Ma. Liberty G.

Velunta
BSA II

1. Tom and Jerry are joint operaton sharing profits and losses equally. The parties appoint Jerry
as the custodian of the joint operation's assets. The joint operation's transactions during the
year are as follows:
a. Jerry transfers inventory costing P400 to the joint operation
b. Tom contributes cash of P500 to the joint operation subject to liquidation by Jerry
c. Jerry purchases additiional inventory of P200 using the joint operation's cash
d. Jerry sells inventory costing for P900 cash
e. Jerry pays expenses of P100 using the joint operation's funds
f. Unsold inventory at year-end amounts to P100.

Required:
a. Prepare journal entries for transactions a to e above assuming no separate books are
maintained for the joint operation.
b. Compute for the profit or loss of the joint operation using the joint operations T-accoun
c. If the joint operation is terminated at year-end, how much cash will be distributed to To
and Jerry, respectively.

A. Joint operations P 400

Inventories

B. Joint operations 500

Payable -Tom

C. Joint operations 200

Joint operations Cash

D. Receivables -Jerry 900

Joint operations

E. Joint operations 100

Cash

B. Sale of Inventory P 900

Cost of sale 500
 Gross Profit 400
Less: Expenses (100)
Profit 300

C. Cash (Ending Balance) 1,100

Divided equally 2

Cash received by each partner P 550

2. On Jan. 1, 2019, Axiom Co. acquires 40% interest in Postulate Inc. for P300,000. The nature
of the acquired interest is an investment in joint venture. Postulate, Inc. reports profit
of P500,000 and distributes P400,000 to its owners in 2019.

Required: Compute for the carrying amount of the investment at the end of the year.

Cost of Acquisition
Share in profit (40% of P500,000)
Dividend received (40% of P400,000)

Investment at the end of the year

e parties appoint Jerry
ansactions during the

ct to liquidation by Jerry
nt operation's cash

ming no separate books are

the joint operations T-account

h cash will be distributed to Tom

P 400

500

200

900

100
 Cash Inventory
500 400
200 200
900 500
100

1,100 100

300,000. The nature

c. reports profit

nd of the year.

P 300,000
200,000
160,000

P 660,000