BB, WW, and FF agree to sell construction tools for a period of one month. BB agrees to construct a stand on the front of the lawn of FF. FF will be paid P2,500 for cleaning up the lawn after the one-month selling period. BB, WW and FF decide that net income, if any will be allocated first by the P2,500 payment to FF and then by a 40% commission on individual sales. The balance will be distributed 75% to BB and 25% to WW. They agree that a cash box will complicate the matters and that all purchases and sales transactions will be out-of-pocket and the responsibility of the individual. Sales to BB, WW and FF are to be at cost, except that the ending inventory may be purchased at 50% of cost. All other sales are to be made at 100% mark-up on cost. The activity of the joint operation is as follows: BB construct the stand on the front of the lawn at a cost of 10,000 BB pays for P100,000 for various construction tools. FF pays P5,000 for permit to operate the concession or business BB purchases additional construction tools for P150,000, using P50,000 contributed by WW and P100,000 of personal money Sales for the period were as follows: BB, P170,000; WW, P260,000; FF, P60,000 FF pays P9,000 for office supplies and these are distributed equally between BB, WW, and FF for their personal use at home. FF agrees to pay P5,000 for the stand. The balance of construction tools inventory was taken by BB Requirement: Determine the amount to be received (paid) by BB during cash settlement.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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BB, WW, and FF agree to sell construction tools for a period of one month. BB agrees to construct a stand on the front of the lawn of FF. FF will be paid P2,500 for cleaning up the lawn after the one-month selling period.

BB, WW and FF decide that net income, if any will be allocated first by the P2,500 payment to FF and then by a 40% commission on individual sales. The balance will be distributed 75% to BB and 25% to WW. They agree that a cash box will complicate the matters and that all purchases and sales transactions will be out-of-pocket and the responsibility of the individual. Sales to BB, WW and FF are to be at cost, except that the ending inventory may be purchased at 50% of cost. All other sales are to be made at 100% mark-up on cost.

The activity of the joint operation is as follows:

BB construct the stand on the front of the lawn at a cost of 10,000
BB pays for P100,000 for various construction tools. FF pays P5,000 for permit to operate the concession or business
BB purchases additional construction tools for P150,000, using P50,000 contributed by WW and P100,000 of personal money
Sales for the period were as follows: BB, P170,000; WW, P260,000; FF, P60,000
FF pays P9,000 for office supplies and these are distributed equally between BB, WW, and FF for their personal use at home. FF agrees to pay P5,000 for the stand.
The balance of construction tools inventory was taken by BB

Requirement: Determine the amount to be received (paid) by BB during cash settlement.

Please provide a good accounting form for the solution. Thank you!

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