Advance Accounting 1

correlative supposition103 CHAPTER 6 SOLUTIONS TO MULTIPLE CHOICES 6-1 a Assets per Jessica Company- balance sheetP3,550,000 Jessicas 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 enthronisation of lovingness P80,000 make headway share Sales150,800 Cost of gross revenue (150,800 ? 125%)120,640 Gross increase 30,160 Expenses 10,000 illuminate bread 20,160 net income/loss ratio x 40% 8,064 fit of investment in JVP88,064 6-5 a cashP190,000 mathematical product catalogue 29,360 Accounts receivable 150,800 Total assets 370,160Sweet Cos, proportionate interest x 60% Sweet Companys share in total assetP222,096 6-6 a Sales7,200 Cost of sales PurchasesP10,000 ware inventory, end (50% of P10,000)__5,000_5,000 Gross sugar2,200 Expenses___500 Net netP1,700 104Chapter 6 6-7 b Original investment ( change)P10,000 Profit share (P1,700 / 2)___850 relaxation of investiture accounting syst emP10,850 6-8 a word jeopardise account in the lead profit distribution ( source balance)P9,000 Unsold intersection__2,500 go venture profit before fee to SalasP11,500 pin venture profit after fee to Salas (P11,500 / 115%)P10,000 6-9 b Fee of Salas (P10,000 x 15%)P1,500Profit share of Salas (P10,000 x 25%)_2,500 TotalP4,000 6-10 b SalasSalve equalizer before profit distributionP500 (dr)P2,000 (cr) Profit shareSabas (P10,000 x 40%)4,000 Salve (P10,000 x 35%)_______3,500 BalanceP3,500 (cr)P5,500 (cr) 6-11 d roast venture account balance before profit distribution (debit)P 6,000 crossroads 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 assign Profit share__4,500 Due from Edwin (debit balance)P 9,500 knock back105 Settlement to Ferdie (Balance of keen account)DebitsP0 CreditsBalance before profit distributionP16,000 Profit share__4,500_20,500 Due to Ferdie (credit balance)P20,500 Settlement to Dante (balance of JV exchange account) DebitsBalance before cash settlementP30,000 Due from Edwin__9,500P39,500 CreditsDue to Ferdie_20,500 BalanceP19,000 6-13 a JV account balance before profit distribution (cr)P4,600 Unsold merchandise (required dr balance after profit distribution)__2,000 marijuana cigarette venture profit before fee to JerryP6,600 colligation venture profit after fee (P6,600 / 110%)__6,000 Fee to JerryP 600 6-14 d Harry CapitalIsaac Capital Balances before profit distribution(P200)P1,800Profit distribution Harry P6,000 x 50%)3,000 Isaac (P6,000 x 20%)1,200 Cash settlementsP2,800P 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 critical point Venture (P5,000 + P8,000)P 13,000 Loss share (P750 x 50%)(375) Unsold merchandise taken (withdrawal)(4,150) lowest settlement to jackP 8,475 106Chapter 6 SOLUTIONS TO PROBLEMS Problem 6 1 Books of Blanco (Manager)Books of AblanJV Cash100,000Investment in JV90,000 knock Venture90,000Merchandise inventory90,000 Cash100,000 Ablan Capital90,000 union Venture60,000 JV cash60,000 Joint Venture20,000 JV cash20,000 JV cash200,000 Joint Venture200,000 Computation of JV Profit Total debit to JVP170,000 Total credit to JVP200,000 Credit balance (Profit)P 30,000 dispersion Joint Venture30,000Investment in JV15,000 Profit from JV15,000Profit from JV15,000 Ablan capital15,000 Ablan capital105,000Cash105,000 JV cash105,000Investment in JV105,000 Cash155,000 JV cash155,000 Joint Venture107 Problem 6 2 Books of the Joint Venture 1. Computer equipment105,000Ella capital60,000 Fabia capital45,000 2. Purchases80,000 Supplies2,000 Diaz capital82,000 3. Expenses9,000 Diaz capital9,000 4. Cash150,000 Sales150,000 5. Expenses3 0,000 Cash30,000 6. Merchandise inventory20,000 Ella capital20,000 7. Fabia capital10,000 Cash10,000 8. Adjusting and closing entries (a)Expenses500 Supplies500 (b)Sales150,000 Income summary150,000 Income summary77,500 Merchandise inventory2,500 Purchases80,000 Income summary39,500 Expenses39,500 Distribution of profit Income summary33,000 Diaz capital11,000 Ella capital11,000 Fabia capital11,000 108Chapter 6 Books of Diaz (1)Investment in Joint Venture82,000Cash82,000 (2)Investment in Joint Venture9,000 Cash9,000 (3)To record profit share Investment in Joint Venture11,000 Profit from Joint Venture11,000 Books of Ella (1)Investment in Joint Venture60,000 Computer equipment60,000 (2)Investment in Joint Venture20,000 Merchandise inventory20,000 (3)To record profit share Investment in Joint Venture11,000 Profit from Joint Venture11,000 Books of Fabia (1)Investment in Joint Venture45,000 Computer equipment45,000 (2)Cash10,000 Investment in Joint Venture10,000 (3)To record profit share Investment in Joint Venture11,000 Profit from Joint Venture11,000 Joint Venture109 Problem 6 3 1)No Separate Set of Joint Venture Books is Used Books of Duran (Manager) May1Joint Venture12,500 Castro capital12,000 Cash500 7JV cash10,000 Bueno capital10,000 26Joint Venture9,500 JV cash9,500 30JV accounts receivable16,000 Joint Venture16,000 June30JV cash15,000 JV accounts receivable15,000 27JV cash9,000 Joint Venture9,000 30To record unsold merchandise taken by Duran Merchandise inventory3,000 Joint Venture3,000 To record profit distribution Joint Venture6,000 Profit from JV2,000 Bueno capital2,000 Castro capital2,000 To record settlements Bueno capital12,000 Castro capital14,000 JV cash24,500 Cash1,500Accounts receivable1,000 JV accounts receivable1,000 110Chapter 6 Books of Bueno May7Investment in Joint Venture10,000 Cash10,000 June30Investment in Joint Venture2,000 Profit from Joint Venture2,000 Cash12,000 Investment in Joint Venture12,000 Books of Castro May1Investment in Joint Venture12,000 Merchandise inventory12,000 June30Investment in Joint Venture2,000 Profit from Joint Venture2,000 Cash14,000 Investment in Joint Venture14,000 (2)A Separate Set of Books is used Books of the Joint Venture May1Merchandise inventory12,500 Castro capital12,000 Duran capital500 7Cash10,000 Bueno capital10,000 26Purchases9,500 Cash9,500 0Accounts receivable16,000 Sales16,000 June20Cash15,000 Accounts receivable15,000 27Cash9,000 Sales9,000 Joint Venture111 June 30Closing entries Sales25,000 Income summary25,000 Income summary19,000 Merchandise inventory, end3,000 Merchandise inventory12,500 Purchases9,500 Distribution of profit Income summary6,000 Bueno capital2,000 Castro capital2,000 Duran capital2,000 Settlements to Venturers Bueno capital12,000 Castro capital14,000 Duran capital2,500 Merchandise inventory3,000 Accounts receivable1,000 Cash24,500 Books of Duran (Manager/Operator) May1Investment in Joint Venture500 Cash500 June30Investment in Joint Venture2,000Profit from Joint Venture2,000 Cash2,500 Investment in Joint Venture2,500 Books of Bueno and Castro (Same as in No. 1 requirement) 112Chapter 6 Problem 6 4 (1)Books of Seiko (Manager/Operator) April1JV Cash102,000 Notes account payable PNB34,000 Roles capital34,000 Timex capital34,000 MayJoint venture64,100 Cash16,300 Rolex capital7,800 JuneRolex capital30,000 JV cash30,000 Joint venture111,400 Cash37,400 Rolex capital64,700 Timex capital9,300 JulyCash40,000 Rolex capital15,000 Timex capital10,000 JV cash65,000 Joint venture55,770 Cash13,970 Rolex capital31,240 Timex capital10,560 distinguishedCash45,000 Rolex capital67,000Timex capital13,500 JV cash125,500 Joint venture30,600 Cash9,730 Rolex capital16,560 Timex capital4,310 To record sales JV cash (P421,000 x 96%)404,160 Joint venture404,160 Joint Venture113 To record payment of loan to PNB Notes payable PNB34,000 Rolex capital34,000 Timex capital34,000 Joint venture (Interest expense)8,000 JV cash110,000 To record distribution of profit Joint venture134,290 Gain from JV (30%)40,287 Rolex capital (60%)80,574 Timex capital (10%)13,429 Computed as follows Total debits tot he JV accountP269,870 Total credits to the JV account_404,160 Gain (credit balance)P134,290 To record settlement Cash32,687Rolex capital128,874 Times capital14,099 JV cash175,660 Computations Settlement to Rolex Balance of capital account DebitsJuneP30,000 July15,000 August67,000 Payment of note payable_34,000P146,000 CreditsApril 1P34,000 May47,800 June64,700 July31,240 August16,560 Profit share_80,574__274,874 Credit balanceP 128,874 114Chapter 6 Settlement to timex Balance of capital account DebitsJulyP10,000 August13,500 Payment of loan__34,000P57,500 CreditsApril 1P34,000 June9,300 July10,560 August4,310 Profit share__13,429_71,599 Credit balanceP14,099 Settlement to Seiko Balance of JV cash account DebitsApril 1P102,000Loan proceeds_404,160P506,160 CreditsJuneP30,000 July65,000 August125,500 Payment of loan_110,000_330,500 Balance of JV cash 175,660 littleSettlement to RolexP128,874 Settlement to Timex__14,099_142,973 Settlement to SeikoP 32,687 (2)Partial Balance Sheet June 30, 2008 Books of Seiko (Manager/operator) Current assets Investment in joint Venture Joint Venture assets CashP72,000 Joint Venture_175,500P247,500 LessEquity of other venturers (P116,500 + P43,300)_159,80087,700 Current liabilities Notes payable PNB34,000 Joint Venture115 Computation of balances as of June 30, 2008 JV CashJoint Venture April 1P102,000P30,000JuneMayP 64,100BalanceP 72,000June_111,400 BalanceP175,500 Notes PayableRolex capital P34,000AprilJuneP30,000P34,000April 1 47,800May _________64,700June P30,000P146,500 P116,500 Timex capital P34,000April __9,000June P43,300 Problem 6 5 Consolidated Balance Sheet CashP61,000 Receivables122,000 Inventory102,500 other(a) assets__40,500 Total assetsP326,000 Accounts payableP61,000 Other liabilities96,500 Capital stock50,000 Retained earnings_118,500 Total liabilities and stockholders fair-mi ndednessP326,000 Consolidated Income Statement SalesP246,750 Cost of sales_124,750 Gross profit122,000 operational expenses__58,250 Consolidated net incomeP 63,750 16Chapter 6 Problem 6 6 (a)Journal entries on venture books June 15Cash1,000,000 MacDo1,000,000 sign contribution at 6% July 1Land2,400,000 owe payable1,650,000 Cash 750,000 Purchased land for cash and 6% owe. Aug 1Cash1,100,000 MacDo1,100,000 Additional contribution at 6%. Land 950,000 Cash 950,000 Paid for improvements. Sept 30mortgage payable 250,000 Interest expense- owe 3,750 Cash 253,750 Reduced mortgage and paid interest. Oct 31Mortgage payable 400,000 Interest expense- Mortgage 8,000 Cash 408,000 Reduced mortgage and paid interest. Nov 30Mortgage payable 300,000Interest expense- Mortgage 7,500 Cash 307,500 Reduced mortgage and paid interest. Dec 31Mortgage payable 200,000 Interest expense- Mortgage 21,000 Cash 221,000 Reduced mortgage and make semi-annual interest payment. Joint Venture117 31Cash2,600,000 Sal es2,600,000 Sales to date. 31Commissions 130,000 Cash 130,000 P2,600,000 x 5% 31Expenses 628,100 Cash 628,100 Paid expenses 31Interest expense- Venturer 60,000 MacDo 60,000 6% on P1,000,000 from June 15 to December 31, and on P1,100,000 from August 1 to December 31. 31Sales2,600,000 Land (cost of land sold)1,145,000 Expenses 628,100 Commissions 130,000Interest expense- mortgage 40,250 Interest- venturer 60,000 Income summary 596,650 To close income and expense accounts. 31Income summary 596,650 MacDo 596,650 MacEn 238,660 To divide gain, 6040. 31MacDo 801,650 Cash 801,650 Payment on account. (b)Journal entries on MacDos books June 15Investment in Joint Venture1,000,000 Cash1,000,000 Initial contribution. Aug 1Investment in Joint Venture1,100,000 Cash1,100,000 Additional contribution. 118Chapter 6 Dec 31Investment in Joint Venture 60,000 Interest income 60,000 Interest earned on cash advanced. 31Investment in Joint Venture 357,990Gain on Joint Venture 357,990 60% of gain on venture. 31Cash 801,650 Investment in Joint Venture 801,650 Repayment in part of advances. (c)MacDo and MacEn Joint Venture Income Statement For the cessation from June 15 to December 31, 2008 SalesP2,600,000 Cost of land sold LandP2,400,000 Improvements 950,000 TotalP3,350,000 Unsold land 2,205,000 1,145,000 Gross profit 1,455,000 Expenses announce and office expensesP 628,100 Interest on mortgage 40,250 Interest on advances 60,000 Commissions 130,000 858,350 Net gainP 596,650 Distributions MacDo (P596,650 x 60%)P 357,990 MacEn (P596,650 x 40%) 238,660Mac Do and MacEn Joint Venture Balance Sheet December 31, 2008 Assets CashP 250,000 Land 2,205,000 Total AssetsP2,455,000 Liabilities and equity Mortgage payableP 500,000 MacDo 1,716,340 MacEn 238,660 Total liabilities and equityP2,455,000 Joint Venture119 Venturers equity (interest) MacDoMacEnTotal InvestedP2,100,000P2,100,000 Shares GainP 357,990P238,660P 596,650 Interest on advances 60,000 60,000 Commissions 130,000 130,000 Total 417,990 368,660 786,650 Balances 2,517,990 368,660 2,886,650 Withdrawn (801,650) (130,000) (931,650) Equity (interests)P1,716,340P238,660P1,955,000