The joint arrangement provided for the division of gains and losses among A, B and C in the

ratio of 2:3:5. The joint operation is to close on December 31, 2008.

5. What is the joint operation profit?

a. (6,600) b. 6,600 c. 6,060 d. (6,060)

6. What is the amount of cash that A will receive on final settlement?

a. 9,280 b. 9,712 c. 8,500 d. 1,212

Sales 24,600
Cost of sales (16910) (8500+7K+200+1210)
Gross Profit 7690
Expenses 1090 (550+540)
Profit 6600

Joint Operation -A:       

Merchandise contribution 8500
Share in profit 6600 x 20% 1320
Unsold inventory (540)
Cash to A 9280

Use the following information for the next two questions:

A and B agreed on a joint operation to purchase and sell car accessories. They agreed to
contribute P 25,000 each to be used in purchasing the merchandise, share equally in any gain or
loss. And record their joint operation transactions in their individual books. After one year, they
decided to terminate the joint operation, and data from their records were: