I. A, B, and C formed a joint operation for the sale of assorted clothing during the summer break. Their transactions during the two-month period are as follows:

Join Operation

March 5 Merchandise - A 7,000

12 Merchandise - B 8,500

14 Freight-in - C 400

15 Cash Sales - C 20,000

18 Cash Sales - C 5,000

30 Merchandise - B 1,000

April 10 Purchases - C 2,500

22 Selling Expenses - C 800

30 Unsold Merchandise Charged to A 600

The Joint arrangement provided for the division of gains and losses among A, B, and C in the ratio 2:3:5. The joint operation is close on April 30.

Requirements:

1. What is the joint operation profit/ (loss)?

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

II. J and P formed a joint operation. The following were the transactions during the year:

J P

Total Purchases 400 320

Total sales 480 240

Expenses paid 800

Other income 40

The joint operation was completed at the end of the year. Each joint operator was entitled to a 10% commission on its purchases and a 20% commission on its sales. Any remaining profit or loss is divided equally.

Requirements:

a. How much is the profit (loss) if the joint operation?

b. On the cash settlement between the joint operators, who will be paid and by what amount?

III. Ven, Co. owns 20% interest in Nus Joint Venture, Inc. and uses the equity method to account for its interest in the joint venture. Ven, Co. has a joint control over Nus Joint venture, Inc. On January 1, 2018, Ven sold equipment with carrying amount of 400,000 and a remaining useful life of 10 years to Nus Joint Venture for 480,000. Gain of 80,000 was recorded by Ven. Both Ven and Nus uses the straight-line method of depreciation.

Requirements:

1. How much is the adjusted share in the profit of the joint venture in 2018 of the joint venture reports profit of 4,000,000?

2. How much is the adjusted share in the profit of the joint venture in 2019 of the joint venture reports profit of 4,800,000?

IV. A Co. owns 20% interest of the B Joint Venture, Inc. and uses the equity method to account for its interest in the Joint Venture. A Co. has joint control over the B Joint Venture, Inc. On January 1, 2017, B Joint Venture sold a land with a carrying amount of 1,000,000 to A Co for 1,080,000. Gain of 80,000 was recorded by B Joint Venture.

Requirements:

a. How much is the adjusted share in profit of the B Joint Venture if B reports a profit of 4,000,000?

b. How much is the adjusted share in the profit of the joint venture in 2018 if the B Joint Venture reports profits of 4,800,000?

a. 976,000

b. 960,000

c. 962,000

d. 1,020,000