Bush Ltd and Forest Ltd enter into a contractual agreement to form a jointly controlled operation on 1 July 2004. Bush Ltd is to contribute land and equipment. Forest Ltd agrees to contribute $5.1 million in cash. It is agreed that they will share output, assets and future contributions in the ratio 70:30 (Bush/Forest). The following information relates to the contribution by Bush Ltd.

The following information relates to the year ending 30 June 2005:
Total cost of production $5,000,000. These costs have been deferred in order to amortise them as production commences.
Of the total costs of production all but $1,000,000 have been paid in cash.
The joint venture manager called on the venturers to contribute a further $4,500,000 in total with each venturer contributing the appropriate portion according to their share in the joint venture.
What entries would be required to record the formation of the joint venture and the transactions for the year ended 30 June 2004?
E) None of the given answers.

Question

Bush Ltd and Forest Ltd enter into a contractual agreement to form a jointly controlled operation on 1 July 2004. Bush Ltd is to contribute land and equipment. Forest Ltd agrees to contribute $5.1 million in cash. It is agreed that they will share output, assets and future contributions in the ratio 70:30 (Bush/Forest). The following information relates to the contribution by Bush Ltd.

The following information relates to the year ending 30 June 2005:
Total cost of production $5,000,000. These costs have been deferred in order to amortise them as production commences.
Of the total costs of production all but $1,000,000 have been paid in cash.
The joint venture manager called on the venturers to contribute a further $4,500,000 in total with each venturer contributing the appropriate portion according to their share in the joint venture.
What entries would be required to record the formation of the joint venture and the transactions for the year ended 30 June 2004?
E) None of the given answers.

Quizplus · Accepted Answer

The Answer of Bush Ltd and Forest Ltd enter into a contractual agreement to form a jointly controlled operation on 1 July 2004. Bush Ltd is to contribute land and equipment. Forest Ltd agrees to contribute $5.1 million in cash. It is agreed that they will share output, assets and future contributions in the ratio 70:30 (Bush/Forest). The following information relates to the contribution by Bush Ltd.

The following information relates to the year ending 30 June 2005:
Total cost of production $5,000,000. These costs have been deferred in order to amortise them as production commences.
Of the total costs of production all but $1,000,000 have been paid in cash.
The joint venture manager called on the venturers to contribute a further $4,500,000 in total with each venturer contributing the appropriate portion according to their share in the joint venture.
What entries would be required to record the formation of the joint venture and the transactions for the year ended 30 June 2004?
E) None of the given answers.

Bush Ltd and Forest Ltd Enter into a Contractual Agreement