XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
1. Meaning: When two or more person undertake to get involved in a particular venture other than their normal business activities, for a temporary period to which they contribute capital and share share profits or losses on some agreed ratio, it is called a joint venture and it ceases ceases with the completion of the task undertaken. undertaken. It is regarded as temporary partnership without a firm name.
2. Features of Joint Venture: No. 1
Points Meaning
2
Name
3
Persons
4 5 6 7 8
9
10
Joint Venture It is an ad hoc association of persons for doing some business. It is without a firm name.
The person carrying on business are called as co-venturers. Act There is not special act governing joint venture. Liability Liability of co-venturers may be joint and several. Books of There is no need to maintain a Accounts separate set of books. System of It follows cash system of Accounting accounting. Profit Profit is calculating for each venture separately and it may be shared in different ratios for different ventures. Independent Co-venturers can do their business independently similar to that of the venture. Dissolution A joint venture is dissolved when the venture is completed.
Page 1
Partnership Firm It is a continuing enterprise with a long term business activities. It is carried under the name and style of a firm. The persons carrying on business are called as Partners. Indian partnership act, 1932 governs the activities of the firm. Liability of partners is always unlimited. Accounts of partnership are to be maintained separately. It follows mercantile system of accounting. Profit is calculated on annual basis and shared in one only.
Partners cannot do independent business similar to the business of firm. A partnership is not dissolved automatically unless the partners decide.
XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
3. Accounting Methods: The under mentioned methods are to be followed where joint venture transactions take place: A. Where Separate set of books is maintained [Joint Banking Method] B. Where no separate set of books is maintained [Individual Recording Method] C. Where Memorandum Joint Venture Account is prepared. [Not included in XII syllabus] A. Where separate set of books is maintained [Joint Banking Method]: Entries under this method (1) When Capital is contributed by the venturers: Joint Bank A/c Dr. To Co-Venturer’s Co-Venturer’s A/c (2) When goods or materials are brought in by co-venturers for joint venture business: Joint Venture A/c Dr. To Co-Venturer’s Co-Venturer’s A/c (3) When expenses of joint venture are paid by co-venturers: Joint Venture A/c Dr. To Co-Venturer’s Co-Venturer’s A/c (4) When goods are purchased for joint ve nture business and payments are made by cheque from Joint Bank A/c: Joint Venture A/c Dr. To Joint Bank A/c (5) When joint venture expenses are ar e paid from Joint Bank A/c: Joint Venture A/c Dr. To Joint Bank A/c (6) When goods are sold on cash basis and sales procee ds deposited into Joint Bank A/c: Joint Bank A/c Dr. To Joint Venture A/c (7) When goods are sold on cash basis and sales procee ds deposited into Joint Bank A/c: Debtors A/c Dr. To Joint Venture A/c (8) When cash is received from debtors and discount allowed: Joint Bank A/c Dr. Discount A/c Dr. To Joint Venture A/c (9) When bad debts are incurred by joint venture on account of non-collection of debts from debtors: Bad Debts A/c Dr. To Debtors A/c (10) When bad debts/discount are transferred to Joint Venture A/c: Joint Venture A/c Dr. To Discount/Bad Debts A/c (11) When commission is payable to co-venturer: Joint Venture A/c Dr. Co-Venturer’s Co-Venturer’s A/c (12)When (12)When goods are sold and consideration is received partly in cash and partly in form of
Page 2
XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
shares/debenture by the firm: Cash/Bank A/c Dr. Shares/Debentures A/c Dr. To Joint Venture A/c (13)When (13)When share/debentures are taken over for value less than its face value by co-venturer: Co-Venturer’s Co-Venturer’s A/c Dr. Joint Venture A/c Dr. To share/debenture A/c (14)When (14)When share/debentures are taken over for value greater than their face value by co-venturer: Co-Venturer’s Co-Venturer’s A/c Dr. To Shares/Debenture A/c To Joint Venture A/c (15)When (15)When unsold stock of goods or assets is t aken over by co-venturer: Co-Venturers’ Co-Venturers’ A/c Dr. To Joint Venture A/c (16)Loss (16)Loss on joint venture business: Co-Venturers’ Co-Venturers’ A/c Dr. To Joint Venture A/c (17)Profit (17)Profit on joint venture business: Joint Venturers’ A/c Dr. To Co-Venturers’ Co-Venturers’ A/c (18)When (18)When cash is paid through joint bank to co -venturers in settlement of their final claim: Co-Venturers’ Co-Venturers’ A/c Dr. To Joint Bank A/c
Proforma: [Joint Banking Method] Joint Venture A/c Particulars To Joint Bank A/c Materials Wages Plant To Co-Venturer A’s A/c Materials Freight B’s A/c Repairs Wages Expenses Joint Bank A/c (Expenses Paid) Co-Venturer A/c (Commission/Interest) To Shares/Debentures A/c (Loss on sale)
Amt. (Rs.) XXX XXX XXX
XXX XXX XXX XXX XXX
Amt. (Rs.)
XXX
XXX
Particulars
Amt. (Rs.)
By Joint Bank A/c (Sale of goods) By Shares/Debentures A/c (Contract Price) By Co-Venturer’s Co-Venturer’s A/c (Materials taken over) By Co-Venturer’s Co-Venturer’s A/c (Plant taken over) By Shares/Debentures A/c
Amt. (Rs.) XXX XXX XXX XXX XXX
(Profit on sale of shares/debentures)
XXX XXX XXX
By Co-Venturers A/c A B C (Loss on joint Venture)
XXX
Page 3
XXX XXX XXX
XXX
XII – BK
WILLINGS
To Co-Venturer A/c A B C (Profit on Joint Venture) Total
JOINT VENTURE ACCOUNTS
TUTORIAL
XXX XXX XXX
XXX
XXX
Total
XXX
CO-VENTURERS A/C Particulars To Joint Venture A/c (Assets/unsold goods taken) To Shares/Debentures A/c (Taken Over) To Joint Venture A/c (Shares in Joint Venture Loss) To Joint Bank A/c (Amount paid in final settlement)
Total
A XXX
B XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Particulars By Joint Bank (Initial Contribution) By Joint Venture A/c (Goods Supplied) By Joint Venture A/c (Expenses Paid) By Joint Venture A/c (Commission/Interest) By Joint Venture A/c (Share in Profit) By Joint Bank A/c (Deficiency brought in) Total
A XXX
B XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Amt. (Rs.)
Amt. (Rs.) XXX
JOINT BANK A/C Particulars To Co-Venturer’s Co-Venturer’s A/c A’s A/c B’s A/c (Initial Contribution) To Joint Venture A/c (Sale of goods) To Shares/Debentures A/c (Sale of shares/debentures) Total
Amt. (Rs.) XXX XXX
Amt. (Rs.)
XXX XXX XXX
XXX
Particulars By Joint Venture A/c (Goods Purchased) By Joint Venture A/c (Expenses Paid) By Co-Venturer’s Co-Venturer’s A/c A’s A/c B’s A/c (Final Payment) Total
XXX
XXX XXX
XXX
XXX
SHARES/DEBENTURES SHARES/DEBENTURES A/C Particulars To Joint Venture A/c (Contract Price) To Joint Venture A/c (Profit on share) Total
Amt. (Rs.) XXX XXX
XXX
Particulars By Co-Venturer’s Co-Venturer’s A/c (Taken Over) By Joint Venture A/c (Loss on shares) Total
Page 4
Amt. (Rs.) XXX XXX
XXX
XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
B) Where separate set of books is not maintained: [Individual Recording Method] Journal Entries 1
2
3
4
5
6
7
8
9
10
11
12
13
14
When goods are purchased and supplied for joint venture business by co-venturer (himself): Joint Venture A/c Dr. To Goods A/c When goods are purchased and supplied for joint venture by other co-venturer: Joint Venture A/c Dr. To Co-Venturer’s Co-Venturer’s A/c (other) When expenses of joint venture business are incurred and paid by co-venturer himself: Joint Venture A/c Dr. To Cash/Bank A/c When expenses of joint venture business are incurred and paid by other co-venturer: Joint Venture A/c Dr. To Co-Venturer’s Co-Venturer’s A/c (other) When advance is sent to other co-venturer for business purpose: Co-Venturer’s Co-Venturer’s A/c (Other) Dr. To Cash/Bank A/c When advance is received from other co-venturer for business purpose: Cash/Bank A/c Dr. To Co-Venturer’s Co-Venturer’s A/c (other) When bill accepted is drawn by other co-venturer for raising finance for business: Co-Venturer’s Co-Venturer’s A/c (other) Dr. To Bill Payable When acceptance is received from other co-venturer for raising finance for business: Bill Receivable A/c Dr. To Co-Venturer’s Co-Venturer’s A/c (other) When Bill Receivable is discounted with bank: Cash/Bank A/c Dr. Discount A/c Dr. To Bill Receivable When discount is transferred to Joint Venture A/c: Joint Venture A/c Dr. To Discount A/c When goods are sold on cash basis: Cash/Bank A/c Dr. To Joint Venture A/c When goods are sold on credit basis: Debtors A/c Dr. To Joint Venture A/c When cash is received from debtors and discount allowed: Cash/Bank A/c Dr. Discount A/c Dr. To Debtors A/c When bad debts is incurred in recovering cash from debtors: Bad Debts A/c Dr. To Debtors A/c
Page 5
XII – BK
WILLINGS
15
16
17
18
19
20
21
22
23
24
TUTORIAL
JOINT VENTURE ACCOUNTS
When discount/bad debts is transferred to Joint Venture A/c: Joint Venture A/c Dr. To Discount/Bad Debts A/c When goods are sold by other co-venturer Co-Venturer’s Co-Venturer’s A/c (other) Dr. To Joint Venture A/c When goods are sold by agent: Agent’s A/c Dr. To Joint Venture A/c When expenses are incurred incurred and commission are charged charged by the agent: Joint Venture A/c Dr. To Agents A/c When agent remits money to co-venturer (himself): Cash/Bank A/c Dr. To Agents A/c When agents remits money to other co-venturer: Co-Venturer’s Co-Venturer’s A/c (other) Dr. To Agent’s A/c When unsold goods are taken over by co-venturer himself: Goods A/c Dr. To Joint Venture A/c When unsold goods are taken over by the co-venturer: Co-Venturer’s Co-Venturer’s A/c (other) Dr. To Joint Venture A/c Transfer of balance of Joint Venture A/c: (a) Transfer of credit balance (Profit on joint venture business) Joint Venture A/c Dr. To Profit & Loss A/c To Co-Venturer’s Co-Venturer’s A/c (other) (b) Transfer of debit balance (Loss incurred on joint venture business) Profit & Loss A/c Dr. Co-Venturer’s Co-Venturer’s A/c (other) Dr. To Joint Venture A/c Settlement of accounts between co-venturers: (a) When balance due paid to other co -venturer Co-Venturer’s Co-Venturer’s A/c (other) Dr. To Cash/Bank A/c (b) When balance due received from other co-venturer Cash/Bank A/c Dr. To Co-Venturer’s Co-Venturer’s A/c (other)
Page 6
XII – BK
WILLINGS
JOINT VENTURE ACCOUNTS
TUTORIAL
Proforma: LEDGER ACCOUNT IN THE BOOKS OF CO-VENTURER A Joint Venture A/c Particulars To Goods A/c (Goods Supplied) To Bank A/c (Expenses) To Commission A/c (Income) To Bills Receivable A/c (Discount) To B’s A/c Goods Expenses Commission Discount To Agent C’s A/c Commission Expenses To Profit Profit on Joint Venture Profit & Loss A/c (Own share) B’s A/c (B’s share) Total
Amt. (Rs.)
Amt. (Rs.) XXX XXX XXX XXX
XXX XXX XXX XXX XXX XXX
XXX
XXX XXX XXX XXX XXX
Particulars By Cash/Bank A/c (Sale Proceeds) By B’s A/c Goods (Sale Proceeds) Materials (Unsold material taken over) By Plant A/c (Unsold plant taken over) By Agent C’s A/c (Sales by the agent) By Loss on Joint Venture Profit & Loss A/c (Own shares) B’s A/c (B’s share of loss)
Amt. (Rs.)
Amt. (Rs.) XXX
XXX XXX XXX XXX
XXX XXX
Total
XXX
OTHER CO-VENTURER A/C B’s A/c Particulars To Joint Venture A/c Goods (Sale Proceeds) Materials (unsold stock taken over) To Joint Venture A/c (B’s share of loss)
Total
Amt. (Rs.) XXX XXX
Amt. (Rs.)
XXX XXX
XXX
Particulars By Joint Venture A/c Material Supplied Expenses Commission Discount (Transfer) By Joint Venture A/c (B’s Share of Profit) By Cash/Bills Receivable A/c (Balancing Figure) Total
Amt. (Rs.) XXX XXX XXX XXX
Amt. (Rs.)
XXX XXX XXX
XXX
Agent C’s A/c Particulars To Joint Venture A/c (Sale of goods)
Amt. (Rs.) XXX
Particulars By Joint Venture A/c (Commission & Expenses) By Cash/Bank A/c/Bills receivable (Receipt) By B’s A/c (Amount paid to B by C)
Page 7
Amt. (Rs.) XXX XXX XXX
XII – BK
WILLINGS
JOINT VENTURE ACCOUNTS
TUTORIAL
Total
XXX
Total
XXX
LEDGER ACCOUNT IN THE BOOKS OF CO-VENTURER B Joint Venture A/c Particulars To A’s A/c Goods Expenses To Goods A/c (Goods Supplied) To Bank A/c (Expenses) To Commission (Income) To Agent C’s A/c Commission Expenses To Profit on Joint Venture A’s A/c (A’s share) Profit & Loss A/c (Own share)
Amt. (Rs.) XXX XXX
Amt. (Rs.)
XXX XXX XXX XXX
XXX XXX
XXX
XXX XXX
XXX
Total
XXX
Particulars By A’s A/c (Sales proceeds) By Bank A/c (Sales Proceeds) By Material (unsold Material taken over) By A’s A/c (Unsold material taken over) By Agent C’s A/c (Sale by the agent) By Loss on Joint Venture A’s A/c (A’s share) Profit & Loss A/c (Own share) Total
Amt. (Rs.)
Amt. (Rs.) XXX XXX XXX XXX XXX
XXX XXX
XXX XXX
OTHER CO-VENTURER A/C A’s A/c Particulars To Joint Venture A/c (Sale proceeds) To Joint Venture A/c (Plant taken over) To Joint Venture A/c (A’s share of loss) To Cash/Bills Payable A/c (Balancing Figure) Total
Amt. (Rs.)
Amt. (Rs.) XXX XXX XXX
Particulars By Joint Venture A/c Goods Expenses By Joint Venture A/c (A’s share of profit)
Amt. (Rs.) XXX XXX
Amt. (Rs.)
XXX XXX
XXX
XXX
Total
XXX
Agent C’s A/c Particulars To Joint Venture A/c (Sale of goods)
Total
Amt. (Rs.) XXX
XXX
Particulars By Joint Venture A/c (Commission & Expenses) By Cash/Bank/Bills Receivable A/c By A’s A/c (Amount paid to A by C) Total
Page 8
Amt. (Rs.) XXX XXX XXX XXX
XII – BK
WILLINGS
JOINT VENTURE ACCOUNTS
TUTORIAL
Problems: 1. Mr. Anand of Akola entered into a joint venture with Mr. Bakshi of Srinagar and Mr. Mirza of Agra on the following arrangements: (a) Bakshi will purchase blankets and Mirza will purchase carpets and both will send the goods for sale to Anand; (b) Anand will sell the goods at the best possible price and send the remittance to B akshi and Mirza in accordance with their dues. (c) Profits will be shared equally among the three par ties. Accordingly, Bakshi purchased 50 blankets at Rs. 100 each and spent Rs. 120 for freight. Mirza purchased 100 c arpets for Rs. 100 each spent Rs. 100 each and spent 380 for freight. Anand sold all the blankets and carpets for Rs. 25,000 and his expenses amounted to Rs. 3 80. He paid the dues to both Bakshi and Mirza.
Pass the necessary Journal Entries in Anand’s Journal and show joint venture A/c A/c and the coventurer’s A/c, in his ledger. 2. Prakash and Kiran entered into a Joint Venture to purchase and sell the goods. They decided to share the profits and losses in the proportion of their initial contribution. They opened a Joint Bank Account by depositing Rs. 60,000 and Rs. 40,000 respectively. They made following expenses from Joint Bank Account. (i) Purchase of goods Rs. 70,000. (ii) Carriage and Insurance Rs. 18,000 (iii) Selling expenses Rs. 8,000. Part of the goods were sold for Rs. 90,000 on cash basis and the balance for Rs. 30,000 on credit basis. Later Rs. 28,000 could only be recovere d from the debtors. The venture was closed and the co-ventures settled their accounts.
You are required to show: i) Joint Venture Account ii) Joint Bank Account
iii) Prakash’s Prakash’s Account iv) Kiran’s Account
and v) Sundry Debtors Account. 3. Yahoo and Google entered into joint venture to purchase the land and sell the plots. Yahoo and Google contributed Rs. 3,00,000 each with w hich they opened a ‘Joint Bank Account’. The following payments were made from Joint Bank Account. (a) Purchase of Land Rs. 3,00,000 (b) (b) Development expenses Rs. 1,00,000 (c) Legal charges Rs. 40,000 Yahoo paid registration fees Rs. 30,000. ¾ of the land was sold for Rs. 5,00,000. Remaining land was taken over at agreed value of Rs. 60,000 by Google.
Pass Journal Entries and Prepare Joint Bank Account, Joint Venture Account and Co-Venturers Accounts. 4. A and B doing business separately as building contractors, undertake jointly to construct a building for a joint stock company for a contract pr ice of Rs. 10,00,000 payable as to Rs. 8,00,000 by installments in cash and Rs. 2,00,000 in fully paid shares of the company. A banking account is opened in their joint names. A paying in Rs. 2,50,000 and B Rs. 1,50,000. 1 ,50,000. They are to share profit or loss in the proportion of 2/3 and 1/3 respectively. Their transaction were as follows:-
Page 9
XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
Rs. Paid Wages 3,30,000 Bought materials 6,70,000 Material supplied by A 45,000 Material supplied by B 24,000 Architect’s fees paid by A 20,000 The contract was completed and the price duly received. Joint venture was closed by A taking up all the share of the company c ompany at an agreed valuation of Rs. 1,70,000 and B taking up the stock of materials at an agreed valuation of Rs. 17,000. Show the necessary accounts 5. Anand and Vijay enter into joint venture and agreed to share profits and losses in the ratio 3:4 respectively. Anand contributed Rs. 10,000 and Vijay Rs. 8,000 and deposited into a joint bank account. Goods worth Rs. 16,000 were purchased. Expenses of the venture amounted to Rs. 800. Goods were sold for Rs. 21,700 . The Accounts between the parties were duly settled.
Show Journal Entries, Joint Venture A/c and Joint Bank A/c. 6. Raja and Pradhan decided to undertake a business venture jointly. They agreed to share t he profits and losses in the ratio of 3/4 and 1/4 respectively. Raja supplied goods from his own stock for the joint venture worth wo rth Rs. 4,50,000 and paid Rs. 18,000 for carriage and freight. Pradhan supplied goods worth Rs. 3,60,000 and spent Rs. 15,000 for sundry expenses. Raja drew a bill on Pradhan for Rs. 60,000 as an advance. Pradhan sold goods for Rs. 10,50,000. At the end of venture the accounts were settled. Give Journal entries in the journal of Raja. 7. Mr. Baleri of Kalyan and Mr. Vyas of Dahisar entere d into Joint Venture sharing profits and losses 3:2. Mr. Baleri sent 1400 bales of c otton at Rs. 460 each paying for freight and other charges Rs. 35,000 and Mr. Vyas sent 1600 bales of cotton Rs. 650 each paying insurance Rs. 18,500 and other charges Rs. 6, 500. Mr. Baleri advanced to Mr. Vyas Rs. 80,000 on account of the venture. All the bales of cotton were sold by Mr. Sharma for Rs. 18,00,000 of which he deducted 2.5% for his expenses and 3.5% for his commission. Mr. Sharma remitted Rs. 8,00,000 to Mr. Baleri by bank draft and the balance to Vyas by a bill of exchange. Prepare Joint Venture A/c, Mr. Baleri’s
A/c and Mr. Sharma’s A/c in the books boo ks of Mr. Vyas. 8. Seth Door Chandra of Shrinagar Purchased 1,000 meters of Kashmir Silk @ Rs. 6 per meter and sent to Seth Amir Chand of o f Varanasi to be sold on joint venture. Door Chandra spent Rs. 200 on packing etc. Amir Chand spent Rs. 500 on clearing etc. Seth Door Chandra drew a bill for Rs. 5,000 which was accepted by Amir Chand. Door Chandra discounted the bill for Rs. 4,850 with the bank. Amir Chand Sold 900 meters of cloth @ Rs. 9 per meter and spent Rs. 252 in this respect. Remaining cloth was taken over by Door Chandra at cost plus 10%. Amir Chand had t o receive commission @ 5% on sale; the profit and loss was to be divided in the ratio of 3/5 and 2/5 between Door Chandra and Amir Chand respectively. Amir Chand sent cheese to Door Chandra for balance due. Open necessary accounts in the books of both parties.
Page 10
XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
9. Mr. Tambakuwala of Gujarat and Mr. Jardawala of Jaysingpur entered into a joint ve nture to consign 2,000 bags of tobacco to Mr . Bidiwala of Nasik to be sold on their Joint risk, which was in proportion of 2 : 1 respectively. Mr. Tambakuwala sent 1,000 bags of tobacco at Rs. 400 each paying freight and other charges Rs. 25,000 and Mr. Jardawala sent 1,000 bags of tobacco at Rs. 500 each paying insurance Rs. 15,000 and other expenses Rs. 5,000. Mr. Tambakuwala advanced to Mr. Jardawala Rs. 1,00,000 on account of the venture. All the bags of tobacco w ere sold by Mr. Bidiwala for Rs. 12,00,000 of which he deducted 2% for his expenses and 3% for his commission. Mr. Bidiwala remitted Rs. 60,000 to Mr. Tambakuwala by draft and the balance to Jardawala by a bill of exchange. Prepare Joint Venture A/c, Mr. Jardawala’s A/c and Mr.
Bidiwala’s A/c in the books of Mr. Tambakuwala of Gujarat. 10. P and Q entered into joint venture to construct a garage for Z Ltd. At a contract price of Rs. 4,00,000 payable as follows: Rs. 3,00,000 by cheque in 5 equal installments and balance by fully paid-up shares of Rs. 100 each. P brought in Rs. 2,50,000 and Q Rs. 1,00,000. These amounts were deposited into a Joint Bank A/c. Later, following payments were made: Purchase of materials Rs. 1,85,000; Payment of wages Rs. 80,000; Architect’s Fees Rs. 20,000; Sundry Expenses Rs. 15,000. P also purchased and supplied for joint venture a co ncrete mixer costing Rs. 20,000. Q paid for various expenses Rs. 25,000 and also supervised the work, for which he is to be credited by Rs. 5,000. The garage was ready, but the work was not satisfactory. So, Z Ltd. deducted half of the amount of the last installment (i.e. Rs. 30,000). All other c onsideration was paid. P took back his concrete mixer subject to depreciation of 20%. Q took over all the shares at Rs. 105 per share. Venture came to an end and accounts between P and Q were settled.
Prepare Joint Venture A/c, Joint Bank A/c and Co-venturer’s Co-venturer’s A/c and Shares A/ c in the books of M/s. PQ & Co. 11. Ashok, Rajesh and Ramesh undertook the construction of a building at a contract price of Rs. 3,00,000 payable in cash Rs. 2,00,000 and in debentures Rs. 1,00,000. They decided to share the profits and losses in the proportion of their initial contribution. They opened a Joint Bank Account, Wherein t hey deposited the following initial amount. Ashok
Rs. 1,50,000
Rajesh
Rs. 1,00,000
Ramesh
Rs. 50,000
The following payments are made out through Joint Bank Account: Rs. 1,25,000 22,500 38,500
Purchase of Materials Purchase of Plant Payment of Wages
Page 11
XII – BK
WILLINGS
JOINT VENTURE ACCOUNTS
TUTORIAL
Payment towards other charges 5,500 Ashok brings the truck of 20,000 Rajesh brings in material of 27,500 Ramesh brings mixer worth 5,000 At the close of venture, the unused material was taken by Ashok for Rs. 2,500. Rajesh took over the mixer and plant for Rs. 13,500 . The truck was sold in the market for Rs. 11,000. The contract price was received as per the agreement and Ramesh agreed to take over the debentures for Rs. 95,000. Prepare Joint Venture A/c, Joint Bank A/c and CO-venturer’s CO- venturer’s A/c. 12. X and Y entered into a joint venture to underwrite the subscription at par of 2,000 equity shares of Rs. 100 each of a newly incorporated company from pune, to be issued to t he public; in consideration of 200 fully paid-up other equity shares of the company at Rs. 100 each. X paid Rs. 1,000 from his personal cash for legal expenses and Y paid from his personal cash Rs. 2,000 for publicity for 1,950 shares only, which were fully allotted. Y managed to bring cash for joint venture business for the remaining unsubscribe unsubscribe 50 shares of Rs. 100 each. The company paid the commission in the form of 200 fully paid shares as agreed. All the shares including commission shares in possession of X and Y were sold at Rs. 110 per share in the market. X received the sale proceeds of 150 shares and Y the remainder. They shared profits and losses equally. The Joint Venture was closed and X and Y settled their accounts. Prepare Prepare Joint Venture A/c, X’s A/c and Y’s A/c. 13. Shailaja and Sumati entered into Joint Venture. They decided to consign 500 T.V. sets to Bharati of Baramati to be sold on their joint risk. The profits and losses to be shared in the ratio of 2:3 respectively. Shailaja sends 300 T.V. sets @ Rs. 30,000 each. She pays Rs. 2,000 for fre ight and insurance. Sumati sends 200 T.V. sets @ Rs. 30,000 e ach. She pays Rs. 1,000 for other charges and Rs. 600 for insurance. All T.V. sets are sold by Bharati for Rs. 1,60,000 out of which she deducts Rs. 5,000 for her expenses and commission at 2%. Bharati remits a Bills Receivable for Rs. 8,00,000 to Shailaja and a B/R for the balance to Sumati. Draft Journal entries in the books of Shailaja. 14. Ankit, Babita and Chetan enter into Joint Ve nture sharing profits and losses in the ratio of 2:2:1. From the following information you are asked to prepare t he necessary accounts in the books of the parties assuming that they maintain no separate set of books: Ankit 12,000 3,000 -
Materials Supplied Expenses paid Gross Sale Proceeds Unsold stock taken over
Babita 6,000 2,000 20,000 2,000
Chetan 1,000 10,000 500
15. Vinod and Vaibhav entered into Joint Venture to dispatch 800 bags of rice to Vikas t o be sold on their Joint risk which is in the proportion of 60% and 40% respectively. Vinod sent 500 bags of rice @ 400 each by paying for insurance Rs. 700, freight Rs. 5,000 and other expenses Rs. 300. Vaibhav sent remaining bags of rice @ Rs. 500 each by paying insurance Rs. 400 and othe r
Page 12
XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
expenses Rs. 500. Vinod drew a bill on Vaibhav for Rs. 40,000 as an advance and was discounted at 2%. The discount to be treated treate d as Joint Venture expenses. All t he bags were sold by Vikas at Rs. 550 each out of which he deducted 4% for his expenses and 2.5% for commission. Vikas remitted Rs. 1,50,000 to Vinod by bank draft and the balance to Vaibhav by 2 months bill. The settlements between Co-venturers were made in cash. Prepare Joint Venture A/c, Vinod A/c and Vikas A/c in the books of Vaibhav. 16. A and B entered into a Joint Venture for the purchase and sale of defence disposal goods. They agreed to share profits and losses in t he ratio of 2:1 respectively. Following transaction took place 1992. April 01 05 07 15 28 May 08 15
A and B paid joint bank account Rs. 36,000 and Rs. 18,000 respectively. Paid rent of shop Rs. 600. Purchased goods for cash Rs. 36,000 paid freight etc. Rs. 500. A paid advertising Rs. 100 from his private account. Sold goods and money deposited in joint bank account Rs. 19,000. Sold goods for cash (again) Rs. 26,000. Purchased goods for cash Rs. 6,000 carriage, insurance and other expenses Rs. 60 paid by B from his private account. 25 A took away the balance of goods left unsold at an agreed price Rs. 4,000. Prepare Joint Venture Account, Joint Bank Account and Account of A and B assume final
settlement was made on May 31.
Board Problems: 17. Mangesh and Mahesh entered into Joint Venture to produce an Advertisement firm for Sanket Traders’s at a Contract Price of Rs. 80,000. They opened a Joint Bank Account with Bank of Maharashtra in which Mangesh deposited Rs. 20,000 and Mahesh Rs. 40,000. They agreed to share profits and losses equally. e qually. Mangesh purchased raw film for Rs. 16,000 and Mangesh a Camera for Rs. 7,000. They paid from Joint Bank Account: Artist’s Fees – Rs. 36,000, Hire of Sets – Sets – Rs. 4,000 and and Technician’s Charges – Charges – Rs. 20,000. The film was completed but due to cer tain defects in films the contract price r educed by 10%, the amount received by cheque from Sanket Traders. At the end of the venture, the Camera was sold for Rs. 5,000 and Mangesh took over the Unused Film for Rs. 1,000.
Prepare: Joint Venture Account, Joint Bank Accounts and Co-Venturers Accounts. (Mar.’05) 18. Mote advanced to Bande Rs. 20,000 on account of the venture. All the machines we re sold by Tole for Rs. 6,00,000 out of w hich he deducted 2% for his expenses and 3% for his commission on total sales. Tole remitted Rs. 3,70,000 to Mote by Bank draft and balance to B ande by one month’s bill.
Give Journal entries in the books of Mote.
Page 13
(Oct.’ 05)
XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
19. Ajay and Abhijeet were partners in a joint venture sharing profits and losses in the proportion of 4/5 and 1/5 respectively. Ajay supplied goods to the value of Rs. 25,000 and incurred expe nses amounting to Rs. 2,700. Abhijeet also supplied goods to the value of Rs. 7,000 and his ex penses amounted to Rs. 400. Abhijeet sold all the goods for Rs. 46,000. Abhijeet is entitled to the commission at 5% on sales. Abhijeet settled Ajay’s account by Bank draft. Give Journal entries in
the books of Ajay.
(Mar. ‘06)
20. Ashok, Kishor and Anup undertook the construction of office building at a contract price of Rs. 10,00,000. The contract price is to be received in cash Rs. 6,00,000 and Rs. 4,00,000 in shares of that company. They opened a Joint Bank account and contribute the following amounts. Ashok – Ashok – Rs. 3,00,000, Kishor – Kishor – Rs. 3,00,000 and Anup – Anup – Rs. 2,00,000. Ashok pays Rs. 10,000 towards an architect fee, Kishor brings into venture mixer of Rs. 25,000. Anup brings into Venture a truck worth Rs. 55,000. The following transactions were made from the Joint Bank account: Purchase of materials Rs. 4,50,000. Payments of wages Rs. 1,50,000. Purchase of plant Rs. 30,000. At the close of venture, ashok took over the unused materials worth Rs. 8,000. Kishor took back mixer worth Rs. 15,000. Anup took back truck worth Rs. 35 ,000. The Scrap value of plant realized Rs. 6,000 . The Contract price was received as agreed and Kishor took over shares at a value of Rs. 4,10,000.
Prepare Joint Venture A/c, Joint Bank A/c, Co-venturers’ Co-venturers’ A/c
(Oct.’ 06)
21. Ram Laxman entered into a joint venture to undertake a construction of a bridge for an agreed value of Rs. 4,00,000. The contract price is to be received in cash. They opened a Bank A/c with their joint names and deposited there in Ram Rs. 80,000 and Laxman Rs. 40,000 as their initial contributions. They share profits and losses in their contribution ratio. The following expenses were incurred from the joint bank a/c: Purchase of materials Rs. 1,60,000. Payment of wages Rs. 1,40,000. Purchase of plant Rs. 24,000. Ram paid Rs. 8,000 towards plan fee and L axman brought in mixer worth Rs. 24,000. The wor k was completed ad contract price was received as per agreements. Ram took over unused materials of Rs. 12,000 and Laxman took back the mixer at Rs. 16,000. The plant sold in the market for Rs. 1 2,000.
Prepare: Joint Venture A/c, Joint Bank A/c, Co-venturers’ Co-venturers’ A/c’s. A/c’s.
(Mar. ‘07)
22. Ajay and Sanjay decided to undertake a business jointly. They agreed to share profits and losses in ratio of ¾ and ¼ re spectively.
Page 14
XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
Ajay supplied goods from his own stock worth Rs. 90,000 and paid Rs. 36,000 for carriage and freight. Sanjay supplied goods worth Rs. 72,000 and spent Rs. 3,000 for sundry expenses. Ajay drew on Sanjay a bill for Rs. 12,000 as an advance. Sanjay sold all the goods for Rs. 2,10,000. At the end of the venture the accounts were settled.
Give Journal Entries in the Books of Ajay.
(Oct.’ 07)
23. Yashpal of Udgir and Balu of Latur entered into Joint Venture to consign 300 machines to Amol of Amravati to be sold on their j oint risk which is in the proportion of 2:3 respectively. Yashpal sent 180 machines at Rs.300 each and paid freight Rs. 700 and sundry expenses Rs. 300. Balu sent 120 machines at Rs. 250 each and paid for insurance Rs. 500 and carriage Rs. 500. Amol sold all machines at Rs.400 each. He spent Rs. 4,000 for advertisement and Rs. 1,000 for godown charges. Amol deducted 5% commission on sales and sent Rs. 80,000 to Yashpal and to Balu by bank draft.
Prepare: (i) Joint Venture A/c (ii) Balu’s A/c (iii) Amol’s A/c in the ledger of Yashpal. (Mar.’ 08) 24. Rajaram and Sitaram entered into joint venture to construct an office building for Bajarang Enterprises and decided to share profits and losses in the ratio of 3:2. Rajaram and Sitaram contributed Rs. 2,50,000 and Rs. 1,50,000 respectively. The money was deposited into a joint bank account. Rajaram supplied equipments and tools valued Rs. 4,00,000 and building materials valued Rs. 3,50,000 supplied by Sitaram. Following expenses were paid through joint bank account: Payment of Wages Rs. 3,00,000, staff salaries Rs. 1,75,000, Architect’s Fees Rs. 50,000, and Sundry expenses Rs. 25,000. On Completion of construction, Bajrang Enterprises paid Rs. 20,00,000 out of which Rs. 15,00,000 in cash and the balance of Rs. 5,00,000 in fully paid-up shares of Rs. 10 each. These shares were taken over at Rs. 12 each by Rajaram and Sitaram in equal ratio. At the close of joint venture equipments and tools were taken up by Rajar am at an agreed value Rs. 1,50,000 and unused materials were taken by Sitaram for Rs. 50,000.
Prepare: (a) Joint Venture A/c (b) Joint Bank A/c (c) Co-Venturer’s Co- Venturer’s A/c in the books of Joint Venture.
(Oct.’ 08)
25. Shivaji of Solapur and Sambhaji of Satara into a joint venture to purchase and sale goods and agreed to share profits and losses in t he proportion of 3:2 respectively. Shivaji sent goods of Rs. 75,000 to Sambhaji for sale. Shivaji paid Rs. 5,500 for freight and insurance. He drew a bill for Rs. 3,000 for carriage. Sambhaji sold goods for Rs. 1,25,000 and paid selling expenses R s. 2,500. He remitted the balance to Shivaji S hivaji after charging 5% commission on sales. Co-venturers settled their accounts.
Page 15
XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
Give Journal Entries in the books of Shivaji.
(Mar.’ 09)
26. Krishna of Udgir and Sanjay of Lohara entere d into Joint Venture to consign 500 bags o f rice to Vijay Traders, Nerul to be sold on the ir joint risk which is in proportion of 3/5 and 2/5 respectively. Krishna sent 300 bags of rice @ 1,200 each paying carriage Rs. 10,000, insurance Rs. 3,000 and other expenses Rs. 2,000. Sanjay sent 200 bags of rice @ Rs. 1,400 each paying carriage Rs. 8,000 and other expenses Rs. 2,000. Sanjay received an advance of Rs. 40,000 from Krishna on account of venture. All the bags of rice were sold by Vijay Traders for Rs. 9,00,000 out of which they deducted 2% for expenses and 3% for their commission on total sales. Vijay Traders remitted Rs. 4,00,000 to Krishna by Bank draft and the balance to Sanjay by one month’s bill. Co-venturers settled their accounts.
Prepare: (i) Joint Venture A/c (ii) Sanjay’s A/c and (iii) Vijay Traders A/c in the books of Krishna.
(Oct.’ 09)
27. Apate, Bachute and Chapate undertook construction of the Cultural Hall of a company at a contract price of Rs. 60,000 payable in Cash Rs. 40,000 and Rs. 20,000 in the form of Debentures of a company. They shared profits and losses in the ratio of 3:2:1 respectively. They opened a joint bank account wherein they deposited the following amounts: Apate Rs. 30,000, Bachute Rs. 20,000, Chapate Rs. 10,000. The following payments are made out through Joint Bank Account: 1)Purchase 1)Purchase of materials
Rs. 25,000
2)Payment 2)Payment of wages
Rs. 7,700
3)Purchase 3)Purchase of plant
Rs. 4,500
4)Other 4)Other charges
Rs. 1,100
Apate brings a truck of
Rs. 4,000
Bachute brings materials of
Rs. 5,500
Chapate brings a mixer worth
Rs. 1,100
At the close of the venture the unused materials were taken by Apate for Rs. 500. Bachute took over the mixer and plant for Rs. 2,700. The truck was sold in the market for Rs. 2,200. The contract price was received as per the agreement. Chapate agreed to take over the debentures at Rs. 19,000.
Prepare:
(1) Joint Venture Account (2) Joint Bank Account
(3) Co-Venturer’s Co-Venturer’s Account
(March 2010)
28. Anand and Pramod entered into joint venture to purchase and sale plots. Anand contributed Rs. 10,00,000 and Pramod Rs. 5,00,000 and the amount was deposited into a joint bank account.
Page 16
XII – BK
WILLINGS
TUTORIAL
JOINT VENTURE ACCOUNTS
The transactions of the venture were as follows: Purchased land for Rs. 5,00,000. Incurred development expenses of Rs. 2,00,000. Pramod paid registration fees of Rs. 25,000. ¾ land was sold for Rs. 7,52,500 The remaining land was taken over by Anand for Rs. 2 ,00,000. The accounts between co-venturers were settled at the end of the Joint Venture.
Pass the necessary Journal Entries to record the above transactions.
(Oct. 2010)
29. Rokadimal of Rajkot and Gunjal of Pune, entere d into a joint venture to purchase and sale goods and agreed to share profits and losses in t he proportion of 4:1 respectively. Rokadimal sent goods of Rs. 4,00,000 to G unjal for sale. Rokadimal paid Rs. 11,500 for carriage. Rokadimal drew a bill of Rs. 95,000 on G unjal, which he accepts. Rokadimal discounted this bill with the bank for Rs. 92,000. The amount of discount is to be tr eated as Joint Venture expenditure. Gunjal paid Rs. 13,500 for advertisement. Gunjal sold all the goods for Rs. 5,00,000 . Gunjal paid Rs. 7,000 for selling expenses and he is entitled for a commission on sales at 5%. Co-Venturers settled their accounts.
Give Journal Entries in the books of Gunjal of Pune.
(March 2011)
30. Surekha and Sangita decided to undertake a venture jointly. They agreed to share profits and losses in the ratio of 3:2. Surekha supplied from her own stock goods worth Rs. 4,00,000 and paid Rs. 9,900 for freight and Rs. 2,400 for insurance. Sangita purchased goods of Rs. 3,90,000 for the venture and paid Rs. 14,000 for selling expenses. Sangita accepted a bill for 3 m onths of Rs. 1,90,000 drawn by Surekha as an advance. The bill was discounted immediately by Surekha for Rs. 1,84,000 and the amount of discount was charged to Joint Venture Account. Ac count. Sangita sold all the goods for Rs. 10,00,000. At the end of venture, the discounts were settled.
Give journal entries in the books of Surekha.
Page 17
(March 2012)