A, B and C formed a joint operation.

They agreed on the following:

 C is the appointed as the manager. As compensation, C is entitled to a ₱150 salary plus bonus of
20% of profit after deducting the salary and the bonus. However, C will be charged for the cost
of any unsold inventory.
 Interest of 10% per annum is allowed to A’s and B’s capital contributions.
 Any remaining profit or loss is divided equally.

The joint operation was complete after a year. The following were the transactions:
 A contributed cash of ₱1000 and merchandise costing ₱600.
 B contributed merchandise costing ₱1,800. B paid freight of ₱60 in the transfer.
 C purchased merchandise worth ₱500 using A’s cash contribution.
 C paid expenses of ₱900 using his own cash.
 C made total sales of ₱3,200.
 All inventories were sold except one-half of those contributed by B.

Required:
1. How much is the joint operation’s profit after deduction for salary but before deduction for
bonus?
2. On the cash settlement between the joint operators,

Problem 2.
On January 1, 2021 Mooney Co. entered into a joint arrangement classified as a joint venture. For an
investment of ₱2,000,000, Mooney obtained 30% interest in HERMIT Joint Venture, Inc. During the
year, HERMIT Joint Venture, Inc. reported profit of ₱4,000,000 and other comprehensive income of
₱800,000, i.e., a total comprehensive income of ₱4,800,000. HERMIT Joint Venture, Inc. declared
dividends of ₱2,400,000. How much is the carrying amount of the investment in joint venture on
December 31, 2021?