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DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : Y. Yella Reddy
Designation : HCCP
Branch : DCCP
Institute : 026, S.G.Govt. Polytechnic, Adilabad
Year/Semester : IV Semester
Subject : Accountancy – III
Subject Code : CCP402
Topic : Joint Venture
Duration : 50 Mts
Sub Topic : Accounts kept by one Venturer
Teaching aids : PPT, Animations
CCP402.21 1
Objectives :

On completion of the period, you would be


able to know:
 Maintenance of accounts by one Venturer

CCP402.21 2
Recap :

In the previous period, the preparation of


Journal Entries, Ledger accounts under
Method I of “ Maintenance of Accounts by
one venturer” is learnt and practised

CCP402.21 3
Illustration 1

 Surendra bought goods for Rs. 75,000/- and


consigned them to Veerendra to be sold by them
on a Joint Venture
 profits were divided in the ratio of 2:1.
 Surendra also paid Rs. 5,500 for freight and
insurance and drew a bill on Veerendra for Rs.
40,000/- on account.

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Illustration 1 contd.
 After acceptance by Veerendra, it was discounted
by Surendra for Rs. 39,000/-.
 Veerendra paid Rs.3,100 for storage, rent etc., the
sales realized Rs. 1,25,000/- and the sales
expenses of Rs.2500 were also incurred by
Veerendra.
 He remitted bank draft for the balance due to
surendra after charging his sales commission @
5% on the gross sales.
 Prepare Joint venture account and Veerendra’s
account in the books of Surendra
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Solution :

Method – I: Maintenance of Accounts by one Venturer

Journal Entries in the Books of Surendra

1) Joint venture a/c Dr. 75,000


To Cash 75,000
(Being the goods purchased)

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2) Joint venture a/c Dr. 5,500
To Cash 5,500
(Being the expenses paid)

3) Bills Receivable a/c Dr. 40,000


To Veerendra a/c 40,000
(Being the bill received)

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4) Bank a/c Dr. 39,000
Joint venture a/c Dr. 1,000
To Bills Receivable a/c 40,000
(Being the bill discounted)
5) Veerendra a/c Dr. 1,25,000
To joint venture a/c 1,25,000
(Being the sales made by Veerendra)

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6) Joint venture a/c Dr. 3,100
To Veerendra a/c 3,100
(Being the expenses incurred)

7) Joint Venture a/c Dr. 2,500


To Veerendra’s a/c 2,500
(Being the sales expenses incurred)

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8) Joint venture a/c Dr. 6,250
To Veerendra 6,250
(Being the commission payable)

9) Joint Venture a/c Dr. 31,650


To P&L a/c 21,100
To Veerendra a/c 10,550
(Being the profit distributed)

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10) Bank a/c Dr. 62,600
To Veerendra a/c 62,200
(Being the balance received)

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Ledger Accounts in the Books of Surendra
Dr. Joint Venture Account Cr.
Rs. Rs.
To Cash a/c 75,000 By Veerendra’s 1,25,000
(goods) a/c
“ Cash a/c (Exp) 5,500
“ B/R (discount) 1,000
a/c
“ Veerendra’s a/c
Expenses 3,100
Sales Exp. 2,500
Comm. 6,250
“ P & L a/c 21,100
“ Veerenda’s a/c 10,550
1,25,000 1,25,000
CCP402.21 12
Veerendra’s Account
Dr. Cr.
Rs. Rs.
To J.V. a/c (Sales) 1,25,000 By B/R a/c 40,000

“ J.V. a/c 3,100


Storage, rent
Sales Exp. 2,500
Comm. 6,250
(1,25,000 @ 5%)
Profit 10,550
“ Bank 62,600
1,25,000 1,25,000

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Illustration 2

 Sarada & Co. purchased goods worth Rs. 75,000 and


consigned them to Gowri & Co. on Joint Venture.
 They agreed to share profits equally.
 Sarada & Co. paid Rs. 10,000 towards expenses.
 On receipt of goods Gowri & Co. paid Rs.6,000
towards advertisement and Rs. 500 towards rent.
 The total goods were sold for Rs.1,20,000. Gowri &
Co. remitted the final balance
 Prepare the necessary Ledger accounts in the books
of Sarada & co
CCP402.21 14
Solution
Books of Sarada & Co.
Joint Venture Account
Dr. Cr.
Rs. Rs.
To Cash a/c 75,000 By Gowri & Co 1,20,000
(goods) a/c (Sales)
“ “ a/c (Exps) 10,000
“ Gowri & Co a/c 6,000
(Advt)
“ “ (rent) 500
“ P & L a/c 14,250
Gowri a/c 14,250
1,20,000 1,20,000

CCP402.21 15
Gowri’s Account

Dr. Cr.
Rs. Rs.
To J.V. a/c 1,20,000 By J.V. a/c (exp) 6,000

“ J.V. a/c (rent) 500


“ J.V. a/c (profit) 14,250
“ Bank a/c 99,250
1,20,000 1,20,000

CCP402.21 16
Assignment

 Sarala & Co. purchased goods worth Rs. 75,000


and consigned them to Gowtham & Co. on Joint
Venture.
 They agreed to share profits equally.
 Sarala & Co. paid Rs. 10,000 towards expenses.
 On receipt of goods Gowtham & Co. paid
Rs.6,000 towards advertisement and Rs. 500
towards rent.
 The total goods were sold for Rs.1,20,000.
Gowtham & Co. remitted the final balance
 Prepare the necessary Ledger accounts in the
books of Sarala & co
CCP402.21 17