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
.
1

Points

Joint Venture

Partnership Firm

Meaning

Name

It is an ad hoc association
of persons for doing some
business.
It is without a firm name.

Persons

Act

Liability

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.

The person carrying on

business are called as coventurers.
There is not special act
governing joint venture.

Liability of co-venturers
may be joint and several.
Books of There is no need to
Accounts maintain a separate set of
books.
System of It follows cash system of
Accountin accounting.
g
Profit
Profit is calculating for
each venture separately
and it may be shared in
different ratios for
different ventures.
Independ Co-venturers can do their
Page
1

It follows mercantile system

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

Partners cannot do

ent

10

business independently
similar to that of the
venture.
Dissolutio A joint venture is
n
dissolved when the
venture is completed.

independent business
similar to the business of
firm.
A partnership is not
dissolved automatically
unless the partners decide.

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-Venturers A/c
(2) When goods or materials are brought in by co-venturers for joint venture
business:
Joint Venture A/c
Dr.
To Co-Venturers A/c
(3) When expenses of joint venture are paid by co-venturers:
Joint Venture A/c
Dr.
To Co-Venturers 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/cDr.
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:
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2

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-Venturers 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-Venturers 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-Venturers 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
Am Am
Particulars
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3

Am

Amt

t.
(Rs.
)
To Joint Bank A/c
Materials
Wages
Plant
To Co-Venturer
As A/c
Materials
Freight
Bs 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)
To Co-Venturer A/c
A
B
C
(Profit on Joint Venture)
Total

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

XXX
XXX
XXX

XXX
XXX
XXX
XXX
XXX

t.
(Rs.
)

XXX

XXX

t.
(Rs.
)
By Joint Bank A/c
(Sale of goods)
By Shares/Debentures A/c
(Contract Price)
By Co-Venturers A/c
(Materials taken over)
By Co-Venturers A/c
(Plant taken over)
By Shares/Debentures A/c

.
(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
XXX
XXX

XXX

XXX

XXX
XXX
XXX

XXX
XX
X

Total

CO-VENTURERS A/C
A
B
Particulars
XXX XXX By Joint Bank
(Initial Contribution)
XXX XXX By Joint Venture A/c
(Goods Supplied)
XXX XXX By Joint Venture A/c
(Expenses Paid)
XXX XXX By Joint Venture A/c
(Commission/Interest)
By Joint Venture A/c
(Share in Profit)
By Joint Bank A/c
(Deficiency brought in)
XX
XX
Total
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4

XXX

A
XXX

B
XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XX

XXX

Particulars

To Co-Venturers A/c
As A/c
Bs A/c
(Initial Contribution)
To Joint Venture A/c
(Sale of goods)
To Shares/Debentures A/c
(Sale of shares/debentures)
Total

Particulars

To Joint Venture A/c

(Contract Price)
To Joint Venture A/c
(Profit on share)
Total

JOINT BANK A/C

Am Am
Particulars
t.
t.
(Rs. (Rs.
)
)
By Joint Venture A/c
XXX
(Goods Purchased)
XXX XXX By Joint Venture A/c
(Expenses Paid)
XXX By Co-Venturers A/c
As A/c
XXX
Bs A/c
(Final Payment)
XX
Total
X
SHARES/DEBENTURES A/C
Am
Particulars
t.
(Rs.
)
XXX By Co-Venturers A/c
(Taken Over)
XXX By Joint Venture A/c
(Loss on shares)
XX
Total
X

Am
t.
(Rs.
)

Amt
.
(Rs.
)
XXX
XXX

XXX
XXX

XXX
XXX

Amt
.
(Rs.
)
XXX
XXX
XXX

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

Method]

Journal Entries
When goods are purchased and supplied for joint venture business by coventurer (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-Venturers A/c (other)
When expenses of joint venture business are incurred and paid by co-venturer
himself:
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5

1
0
1
1
1
2
1
3

1
4
1
5
1

Joint Venture A/c

Dr.
To Cash/Bank A/c
When expenses of joint venture business are incurred and paid by other coventurer:
Joint Venture A/c
Dr.
To Co-Venturers A/c (other)
When advance is sent to other co-venturer for business purpose:
Co-Venturers 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-Venturers A/c (other)
When bill accepted is drawn by other co-venturer for raising finance for
business:
Co-Venturers 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-Venturers 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
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
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6

6
1
7
1
8
1
9
2
0
2
1
2
2
2
3

2
4

Co-Venturers A/c (other)

Dr.
To Joint Venture A/c
When goods are sold by agent:
Agents A/c
Dr.
To Joint Venture A/c
When expenses are incurred and commission are 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-Venturers A/c (other)
Dr.
To Agents 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-Venturers 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-Venturers A/c (other)
(b) Transfer of debit balance (Loss incurred on joint venture business)
Profit & Loss A/c
Dr.
Co-Venturers 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-Venturers 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-Venturers A/c (other)

The Disadvantages of Joint Ventures

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7

It takes time and effort to build the right relationship and partnering with
another business canbe challenging. Problems are likely to arise if:

The objectives of the venture are not 100 per cent clear and communicated to
everyoneinvolved.

There is an imbalance in levels of expertise, investment or assets brought into

the venture bythe different partners.

Different cultures and management styles result in poor integration and cooperation.

The partners don't provide enough leadership and support in the early stages.

Success in a joint venture depends on thorough research and analysis of the

objectives

Advantages of joint ventures

Joint ventures enable companies to share technology and complementary IP

assets forthe production and delivery of innovative goods and services.

For the smaller organization with insufficient finance and/or specialist

management skills,the joint venture can prove an effective method of obtaining
the necessary resources toenter a new market. This can be especially true in
attractive markets, where localcontacts, access to distribution, and political
requirements may make a joint venture thepreferred or even legally required
solution.

Joint ventures can be used to reduce

local/nationalacceptability of the company.

Page
8

political

friction

and

improve

Joint ventures may provide specialist knowledge of local markets, entry to

requiredchannels of distribution, and access to supplies of raw materials,
government contractsand local production facilities.

In a growing number of countries, joint ventures with host governments have

becomeincreasingly important. These may be formed directly with State-owned
enterprises ordirected toward national champions.

There has been growth in the creation of temporary consortium companies and
alliances,to undertake particular projects that are considered to be too large
for individualcompanies to handle alone (e.g. major defence initiatives, civil
engineering projects, newglobal technological ventures).

Exchange controls may prevent a company from exporting capital and thus
make thefunding of new overseas subsidiaries difficult. The supply of knowhow may therefore beused to enable a company to obtain an equity stake in a
joint venture, where the localpartner may have access to the required funds.
Disadvantages of joint ventures

A major problem is that joint ventures are very difficult to integrate into a
global strategythat involves substantial cross-border trading. In such
circumstances, there are almostinevitably problems concerning inward and
outward transfer pricing and the sourcing ofexports, in particular, in favour of
wholly owned subsidiaries in other countries.

The trend toward an integrated system of global cash management, via a

central treasury,may lead to conflict between partners when the corporate
headquarters endeavours toimpose limits or even guidelines on cash and
working capital usage, foreign exchangemanagement, and the amount and
means of paying remittable profits.

Another serious problem occurs when the objectives of the partners are, or
become,incompatible. For example, the multinational enterprise may have a
very different attitudeto risk than its local partner, and may be prepared to
accept short-term losses in order tobuild market share, to take on higher levels
of debt, or to spend more on advertising.Similarly, the objectives of the
participants may well change over time, especially whenwholly owned
Page
9

subsidiary alternatives may occur for the multinational enterprise withaccess

to the joint venture market.

Problems occur with regard to management structures and staffing of joint

ventures.

Many joint ventures fail because of a conflict in tax interests between the
partners.

Proforma:
LEDGER ACCOUNT IN THE BOOKS OF CO-VENTURER
Joint Venture A/c
Particulars
Am Am
Particulars
t.
t.
(Rs. (Rs.
)
)
To Goods A/c
XXX By Cash/Bank A/c
(Goods Supplied)
(Sale Proceeds)
To Bank A/c (Expenses)
XXX By Bs A/c
To Commission A/c (Income)
XXX
Goods (Sale Proceeds)
To Bills Receivable A/c
XXX
Materials
(Discount)
(Unsold material taken
To Bs A/c
XXX
over)
Goods
XXX
By Plant A/c
Expenses
XXX
(Unsold plant taken over)
Commission
XXX XXX By Agent Cs A/c
Discount
(Sales by the agent)
To Agent Cs A/c
XXX
By Loss on Joint Venture
Commission
XXX XXX Profit & Loss A/c
Expenses
XXX (Own shares)
To Profit on Joint Venture
XXX
Bs A/c (Bs share of
Profit & Loss A/c (Own
XXX loss)
share)
Bs A/c (Bs share)
Total
XX
Total
X

Particulars

OTHER CO-VENTURER A/C

Bs A/c
Am Am
Particulars
t.
t.
Page
10

A
Am
t.
(Rs.
)

Amt
.
(Rs.
)
XXX

XXX
XXX
XXX
XXX

XXX
XXX

XXX

Am
t.

Amt
.

(Rs.
)
To Joint Venture A/c
Goods (Sale Proceeds)
Materials
(unsold stock taken over)
To Joint Venture A/c
(Bs share of loss)

Total

Particulars

To Joint Venture A/c

(Sale of goods)

Total

XXX
XXX

(Rs.
)

XXX
XXX

XX
X

(Rs.
)
By Joint Venture A/c
Material Supplied
Expenses
Commission
Discount (Transfer)
By Joint Venture A/c
(Bs Share of Profit)
By Cash/Bills Receivable A/c
(Balancing Figure)
Total

XXX
XXX
XXX
XXX

Agent Cs A/c
Am
Particulars
t.
(Rs.
)
XXX By Joint Venture A/c
(Commission & Expenses)
By Cash/Bank A/c/Bills receivable
(Receipt)
By Bs A/c (Amount paid to B by
C)
XX
Total
X

LEDGER ACCOUNT IN THE BOOKS OF CO-VENTURER B

Joint Venture A/c
Particulars
Am Am
Particulars
Am
t.
t.
t.
(Rs. (Rs.
(Rs.
)
)
)
To As A/c
By As A/c
Goods
XXX
(Sales proceeds)
Expenses
XXX XXX By Bank A/c
To Goods A/c (Goods
XXX (Sales Proceeds)
Supplied)
XXX By Material
To Bank A/c (Expenses)
XXX (unsold Material taken
To Commission (Income)
over)
To Agent Cs A/c
XXX
By As A/c
Commission
XXX XXX (Unsold material taken
Expenses
over)
Page
11

(Rs.
)

XXX
XXX
XXX
XXX

Amt
.
(Rs.
)
XXX
XXX
XXX
XXX

Amt
.
(Rs.
)
XXX
XXX
XXX
XXX
XXX

To Profit on Joint Venture

As A/c (As share)
Profit & Loss A/c (Own
share)

Total

Particulars

To Joint Venture A/c

(Sale proceeds)
To Joint Venture A/c
(Plant taken over)
To Joint Venture A/c
(As share of loss)
To Cash/Bills Payable A/c
(Balancing Figure)
Total

Particulars

To Joint Venture A/c

(Sale of goods)

Total

XXX
XXX

XXX

XX
X

By Agent Cs A/c
(Sale by the agent)
By Loss on Joint Venture
As A/c (As share)
Profit & Loss A/c (Own
share)
Total

OTHER CO-VENTURER A/C

As A/c
Am Am
Particulars
t.
t.
(Rs. (Rs.
)
)
XXX By Joint Venture A/c
Goods
XXX
Expenses
By Joint Venture A/c
XXX (As share of profit)

XXX
XXX

XXX

XXX

Am
t.
(Rs.
)
XXX
XXX

Amt
.
(Rs.
)

XXX
XXX

XXX
XX
X

Total

Agent Cs A/c
Am
Particulars
t.
(Rs.
)
XXX By Joint Venture A/c
(Commission & Expenses)
By Cash/Bank/Bills Receivable A/c
By As A/c (Amount paid to A by
C)
XX
Total
X

Problems:
Page
12

XXX

Amt
.
(Rs.
)
XXX
XXX
XXX
XXX

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 Anands Journal
and show joint venture A/c and the co-venturers 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) Prakashs Account
iv) Kirans 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. 40,000
Yahoo paid registration fees Rs. 30,000. 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 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 Wages
3,30,000
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13

Bought materials
6,70,000
Material supplied by A
45,000
Material supplied by B
24,000
Architects 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 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. Baleris A/c and Mr. Sharmas 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 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
14

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.
Jardawalas A/c and Mr. Bidiwalas 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; Architects 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-venturers 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 ata 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. 1,50,000
Rajesh
Rs. 1,00,000
Ramesh
Rs. 50,000
The following payments are made out through Joint Bank Account:
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Rs.
Purchase of Materials
1,25,000
Purchase of Plant
22,500
Payment of Wages
38,500
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-venturers 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, Xs A/c and Ys
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
Chetan
Materials Supplied
12,000
6,000
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Expenses paid
Gross Sale Proceeds
Unsold stock taken over

3,000
-

2,000
20,000
2,000

1,000
10,000
500

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 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 Traderss 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: Artists Fees Rs. 36,000, Hire of Sets Rs.
4,000 and Technicians Charges Rs. 20,000.
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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 on total sales. Tole remitted Rs. 3,70,000 to Mote by
Bank draft and balance to Bande by one months 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 Ajays 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.
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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/cs.
(Mar. 07)
22.Ajay and Sanjay decided to undertake a business jointly. They agreed to share
profits and losses in ratio of and 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) Balus A/c (iii) Amols 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, Architects 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.
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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-Venturers 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.
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 months bill.
Co-venturers settled their accounts.
Prepare: (i) Joint Venture A/c (ii) Sanjays 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. 25,000
2) Payment of wages
Rs. 7,700
3) Purchase of plant
Rs. 4,500
4) Other charges
Rs. 1,100
Apate brings a truck of
Rs. 4,000
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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-Venturers 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.
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.
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, 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.
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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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