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# EXERCISES

Exercise 4 - 1
Paulo, Edwin and Marco
Worksheet Summarizing Joint Venture Transactions
May 12 to 26, 2008
Construction of stand
Purchases
Sales
Stand taken by Edwin
Unsold merchandise taken by Marco
Net profit

Joint Venture
Debit
Credit
P 3,000
30,000
60,000
P153,000
2,000
4,000*
P 93,000
P159,000
66,000
_______
P159,000
P159,000

Paulo
Credit

Debit

P 80,000

Marco
Credit

P 30,000
45,000

P 75,000

1,530
24,000
9,285
P 34,815
P109,815
_______
P109,815

Debit

Credit
P 3,000

P10,000
P33,000
2,000

P 80,000

Distribution of profit:
Permit paid by Paulo
Commission
Balance shared 50%, 10% and 40%
Share in net income
Totals
Cash settlement

Edwin

Debit

5,000
P40,000

P35,000

P10,000

_______
P35,000
______
P35,000

P 9,900
1,857
P11,757
P21,757
13,243
P35,000

4,000
P44,000

P 8,000

_______
P44,000
______
P44,000

P12,000
7,428
P19,428
P27,428
16,572
P44,000

_______
P 80,000
29,815
P109,815

Purchases
Cost of sales (P153,000 / 180%**)
Inventory, end
Value upon which participants can purchase inventory
Value assigned to the inventory taken by Lito

P90,000
85,000
P 5,000
x 80%
P 4,000

Exercise 4 3
Books of Jolly

Books of Bernie

## To set up inventory, end

(should be set up before
recognizing gain or loss)

Joint Venture

110,000

## To recognize gain or loss,

shared 4:2:2
NI=P50,000 + P110,000

Joint Venture
Income from JV
Bernie
Sonny

160,000

Sonny*

Sonny
JV Cash
Income from JV
Bernie

78,000

110,000

80,000
40,000
40,000

62,400
10,400
5,200

Jolly
Joint Venture

110,000

Joint Venture
Jolly
Income from JV
Sonny

160,000

Sonny
Jolly
Income from JV

78,000

Books of Sonny
110,000

80,000
40,000
40,000

72,800
5,200

Jolly
Joint Venture

110,000

Joint Venture
Jolly
Bernie
Income from JV

160,000

110,000

80,000
40,000
40,000

Cash
Loss from JV
Bernie
Jolly

62,400
15,600
72,000
150,000

## Interest of Sonny (P38,000 + P40,000)

P78,000
Bonus to Jolly and Bernie (P78,000 x 20%)
15,600
Cash settlement to Sonny
P62,400
The bonus to Jolly and Bernie represents a gain to them and a loss to Sonny. The P15,600 bonus shall be shared by Jolly and Bernie in the ratio of 4:2. The, the sharing is as follows: Jolly
P15,600 x 4/6 = P10,400; Bernie P15,600 x 2/6 = P5,200.

Problem 4-1
Dario, Val, and Rene
Worksheet Summarizing Joint Venture Transactions
August 7 - 10, 2008
Joint Venture
Debit
Credit
1,000
10,000
500
15,000
45,000

Construction of stand
Purchases
Payment of permit to operate
Sales
Fire extinguishers divided among venturers
Unsold merchandise taken by Dario

26,500
19,759
46,250

Net profit
Distribution of profit:
Cleaning of lawn of Rene
Commission
Balance -75% to Dario and 25% to Val
Totals
Cash settlement

## Purchases P10,000 + P15,000

Cost of Sales P45,000/200%
Inventory end
Inventory value taken by Dario

1,250
46,250

Dario
Debit

Debit

Rene
Credit

Debit

Credit

500
10,000
15,000
3,333
1,250
19,583

5,000
20,000
3,333

21,000

23,333

5,000

6,000
938
27,938

23,333

27,938

23,333

8,000
312
13,312
10,020
23,333

10,000
3,334

10,000

13,334

10,500

46,250

19,583
8,355
27,938
P25,000
22,500
P 2,500
X 50%
P 1,250

Val
Credit
P 1,000
10,000

500
4,000
13,334
1,666
15,000

15,000
15,000