Question
JULY COMPANY and AUGUST COMPANY are participant in a joint arrangement sharing control and profits equally. They contributed P500,000 each. JULY's contribution is cash. AUGUST
JULY COMPANY and AUGUST COMPANY are participant in a joint arrangement sharing control and profits equally. They contributed P500,000 each. JULY's contribution is cash. AUGUST contributed and equipment with a carrying value of P480,000. The equipment has a ten-year remaining life when contributed. They established APRILMAY CORPORATION on January 2, 2018 to carry on the joint undertaking, thus JULY and AUGUST have equal rights over the net assets of the business.
The following information is relevant in answering the various questions:
JULY COMPANY
AUGUSTO COMPANY
APRILMAY CO.
Net income during the year
P 72,000
P 80,000
P 144,000
Cash dividends paid during the year
18,000
24,000
36,000
Retained earnings, 1/1/18
100,000
70,000
0
1.How much total amount of asset(s) will AUGUST COMPANY recognize on January 2, 2018 to record its investment?
a.P500,000
b.P490,000
c.P480,000
d.P 0
2.At what amount will the investment of AUGUST COMPANY be shown in its December 31, 2018 balance sheet?
a.P432,000
b.P450,000
c.P554,000
d.P608,000
3.At what amount will JULY COMPANY report its Retained Earnings at December 31, 2018?
a.P100,000
b.P226,000
c.P154,000
d.P298,000
4.The journal entry AUGUST COMPANY will record its investment on January 2, 2018 will include a
a.Debit to Cash in JO of P250,000
b.Debit to Equipment in JO of P240,000
c.Credit to gain on sale of P20,000
d.Credit to gain on sale of P10,000JULY COMPANY and AUGUST COMPANY are participant in a joint arrangement sharing control and profits equally. They contributed P500,000 each. JULY's contribution is cash. AUGUST contributed and equipment with a carrying value of P480,000. The equipment has a ten-year remaining life when contributed. They established APRILMAY CORPORATION on January 2, 2018 to carry on the joint undertaking, thus JULY and AUGUST have equal rights over the net assets of the business.
The following information is relevant in answering the various questions:
JULY COMPANY
AUGUSTO COMPANY
APRILMAY CO.
Net income during the year
P 72,000
P 80,000
P 144,000
Cash dividends paid during the year
18,000
24,000
36,000
Retained earnings, 1/1/18
100,000
70,000
0
1.How much total amount of asset(s) will AUGUST COMPANY recognize on January 2, 2018 to record its investment?
a.P500,000
b.P490,000
c.P480,000
d.P 0
2.At what amount will the investment of AUGUST COMPANY be shown in its December 31, 2018 balance sheet?
a.P432,000
b.P450,000
c.P554,000
d.P608,000
3.At what amount will JULY COMPANY report its Retained Earnings at December 31, 2018?
a.P100,000
b.P226,000
c.P154,000
d.P298,000
4.The journal entry AUGUST COMPANY will record its investment on January 2, 2018 will include a
a.Debit to Cash in JO of P250,000
b.Debit to Equipment in JO of P240,000
c.Credit to gain on sale of P20,000
d.Credit to gain on sale of P10,000
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Accounting Best Practices
Authors: Steven M Bragg
7th Edition
1118404149, 9781118404140
