PROBLEM 1: TRUE OR FALSE

1. TRUE
2. TRUE
3. TRUE
4. FALSE
5. TRUE
6. FALSE
7. FALSE
8. FALSE
9. FALSE
10. TRUE

PROBLEM 2: MULTIPLE CHOICE – THEORY

1. C
2. C
3. A
4. B
5. D
6. D
7. B
8. A
9. C
10. B

PROBLEM 3: EXERCISES

1.

I. No separate books maintained

A. Journal Entries

A’s Books B’s Books C’s Books

a.
Joint Operation 420 Joint Operation 420 Joint Operation 420
Inventory 40 Payable to A 420 Payable to A 420
Freight 20
 A’s Books B’s Books C’s Books
b.
Joint Operation 400 Joint Operation 400 JO - Cash 400
Payable to B 400 Cash 400 Payable to B 400

A’s Books B’s Books C’s Books

c.
Joint Operation 100 Joint Operation 100 Joint Operation 500
Payable to C 100 Payable to C 100 JO - Cash 400
Accounts Payable 100

A’s Books B’s Books C’s Books

d.
Receivable from C 1,600 Receivable from C 1,600 JO - Cash 1,600
Joint Operation 1,600 Joint Operation 1,600 Joint Operation 1,600

A’s Books B’s Books C’s Books

e.
Joint Operation 110 Joint Operation 110 Joint Operation 110
Payable to C 110 Payable to C 110 Cash 110

B. Profit or loss:

Joint Operation
Mdse. contribution of A 420
Purchases 500 1,600 Sales and other income
Expenses 110 60 Unsold merchandise
630 Credit Balance - Profit
C. Cash Settlements:
Solution: Using Personal Account

Payable to A (in B’s and C’s books)

420 (a)
210 P/L
630 Receipt

Payable to B (in A’s and C’s books)

400 (b)
210 P/L
610 Receipt

Payable to C (in A’s and B’s books)

100 (c)
110 (e)
EI 60 210 P/L
360 Receipt

Receivable from C (in A’s and B’s books)

(d) 1,600

Payment 1,600

The cash settlements are as follows:

 A receives cash of ₱630, representing the credit balance in the payable to A account.
 B receives ₱ 610
 C, the manager and holder of the JO-Cash, pays A and B a total of 1,240 (1,600 less 360)
or (630 to A and 610 to B). C’s net share on the settlement of the joint operation is 360.
 II. Separate books maintained

a. Journal Entries

B’s and C’s Books A’s Books JO’s Books

a.
Joint Operation 420 Inventory 420
Inventory 40 A, Capital
Freight 20 420

A’s and C’s Books B’s Books JO’s Books

b.
Joint Operation 400 Cash 400
Cash 400 B, Capital 400

A’s and B’s books C’s Books JO’s Books

c.
Joint Operation 100 Purchases 500
Accounts payable Cash 400
100 C, Capital 100

A’s , B’s and C’s Books JO’s Books

d.
Purchases 500
Cash 400
C, Capital 100
 A’s and B’s Books C’s Books JO’s Books
e.
Joint Operation 110 Expenses 110
Cash 110 C, Capital 110

b. Profit or loss

Solution:

Sales 1,600
Cost of goods Sold:
Inventory Beg. 420
Purchases 500
Total goods available for sale 920
Inventory, end (60) (860)
Gross Profit 740
Expenses 110
Profit 630

c. Cash settlement:

Solution: Using Capital Accounts

A, Capital
420 (a)
210 P/L
630 Receipt

B, Capital
400 (b)
210 P/L
610 Receipt

C, Capital
100 (c)
110 (e)
EI 60 210 P/L
 360 Receipt

2.

Investment in Joint Venture

Initial investment 1,000,000 239,976 Loss (720,000 x 33 1/3%)

760,024

PROBLEM 4

1. C

Solution:
1,000,000
400,000
1,400,000

2. B

Solution:

Joint Operation
Mdse. contribution of A&B (8500+7000) 15,500
Purchases 3,700 24,600 Sales and other income
Expenses 550 1,210 Merchandise withdrawal of B
540 Unsold merchandise
6,600 Credit Balance - Profit

3. A
 Solution:

Payable to A
8,500
EI 540 1,320 (6,000 x 20%) P/L

9,280 Receipt

4. C

Solution:

Joint Operation
Contributions (100+120+180) 300
Expense 240 900 Sales (squeeze) P/L

Balance before closing (100+120-580) 360

5.

6.

7. A

Solution:

Joint Operation
Debit Balance before closing 5
17 unsold merchandise

12 Profit (A’s share of 4x3)

 8.
9.
10.

PROBLEM 6: MULTIPLE CHOICE – PFRS FOR SMEs

1. D
2. A
3. B
4. D
5.
6.
7.
8.
9.
10.