Reference no: EM132740597

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

Brisk, Whisk and Frisk decide that net income, if any will be allocated first by the P2,500 payment to Frisk and then by a 40% commission on individual sales. The balance will be distributed 75% to Brisk and 25% to Whisk. 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 Brisk, Whisk and Frisk 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:

a. Brisk construct the stand on the front of the lawn at a cost of P10,000;

b. Brisk pays for P100,000 for various construction tools. Frisk pays P5,000 for permit to operate the concession or business;

c. Brisk purchases additional construction tools for P150,000, using P50,000 contributed by Whisk and P100,000 of personal money;

d. Sales for the period were as follows: Brisk, P170,000; Whisk, P260,000; and Frisk, P60,000;

e. Frisk pays P9,000 for office supplies and these are distributed equally between Brisk, Whisk, and Frisk for their personal use at home. Frisk agrees to pay P5,000 for the stand.

f. The balance of construction tools inventory was taken by Brisk.

Required - Determine the net income of the joint operation.