Reference no: EM132804022

Question - A, B and C formed a joint operation. The following were the transactions:

a. A transferred inventory, costing 400, to C, the appointed manager. A paid freight 20 on the transfer.

b. B transferred 400 cash to C.

c. C purchased inventory worth 500. Of that amount, 400 were paid using the joint operation's cash and 100 were on account of C.

d. C made cash sales of 1,600

e. C paid operating expenses of 110 using his personal cash

The joint operation was completed and the unsold inventory worth 60 was charged to C. the profit was divided equally.

Questions -

1. What is the journal entries?

2. How much is the profit or loss?

3. How much cash settlements under each of the following assumptions:

a. No separate books are maintained for the joint operation

b. Separate books are maintained for the joint operation.