,000 Investment in Joint Venture Income from Joint Venture 1,262,334 Cash Investment in Joint Venture 12,063,334 7,800,000 3,000,000 1,262,334 12,063,334 Problem 4-3 Books of Marissa Joint Venture Yolly Beth 104,000 44,000 60,000 Joint Venture Accounts Receivable Joint Venture 160,000 Joint Venture Cash Joint Venture Joint Venture Accounts Receivable 153,000 7,000 160,000 160,000 AA1 - Chapter – Joint Ventures (2005) Suggested Answers Joint Venture Joint Venture Cash 40,000 Yolly Beth Joint Venture 10,000 7,500 40,000 17,500 Joint Venture Yolly Beth Interest on investment 1,560 Joint Venture Income from Joint Venture Commission on sales 8,000 660 900 8,000 Joint Venture Yolly Beth Income from Joint Venture Allocation of the balance 16,940 Yolly Beth Cash Joint Venture Cash 40,306 59,047 13,647 Books of Yolly Joint Venture Merchandise Inventory Beth page 10 Marissa Joint Venture 5,646 5,647 5,647 113,000 104,000 44,000 60,000 160,000 160,000 Joint Venture Marissa 7,000 Joint Venture Marissa 40,000 Merchandise Inventory Beth Joint Venture 10,000 7,500 Joint Venture Income from Joint Venture Beth Interest on investment 7,000 40,000 17,500 1,560 660 900 AA1 - Chapter – Joint Ventures (2005) Suggested Answers Joint Venture Marissa Commission on sales 8,000 8,000 Joint Venture Income from Joint Venture Beth Marissa Allocation of the balance 16,940 Cash Beth Marissa 40,306 59,047 Books of Beth Joint Venture Yolly Merchandise Inventory page 11 Marissa Joint Venture 5,646 5,647 5,647 99,353 104,000 44,000 60,000 160,000 160,000 Joint Venture Marissa 7,000 Joint Venture Marissa 40,000 Yolly Merchandise Inventory Joint Venture 10,000 7,500 7,000 40,000 17,500 Joint Venture Yolly Income from Joint Venture Interest on investment 1,560 Joint Venture Marissa Commission on sales 8,000 660 900 8,000 Joint Venture Yolly Income from Joint Venture Marissa Allocation of the balance 16,940 Yolly Cash Marissa 40,306 59,047 5,646 5,647 5,647 99,353 AA1 - Chapter – Joint Ventures (2005) Suggested Answers page 12 Requirement Books of the Joint Venture Merchandise Yolly, Capital Beth, Capital 104,000 44,000 60,000 Accounts Receivable Sales 160,000 Cash Uncollectible Accounts Expense Sales Discount Accounts Receivable 153,000 4,300 2,700 160,000 160,000 Expenses Cash 40,000 Yolly, Capital Beth, Capital Merchandise 10,000 7,500 Sales Merchandise Sales Discounts Doubtful Accounts Expense Expenses Income Summary 40,000 17,500 160,000 86,500 2,700 4,300 40,000 26,500 Income Summary Yolly, Capital Beth, Capital Marissa, Capital 26,500 Yolly, Capital Beth, Capital Marissa, Capital Cash 40,306 59,047 13,647 6,306 6,547 13,647 113,000 Books of Yolly Investment in Joint Venture Merchandise Inventory 44,000 Merchandise Inventory Investment in Joint Venture 10,000 Investment in Joint Venture Income from Joint Venture P660 + P5,646 = P6,306 6,306 44,000 10,000 6,306 AA1 - Chapter – Joint Ventures (2005) Suggested Answers Cash Investment in Joint Venture Books of Beth Investment in Joint Venture Merchandise Inventory 40,306 40,306 60,000 60,000 Merchandise Inventory Investment in Joint Venture 7,500 Investment in Joint Venture Income from Joint Venture P900 + P5,647 = P6,6,547 6,547 Cash Investment in Joint Venture Books of Marissa Investment in Joint Venture Income from Joint Venture P8,000 + P5,647 = P13,647 page 13 Cash Investment in Joint Venture 7,500 6,547 59,047 59,047 13,647 13,647 13,647 13,647 Problem 4-4 Merchandise Inventory Joint Venture Joint Venture Income from Joint Venture Bonus = 10% (NI – B) Bonus = 10% (P53,636.20 – B) = P4,785 10,571.20 10,571.20 4,785 4,785 Joint Venture Income from Joint Venture Santi Romy Distribution of balance – 30%, 50%, and 20% to Noel, Santi, and Romy, respectively 47,851.20 Santi Romy Cash Final cash settlement 22,863.60 18,628.24 14,355.36 23,925.60 9,570.24 41,491.84 AA1 - Chapter – Joint Ventures (2005) Suggested Answers page 14 Problem 4-5 Books of Leo Joint Venture Income from Joint Venture Bonus = 20% (NI – B) Bonus = 20% (P24,000 – B) = P4,000 Income from Joint Venture Mandy Joint Venture Interest on deficiency and excess Leo = P10,000 x 12% x 6/12 = P600 Mandy = P5,000 x 12% x 6/12 = P300 Joint Venture Income from Joint Venture Niel Mandy Balance of profit divided in the ratio of 4:4:2 to Leo, Niel, and Mandy, respectively Books of Mandy Joint Venture Leo 3 4,000 600 300 300 20,300 8,120 8,120 4,060 4,000 4,000 Leo Income from Joint Venture Joint Venture 600 Joint Venture Leo Niel Income from Joint Venture 20,300 Books of Niel Joint Venture Leo 4,000 Leo Mandy Joint Venture Joint Venture Leo Income from Joint Venture Mandy 300 300 8,120 8,120 4,060 4,000 4,000 600 300 300 20,300 8,120 8,120 4,060 AA1 - Chapter – Joint Ventures (2005) Suggested Answers page 15 MULTIPLE CHOICE A Total credits in the Joint Venture account Less Total debits in the Joint Venture account Gain (excess of credit over debit) P258,100 197,500 P 60,600 D Merchandise contribution Add Share in the gain (P60,600 x 2/10) Final settlement to Minda P 85,000 12,120 P 97,120 A The account of Melissa has a debit balance, thus, she has to make payment The account of Nancy has a debit balance, thus, she has to make payment The account of Olivia has a credit balance, thus, she has to receive payment C P150,000 + P105,000 = P255,000 C P120,000 + (135,000/3) = P165,000 B Capital of Tan Unsold merchandise taken by Tan Share on the venture income (P135,000* / 3) Amount received by Tan in final settlement P270,000 ( 105,000) 45,000 P210,000 Credit balance in the Joint Venture account Unsold merchandise taken by Tan Venture income Salaries to Reyes Remainder – divided equally P150,000 105,000 P255,000 120,000 P135,000 * B 15% (P115,000 –B) = P15,000 C Credit balance in the Joint Venture account Unsold merchandise purchased by Soriente Net profit before bonus Bonus to Soriente [ 15% (P115,000 – B) Net profit after bonus C P100,000 x 40% = P40,000 10 B Account balances Share in venture profit Cash settlement P 90,000 25,000 P115,000 15,000 P100,000 Santos (P 5,000) 40,000 P35,000 Salazar P20,000 35,000 P55,000 AA1 - Chapter – Joint Ventures (2005) Suggested Answers 11 C 12 B 13 D page 16 Sales Less Sales discounts Net sales Cost of sales: Contributed merchandise Less Returned merchandise Gross profit Operating expenses (P6,450 + P58,650) Net income Less Bonus (P41,250 x 25/125) Net income after bonus P156,000 26,400 129,600 P106,350 65,100 P 41,250 8,250 P 33,000 P41,250 x 25/125 = P8,250 Merchandise contribution Merchandise returns Interest on original capital Balance of profit divided equally Cash settlement 14 P240,000 4,050 P235,950 A Purchases Expenses Balance, end Joint Venture 300,000 Sales 34,500 225,000 559,500 Iona P66,000 ( 15,000) 990 10,220 P62,210 Paula P90,000 ( 11,400) 1,350 10,220 P90,170 559,50 559,50 Sales revenue is a credit entry in the Joint Venture account The total of the purchases, expenses and the ending balance is equal to total sales revenue The ending balance is the sum of the credit balances of Marc and Martin of P120,000 and P105,000 15 B P236,500 x 50% = P118,250 16 A Investment of Marc Cost of unsold goods assumed by Marc Share in the joint venture gain: Credit balance in the JV account Unsold goods assumed by the partners JV gain Share of Marc Cash settlement to Marc P12,000 – P2,500 = P9,500 17 18 B D Contribution Less Share on loss (P12,000 – P2,500) P150,000 ( 4,500) P225,000 11,500 P236,500 50% Debbie P10,000 4,750 P 5,250 118,250 P263,750 Ellie P2,000 4,750 (P2,750) AA1 - Chapter – Joint Ventures (2005) Suggested Answers page 17 Additional loss to Debbie Cash distribution 19 B Valdez P789,200 300,000 P489,200 ( 2,750) P 2,500 Ramos P654,250 300,000 P354,250 Receipts Less Investment Revenue Sale of non-cash assets Total revenue Less Expenses – disbursements (P622,750 + P706,950) Joint venture profit 2,750 Total P 943,450 600,000 P1,543,450 1,329,750 P 213,750 20 21 B Debit to Joint Venture account: Investment of Santos (12,000 shares @ P45) Investment of Cruz (8,000 shares @ P45) Manager’s fee [ 1% (176,000 + 240,000 + 133,000 +261,625)] Miscellaneous expenses Credit to Joint Venture account: Sales (4,000 @ P44) Sales (6,000 @ P40) Cash dividend [(12,000 + 8,000 – 4,000 – 6,000) x P2] Sales (3,500 @ P38) Sales [(10,000 – 3,500) x 115% = 7,475 shares x P35] P540,000.00 360,000.00 8,106.25 1,500.00 P909,606.25 P176,000.00 240,000.00 20,000.00 133,000.00 261,625.00 P830,625.00 Net loss of the venture (P909,606.25 – P830,625) P 78,981.25 22 D Investment of Cruz (8,000 shares @ P45) Less Share in JV net loss (P78,981.25 x 8/20) Share of Cruz after distribution of proceeds P360,000.00 31,592.50 P328,407.50 23 B Loss upon the investment of shares (8,000 shares @ P10) Share in JV loss Loss of Cruz on the disposition of Palawan Oil Co shares P 80,000.00 31,592.50 P 111,592.50 Loss on the disposition of the shares of Cruz is the total of the loss upon investment of the shares (i.e P45 – P55 = P10 per share) and the share on the net loss of the dissolved joint venture 24 A 20,000 shares x P40 MV = P800,000 25 A 20,000 – 4,500 + 15,500 x 120% = 18,600 – 5,000 = 13,600 x P1 = P13,600 26 B Proceeds from sale of shares; 4,500 x P44 5,000 x P25 6,000 x P28 7,600* x P35 Cost of the shares (see # 1) P198,000 125,000 168,000 266,000 P757,000 800,000 AA1 - Chapter – Joint Ventures (2005) Suggested Answers Loss from sale of the shares Expenses (3,000 + 4,700) Dividend revenue Number of shares after stock dividend Less shares sold on November Shares entitled to cash dividend Dividend per share Net loss page 18 P 43,000 ( 7,700) 18,600 5,000 13,600 x P1 Share of Roxas on the venture loss * Contributed shares Shares sold on Oct 20 Remaining shares Shares received as stock dividend (20% x 15,500) Shares sold on Nov and 22 Shares sold at P35 13,600 P 37,100 x 6/20 P11,130 20,000 4,500 15,500 3,100 (11,000) 7,600 27 D 20,000 – 4,500 = 15,500 x 20% = 3,100 28 C Investment (10,000 shares @ P40) Share on the joint venture loss (P37,100 x 1/2 ) Share of Silverio on the distribution of proceeds P400,000 18,550 P381,450 29 A Loss upon contribution of the shares [(P40 – P62) x 4,000] Share on the JV loss (P37,100 x 4/20) Tan’s loss on disposition of his investment in Golden Copper P88,000 7,420 P95,420 ... 40,306 59 ,047 5,646 5,647 5,647 99,353 AA1 - Chapter – Joint Ventures (2005) Suggested Answers page 12 Requirement Books of the Joint Venture Merchandise Yolly, Capital Beth, Capital 104, 000 44,000... profit divided equally 2, 104, 000 Greg Medel Joint Venture Cash Final cash settlement 490,000 1,280,000 1,770,000 701,334 701,333 701,333 21,481,333 15,471,333 36,952,666 AA1 - Chapter – Joint Ventures... 19,500,000 13,000,000 7,800,000 3,000,000 3,000,000 Roland Joint Venture Sales by venturers 35,400,000 Roland Joint Venture Sales by salesmen 14,300,000 Joint Venture Roland Venture expenses Joint Venture