On January 1, 2022, Entity A and Entity B signed an agreement to form a joint arrangement to manufacture campaign shirts for the coming election. They initially invested P250,000 cash each. The following transactions happened in 2022 in relation to the joint arrangement:Purchased machinery and equipment costing P150,000 (P80,000 paid in cash, the balance on account). It has an estimated useful life of 3 years with no residual value.Purchased raw materials amounting to P110,000 (including P15,000 indirect materials) on account. All were issued to production.Incurred and paid labor amounting to P120,960 (including P10,000 indirect labor).Incurred and paid other factory overhead – P25,000.Paid suppliers – P100,000.Finished all the jobs and sold to customers at 20% mark up.Collected all the accounts from customers.Answer the following subquestion relating to this one problem: a. How much is the net income (loss) of the joint arrangement?b. How much is the share of Entity A in the revenue?_______________________

A joint venture is a business arrangement in which two or more parties agree to pool their resources…

Answered: On January 1, 2022, Entity A and Entity…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

On January 1, 2022, Entity A and Entity B signed an agreement to form a joint arrangement to manufacture campaign shirts for the coming election. They initially invested P250,000 cash each. The following transactions happened in 2022 in relation to the joint arrangement:

Purchased machinery and equipment costing P150,000 (P80,000 paid in cash, the balance on account). It has an estimated useful life of 3 years with no residual value.
Purchased raw materials amounting to P110,000 (including P15,000 indirect materials) on account. All were issued to production.
Incurred and paid labor amounting to P120,960 (including P10,000 indirect labor).
Incurred and paid other factory overhead – P25,000.
Paid suppliers – P100,000.
Finished all the jobs and sold to customers at 20% mark up.
Collected all the accounts from customers.

Answer the following subquestion relating to this one problem:

a. How much is the net income (loss) of the joint arrangement?

b. How much is the share of Entity A in the revenue?

_______________________

Expert Solution

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions