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 cash balance of the joint arrangement as of December 31, 2022? b. How much is the amount to be debited by Entity A to Investment in Joint Venture on January 1, 2022? c. How much the share of Entity B in the net income (loss) of the joint arrangement?
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 cash balance of the joint arrangement as of December 31, 2022? b. How much is the amount to be debited by Entity A to Investment in Joint Venture on January 1, 2022? c. How much the share of Entity B in the net income (loss) of the joint arrangement?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 cash balance of the joint arrangement as of December 31, 2022?
b. How much is the amount to be debited by Entity A to Investment in Joint Venture on January 1, 2022?
c. How much the share of Entity B in the net income (loss) of the joint arrangement?
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