JOINT ARRANGEMENTS

1) Ryan, Sue, and Tess formed a joint operation. Ryan is to act as managing joint operator and is
designated to record the joint operations accounts in his books. As a manager, he is allowed a salary
of P12,000. Remaining P & L is to be divided equally.

The following balances appear at the end of 2020 before adjustment for joint operation's inventory and
profit. debit credit
Joint operation cash 48,000
Sue. Capital 3,000
Tess, Capital 27,000

The arrangement is to be terminated on Dec.31, 2020; unsold merchandise cost P10,400.

Assuming the joint operation's profit is P5,000, what is the balance of J/O account before the distribution of
profit?

2) Using the information in No.1. and assuming that the joint operation incurs a loss of P1,000, what is the
balance of the J/O account before the distribution of loss?

3) DD, EE and FF formed a joint arrangement in 2020 and agreed to divide profits and losses equally. The
arrangement is terminated on Dec.31, 2021 even though there are still unsold merchandise. On this date,
DD's trial balance showed the following account balances before profit or loss distribution.
Debit Credit
JO Cash 30,000
Joint operation 6,000
EE, Capital 14,000
FF, Capiital 16,000
DD received P4,500 for his share in the JO profit. He also agreed to be charged for the unsold merchandise
as of Dec.31, 2021. The cost of the unsold merchandise charged to DD is _____________.

4) Ben and Ces joined in an arrangement for the sale of football souvenirs. Partners agreed to the following:
a) Ben shall be allowed a commission of 20% on net purchases made by him
b) each member shall be allowed a commission of 25% on his own sales
c) any remaining profit shall be shared equally.
Joint operation transactions were as follows:
Ben Ces
Cash purchases P950
Expenses paid P150
Sales 800 600

The joint operation profit/loss is __________

5) Using the same information in No.4, the amount due to/(from) joint operators is:
Ben- _______ Ces- ___________

6) Mercy and Ness enter into a contract to speculate on the stock market, each using their personal cash.
The earnings are to be divided equally, and settlement is to be made at the end of the year after all
securities have been sold. A summary of the monthly brokerage statements for the year showed the ffg:
Mercy Ness
Total of all purchase confirmations 45,000 18,000
Total of all sales confirmation 48,700 16,000
Interest charged on margin accounts 80 50
 Dividends credited to accounts 40 100

The joint operation profit/(loss) is ____________

7) Using the information in No. 6, final settlement will require payment as follows:
a) Mercy pays Ness P2,405
b) Mercy and Ness receive P1,255 each
c) Mercy receives P1,150 from Ness
d) none of the above

8) The joint operation accounts in the books of joint operators X, Y and Z show the balances below upon
termination of the joint operations and distribution of the profits.
Accounts with X Y Z
Dr/(Cr) Dr/(Cr) Dr/(Cr)
X - P2,500 P2,500
Y P4,000 - P4,000
Z (P6,500) (P6,500) -

Final settlement of the joint operation will require payments as follows:

a) X pays P2,500 to Z, Y pays P4,000 to Z c) Y pays P6,500 to X, and Z pays P2,500 to Y
b) Z pays P2,500 to X and P4,000 to Y d) no payment (s) to be made

9) Alex and Rey formed a joint operation on Jan.1,2020 to operate two stores to be managed by each
joint operator. Alex contributed cash of P30,000 and Rey contributed cash of P20,000.

Profits and losses are to be divided according to capital ratio. All transactions were made in cash, and the
cash receipts and disbursements of the arrangement during the four-month period, handled through the
joint operator bank account, are as follows:
Alex Rey
Receipts 78,920 65,425
Disbursements 42,275 70,695

On April 30,2020, the remaining non cash assets in the hands of the joint operators were sold for P60,000.
The joint operation was terminated and settlement was made between the operators.

The profit or loss for the four-month period after selling the non cash assets was __________

10) Using information in No. 9, the P60,000 cash was divided between the joint operators in the ffg.manner:
a) Alex, P16,180;Rey,P43,820 c) Alex, P26,180; Rey, P33,820
b) Alex, P21,905; Rey, P38,095 d) Alex, P48,095; Rey P11,905

11-13: Aaron and Bobby formed a joint arrangement, with the following capital contributions and P/L
ratio: Contributions P& L Ratio
Cash Merchandise 50%
Aaron 5,000 8,000 50%
Bobby 0 6,000
A summary of the activities is presented below:
Purchases of merchandise by Bobby 4,000
Expenses paid by Bobby:
Mayor's permit 400
 Freight on merchandise contributed by Aaron 300
Delivery expense for merchandise sold 200
Sales (all of the merchandise contributed and purchased by Bobby
and 1/2 of the merchandise contributed by Aaron) - Selling price 14,000

11) The balance of the joint operation account before profit or loss distribution is ____________
12) The profit (loss) of the joint operation is ______________
13) How much would Aaron receive in the final settlement assuming he took the unsold merchandise at
cost? ______________