1.

B
Solutions:
Profit or loss is computed as follows:
Joint operation
Merchandise – A 800 3200 Sales – C
Purchases - A's cash 400
Merchandise – B 1600 840 Unsold inventory charged to C*
Freight - in – B 80
Expenses – C 800
360 Profit before salary and bonus - Credit
balance
Salaries expense - C 120
240 Profit after salary but before bonus - Credit
balance
Bonus expense** 48
192 Profit after salary and bonus

*Unsold inventory: (₱1,600 plus ₱80 freight-in) multiplied by one-half.

2. C
Solution:
Profit is allocated to the joint operators as follows:
Allocation to: A B C Totals
Profit before salary and bonus 360
Salary to C 120 (120)
Bonus to C** 48 (48)
Profit after salary and bonus 192
Interest on capital: -
A - (300 x 10%) 120 (120)
B - (420 x 10%) 168 (168)
Profit after interests on capital (96)
Allocation (24 ÷ 3) (32) (32) (32) 96
Net share - as allocated 88 136 136 -

**Bonus is computed as follows:

P
B = P -
1 + Br
B = 240 – (240 ÷ 1.25%) = 48

Cash settlement is determined as follows:

Joint operation - A
Inventory contributed by A 400
Cash contribution 800
Net share in profit 88
Cash settlement – receipt 1,288

Joint operation - B
Inventory contributed 1,600
Freight paid 80
Net share in profit 136
Cash settlement – receipt 1,816
 Joint operation – C
Expenses paid 800 840 Cost of inventory taken
Net share in profit 136
Cash settlement - receipt 96

Problem 10

The joint operation’s profit is computed as follows:

Joint operation
Account with A 16 56 Account with C
Account with B 48 88 Unsold inventory
80 Profit before bonus - credit balance

Profit is allocated as follows:

Allocation to: A B C Totals
Profit before bonus 80
Bonus to A (80 x 10%) 8 (8)
Profit after bonus 72
Equal allocation (72 ÷ 3) 24 24 24 (72)
As allocated 32 24 24 -

Cash settlement is determined as follows:

Joint operation – A
Contributions 16 88 Inventory taken
Net share in profit 32
40 Cash settlement - payment

Joint operation – B
Contributions 48
Net share in profit 24
Cash settlement – receipt 72

Joint operation – C
56 Withdrawals
Net share in profit 24
32 Cash settlement - payment

Cash settlement – Reconstruction of accounts