TOPIC: ACCOUNTING FOR JOINT OPERATION TRANSACTION

: WHAT IS THE PROFIT AFTER MANAGEMENT FEE AND BONUS AND THE CASH SETTLEMENTS TO THE JOINT OPERATORS (NO SEPARATE RECORDS ARE MAINTAINED)

Accounting for Joint Operation Transactions Fact pattern: Small, Medium and Large formed a joint operation: The following were the joint operation transactions: a. Small transferred cash of P100,000 to Large, the appointed manager, representing Small's contribution. b. Medium contributed inventories worth P120,000. c. Large contributed cash of P80,000. d. Large purchased inventories worth P160,000 and paid freight. of P20,000 using the cash contributions. e. Large made cash sales of P900,000. f. Large paid expenses of P240,000 from the JO-Cash. . All inventories were sold except one-third from Large's purchases. Large was charged for the cost of the unsold inventory. The joint operators agreed on the following: Large is entitled to a management fee of P6,000 and a bonus of 15% of profit after management fee and bonus. ii. Any remaining profit or loss is divided equally