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XII – BK WILLINGS TUTORIAL JOINT VENTURE ACCOUNTS 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 profits or losses on some agreed ratio, it is called a joint venture and it ceases with the completion of the task undertaken. It is regarded as temporary partnership without a firm name. 2. Features of Joint Venture: No . Points Joint Venture Partnership Firm 1 Meaning It is an ad hoc association of persons for doing some business. It is a continuing enterprise with a long term business activities. 2 Name It is without a firm name. It is carried under the name and style of a firm. 3 Persons The person carrying on business are called as co-venturers. The persons carrying on business are called as Partners. 4 Act There is not special act governing joint venture. Indian partnership act, 1932 governs the activities of the firm. 5 Liability Liability of co- venturers may be joint and several. Liability of partners is always unlimited. 6 Books of Accounts There is no need to maintain a separate set of books. Accounts of partnership are to be maintained separately. 7 System of It follows cash system It follows mercantile Page 1
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Page 1: Joint Venture

XII – BK WILLINGS TUTORIAL JOINT VENTURE ACCOUNTS

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 profits or losses on some agreed ratio, it is called a joint venture and it ceases with the completion of the task undertaken. It is regarded as temporary partnership without a firm name.

2. Features of Joint Venture:

No. Points Joint Venture Partnership Firm1 Meaning It is an ad hoc association of

persons for doing some business.

It is a continuing enterprise with a long term business activities.

2 Name It is without a firm name. It is carried under the name and style of a firm.

3 Persons The person carrying on business are called as co-venturers.

The persons carrying on business are called as Partners.

4 Act There is not special act governing joint venture.

Indian partnership act, 1932 governs the activities of the firm.

5 Liability Liability of co-venturers may be joint and several.

Liability of partners is always unlimited.

6 Books of Accounts

There is no need to maintain a separate set of books.

Accounts of partnership are to be maintained separately.

7 System of Accounting

It follows cash system of accounting.

It follows mercantile system of accounting.

8 Profit Profit is calculating for each venture separately and it may be shared in different ratios for different ventures.

Profit is calculated on annual basis and shared in one only.

9 Independent Co-venturers can do their business independently similar to that of the venture.

Partners cannot do independent business similar to the business of firm.

10 Dissolution A joint venture is dissolved when the venture is completed.

A partnership is not dissolved automatically unless the partners decide.

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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 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 A/c(3) When expenses of joint venture are paid by co-venturers: Joint Venture A/c Dr. To Co-Venturer’s A/c(4) When goods are purchased for joint venture 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 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 proceeds 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 proceeds 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:

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XII – BK WILLINGS TUTORIAL JOINT VENTURE ACCOUNTS

Joint Venture A/c Dr. Co-Venturer’s A/c(12)When goods are sold and consideration is received partly in cash and partly in form of

shares/debenture by the firm: Cash/Bank A/c Dr. Shares/Debentures A/c Dr. To Joint Venture A/c(13)When share/debentures are taken over for value less than its face value by co-venturer: Co-Venturer’s A/c Dr. Joint Venture A/c Dr. To share/debenture A/c(14)When share/debentures are taken over for value greater than their face value by co-venturer: Co-Venturer’s A/c Dr. To Shares/Debenture A/c To Joint Venture A/c(15)When unsold stock of goods or assets is taken over by co-venturer: Co-Venturers’ A/c Dr. To Joint Venture A/c(16)Loss on joint venture business: Co-Venturers’ A/c Dr. To Joint Venture A/c(17)Profit on joint venture business: Joint Venturers’ A/c Dr. To Co-Venturers’ A/c(18)When cash is paid through joint bank to co-venturers in settlement of their final claim: Co-Venturers’ A/c Dr. To Joint Bank A/c

Proforma: [Joint Banking Method]Joint Venture A/c

Particulars Amt.(Rs.)

Amt.(Rs.)

Particulars Amt.(Rs.)

Amt.(Rs.)

To Joint Bank A/c Materials Wages PlantTo Co-VenturerA’s A/c Materials FreightB’s A/c Repairs Wages ExpensesJoint Bank A/c(Expenses Paid)Co-Venturer A/c

XXXXXXXXX

XXXXXX

XXXXXXXXX

XXX

XXX

XXXXXX

XXX

By Joint Bank A/c(Sale of goods)By Shares/Debentures A/c(Contract Price)By Co-Venturer’s A/c(Materials taken over)By Co-Venturer’s A/c(Plant taken over)By Shares/Debentures A/c(Profit on sale of shares/debentures)By Co-Venturers A/c A B C(Loss on joint Venture)

XXXXXXXXX

XXX

XXX

XXX

XXX

XXX

XXX

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XII – BK WILLINGS TUTORIAL JOINT VENTURE ACCOUNTS

(Commission/Interest)To Shares/Debentures A/c(Loss on sale)To Co-Venturer A/c A B C(Profit on Joint Venture)

XXXXXXXXX

XXX

XXX

Total XXX Total XXX

CO-VENTURERS A/CParticulars A B Particulars A B

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)

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

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)

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

Total XXX XXX Total XXX XXX

JOINT BANK A/CParticulars Amt.

(Rs.)Amt.(Rs.)

Particulars Amt.(Rs.)

Amt.(Rs.)

To 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)

XXXXXX XXX

XXX

XXX

By Joint Venture A/c(Goods Purchased)By Joint Venture A/c(Expenses Paid)By Co-Venturer’s A/c A’s A/c B’s A/c(Final Payment)

XXXXXX

XXX

XXX

XXX

Total XXX Total XXX

SHARES/DEBENTURES A/CParticulars Amt.

(Rs.)Particulars Amt.

(Rs.)To Joint Venture A/c(Contract Price)To Joint Venture A/c

(Profit on share)

XXX

XXX

By Co-Venturer’s A/c(Taken Over)By Joint Venture A/c

(Loss on shares)

XXX

XXX

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XII – BK WILLINGS TUTORIAL JOINT VENTURE ACCOUNTS

Total XXX Total XXX

B) Where separate set of books is not maintained: [Individual Recording Method]

Journal Entries1 When goods are purchased and supplied for joint venture business by co-venturer (himself):

Joint Venture A/c Dr. To Goods A/c

2 When goods are purchased and supplied for joint venture by other co-venturer:Joint Venture A/c Dr. To Co-Venturer’s A/c (other)

3 When expenses of joint venture business are incurred and paid by co-venturer himself:Joint Venture A/c Dr. To Cash/Bank A/c

4 When expenses of joint venture business are incurred and paid by other co-venturer:Joint Venture A/c Dr. To Co-Venturer’s A/c (other)

5 When advance is sent to other co-venturer for business purpose:Co-Venturer’s A/c (Other) Dr. To Cash/Bank A/c

6 When advance is received from other co-venturer for business purpose:Cash/Bank A/c Dr. To Co-Venturer’s A/c (other)

7 When bill accepted is drawn by other co-venturer for raising finance for business:Co-Venturer’s A/c (other) Dr. To Bill Payable

8 When acceptance is received from other co-venturer for raising finance for business:Bill Receivable A/c Dr. To Co-Venturer’s A/c (other)

9 When Bill Receivable is discounted with bank:Cash/Bank A/c Dr.Discount A/c Dr. To Bill Receivable

10 When discount is transferred to Joint Venture A/c:Joint Venture A/c Dr. To Discount A/c

11 When goods are sold on cash basis:Cash/Bank A/c Dr. To Joint Venture A/c

12 When goods are sold on credit basis:Debtors A/c Dr. To Joint Venture A/c

13 When cash is received from debtors and discount allowed:Cash/Bank A/c Dr.Discount A/c Dr.

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XII – BK WILLINGS TUTORIAL JOINT VENTURE ACCOUNTS

To Debtors A/c14 When bad debts is incurred in recovering cash from debtors:

Bad Debts A/c Dr. To Debtors A/c

15 When discount/bad debts is transferred to Joint Venture A/c:Joint Venture A/c Dr. To Discount/Bad Debts A/c

16 When goods are sold by other co-venturerCo-Venturer’s A/c (other) Dr. To Joint Venture A/c

17 When goods are sold by agent:Agent’s A/c Dr. To Joint Venture A/c

18 When expenses are incurred and commission are charged by the agent:Joint Venture A/c Dr. To Agents A/c

19 When agent remits money to co-venturer (himself):Cash/Bank A/c Dr. To Agents A/c

20 When agents remits money to other co-venturer:Co-Venturer’s A/c (other) Dr. To Agent’s A/c

21 When unsold goods are taken over by co-venturer himself:Goods A/c Dr. To Joint Venture A/c

22 When unsold goods are taken over by the co-venturer:Co-Venturer’s A/c (other) Dr. To Joint Venture A/c

23 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 A/c (other)(b) Transfer of debit balance (Loss incurred on joint venture business) Profit & Loss A/c Dr. Co-Venturer’s A/c (other) Dr.

To Joint Venture A/c24 Settlement of accounts between co-venturers:

(a) When balance due paid to other co-venturer 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 A/c (other)

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XII – BK WILLINGS TUTORIAL JOINT VENTURE ACCOUNTS

Proforma:LEDGER ACCOUNT IN THE BOOKS OF CO-VENTURER A

Joint Venture A/cParticulars Amt.

(Rs.)Amt.(Rs.)

Particulars Amt.(Rs.)

Amt.(Rs.)

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 DiscountTo Agent C’s A/c Commission ExpensesTo Profit on Joint VentureProfit & Loss A/c (Own share)B’s A/c (B’s share)

XXXXXXXXXXXX

XXXXXX

XXX

XXXXXXXXX

XXX

XXXXXXXXXXXX

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)

XXXXXX

XXX

XXX

XXX

XXX

XXX

Total XXX Total XXX

OTHER CO-VENTURER A/CB’s A/c

Particulars Amt.(Rs.)

Amt.(Rs.)

Particulars Amt.(Rs.)

Amt.(Rs.)

To Joint Venture A/cGoods (Sale Proceeds)Materials(unsold stock taken over)To Joint Venture A/c(B’s share of loss)

XXXXXX XXX

XXX

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)

XXXXXXXXXXXX XXX

XXX

XXX

Total XXX Total XXX

Agent C’s A/cParticulars Amt.

(Rs.)Particulars Amt.

(Rs.)To Joint Venture A/c

(Sale of goods)XXX By Joint Venture A/c

(Commission & Expenses)XXX

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By Cash/Bank A/c/Bills receivable(Receipt)

By B’s A/c (Amount paid to B by C)

XXX

XXXTotal XXX Total XXX

LEDGER ACCOUNT IN THE BOOKS OF CO-VENTURER BJoint Venture A/c

Particulars Amt.(Rs.)

Amt.(Rs.)

Particulars Amt.(Rs.)

Amt.(Rs.)

To A’s A/c Goods ExpensesTo Goods A/c (Goods Supplied)To Bank A/c (Expenses)To Commission (Income)To Agent C’s A/c Commission ExpensesTo Profit on Joint Venture A’s A/c (A’s share) Profit & Loss A/c (Own share)

XXXXXX

XXXXXX

XXXXXX

XXXXXXXXXXXX

XXX

XXX

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)

XXXXXX

XXX

XXX

XXX

XXX

XXX

XXXTotal XXX Total XXX

OTHER CO-VENTURER A/CA’s A/c

Particulars Amt.(Rs.)

Amt.(Rs.)

Particulars Amt.(Rs.)

Amt.(Rs.)

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)

XXX

XXX

XXX

XXX

By Joint Venture A/c Goods ExpensesBy Joint Venture A/c(A’s share of profit)

XXXXXX XXX

XXX

Total XXX Total XXX

Agent C’s A/cParticulars Amt.

(Rs.)Particulars Amt.

(Rs.)To Joint Venture A/c(Sale of goods)

XXX By Joint Venture A/c(Commission & Expenses)By Cash/Bank/Bills Receivable A/cBy A’s A/c (Amount paid to A by C)

XXX

XXXXXX

Total XXX Total XXX

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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 Bakshi and Mirza in accordance with their dues. (c) Profits will be shared equally among the three parties. Accordingly, Bakshi purchased 50 blankets at Rs. 100 each and spent Rs. 120 for freight. Mirza purchased 100 carpets 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. 380. He paid the dues to both Bakshi and Mirza. Pass the necessary Journal Entries in Anand’s Journal and show joint venture A/c and the co-venturer’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 recovered 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 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 which they opened a ‘Joint Bank Account’.The following payments were made from Joint Bank Account.(a) Purchase of Land Rs. 3,00,000 (b) Development expenses Rs. 1,00,000 (c) Legal charges Rs.

40,000Yahoo 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 price 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

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XII – BK WILLINGS TUTORIAL JOINT VENTURE ACCOUNTS

is opened in their joint names. A paying in Rs. 2,50,000 and B Rs. 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:-

Rs.Paid WagesBought materialsMaterial supplied by AMaterial supplied by BArchitect’s fees paid by A

3,30,0006,70,00045,00024,00020,000

The contract was completed and the price duly received. Joint venture was closed by A taking up all the share of the company 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 the 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 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 entered into Joint Venture sharing profits and losses 3:2. Mr. Baleri sent 1400 bales of cotton 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 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 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 to receive commission @ 5% on sale; the profit and loss was to be divided in the ratio of 3/5 and

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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.

9. Mr. Tambakuwala of Gujarat and Mr. Jardawala of Jaysingpur entered into a joint venture 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 were 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 concrete 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 consideration 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 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 they deposited the following initial amount.

Ashok Rs. 1,50,000Rajesh Rs. 1,00,000Ramesh Rs. 50,000

The following payments are made out through Joint Bank Account:Rs.

Purchase of Materials 1,25,000

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Purchase of PlantPayment of WagesPayment towards other charges

22,50038,5005,500

Ashok brings the truck ofRajesh brings in material ofRamesh brings mixer worth

20,00027,5005,000

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 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 the 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 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 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 freight and insurance. Sumati sends 200 T.V. sets @ Rs. 30,000 each. 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 Venture sharing profits and losses in the ratio of 2:2:1. From the following information you are asked to prepare the necessary accounts in the books of the parties assuming that they maintain no separate set of books:

Ankit Babita ChetanMaterials SuppliedExpenses paidGross Sale ProceedsUnsold stock taken over

12,0003,000

--

6,0002,000

20,0002,000

-1,000

10,000500

15. Vinod and Vaibhav entered into Joint Venture to dispatch 800 bags of rice to Vikas to be sold on their Joint risk which is in the proportion of 60% and 40% respectively. Vinod sent 500 bags of

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XII – BK WILLINGS TUTORIAL JOINT VENTURE ACCOUNTS

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 other 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 as Joint Venture expenses. All the 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 the ratio of 2:1 respectively. Following transaction took place 1992.

April 01 A and B paid joint bank account Rs. 36,000 and Rs. 18,000 respectively. 05 Paid rent of shop Rs. 600. 07 Purchased goods for cash Rs. 36,000 paid freight etc. Rs. 500. 15 A paid advertising Rs. 100 from his private account. 28 Sold goods and money deposited in joint bank account Rs. 19,000.May 08 Sold goods for cash (again) Rs. 26,000. 15 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.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 – Rs. 4,000 and Technician’s Charges – Rs. 20,000.The film was completed but due to certain defects in films the contract price reduced 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 were sold by Tole for Rs. 6,00,000 out of which he deducted 2% for his expenses and 3% for his commission

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on total sales. Tole remitted Rs. 3,70,000 to Mote by Bank draft and balance to Bande by one month’s bill.Give Journal entries in the books of Mote. (Oct.’ 05)

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 expenses amounting to Rs. 2,700. Abhijeet also supplied goods to the value of Rs. 7,000 and his expenses 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 – Rs. 3,00,000, Kishor – Rs. 3,00,000 and 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’ 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 Laxman brought in mixer worth Rs. 24,000. The work 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. 12,000.Prepare: Joint Venture A/c, Joint Bank A/c, Co-venturers’ A/c’s. (Mar. ‘07)

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22. Ajay and Sanjay decided to undertake a business jointly. They agreed to share profits and losses in ratio of ¾ and ¼ respectively.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 joint 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 Rajaram 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 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 the 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.

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Sambhaji sold goods for Rs. 1,25,000 and paid selling expenses Rs. 2,500.He remitted the balance to Shivaji after charging 5% commission on sales.Co-venturers settled their accounts.Give Journal Entries in the books of Shivaji. (Mar.’ 09)

26. Krishna of Udgir and Sanjay of Lohara entered into Joint Venture to consign 500 bags of rice to Vijay Traders, Nerul to be sold on their 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 of materials Rs. 25,0002)Payment of wages Rs. 7,7003)Purchase of plant Rs. 4,5004)Other charges Rs. 1,100Apate brings a truck of Rs. 4,000Bachute brings materials of Rs. 5,500Chapate brings a mixer worth Rs. 1,100At 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 Account (March 2010)

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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.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. 7,52,500The 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, entered into a joint venture to purchase and sale goods and agreed to share profits and losses in the proportion of 4:1 respectively.

Rokadimal sent goods of Rs. 4,00,000 to Gunjal for sale.Rokadimal paid Rs. 11,500 for carriage.Rokadimal drew a bill of Rs. 95,000 on Gunjal, which he accepts.Rokadimal discounted this bill with the bank for Rs. 92,000.The amount of discount is to be treated 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 months 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.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. (March 2012)

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