Accounting for Joint Ventures Questions and Answers
Accounting For Joint Very Short Answer Type Questions
Define joint venture?
It is an agreement between two or more parties called co-ventures, to undertake a particular venture or business and to share the profit or loss of that venture in a agreed ratio. It is a temporary partnership without a firm name or common name.
Write any four features of joint venture?
- the minimum member of persons required for a joint venture is two and there is no maximum limit on the number of parties
- the persons who formed joint venture are called ventures or co-ventures.
- The ventures contribute capital and managerial services for the joint venture.
- It is temporary partnership without firm name of common name.
Write two differences between joint venture and partnership?
- a joint venture does not have a firm name or common name. but a partnership ha a firm name.
- a joint ventures is restricted to a particular venture or business. But a partnership is not restricted to a particular venture or business.
Write two differences between joint venture and consignment?
- In a joint venture, there is temporary partnership. But in a consignment there is no partnership
- In joint venture all the venturers are the owners of the business. But in a consignment only consignor is the owner of the business.
How do you treat goods supplied by a co-venture from his own stock?
The goods supplied by a ventures to joint venture out of his own stock at cost or at selling price should be debited to joint venture account and credited to concerned ventures account.
What is meant by memorandum joint venture account?
It is combination of joint venture with co-ventures accounts prepared in the books of each of the co-venturers. It is prepared to find out profit or loss on joint venture.
What is the journal entry for supplies of goods from co-ventures own stock?
Joint venture with co-ventures a/c Dr
To concerned ventures a/c
What is the journal entry when any venture takes over the goods?
Concerned ventures a/c Dr
To joint venture a/c
What are the objections of joint venture?
- To purchase and sale of goods.
- To speculation of shares and debentures.
- To underwrite the shares and debentures of a company.
- To construction of buildings.
Why a joint venture is called as temporary partnership?
A joint venture is formed between the ventures for a specific persons and it ceases to exit on the completion of the specific venture, so a joint venture is called temporary partnership.
State the methods of accounting for Joint ventures.
- When on co-venture keeps the record of joint ventures.
- When all the co-venture keeps the record of joint ventures.
- When a separate set of book is maintained for joint ventures.
- Memorandum joint venture méthod.
When is a Memorandum Joint-Venture Account opened?
This account is prepared to know the profit or loss on joint venture. it is merely combination of personal accounts. This account is debited with all items which are already debited in personal accounts.of all the Co-ventures. This account is credited with all items which are already credited in personal accounts of all Co-venturers. This differences in this account is treated as profit or loss.
Accounting For Joint Short Answer Type Questions
What are the differences between joint venture and partnership?
Joint venture :
- It does not have a firm name or common name.
- It is restricted to a particular venture or business.
- It is a temporary concern.
- It is for a shorter duration.
- The persons carrying on business are called co-venturers.
- Accounts are prepared on closing of the joint venture.
- There is no limit on the maximum number of co-ventures.
- Co-ventures of a joint venture do not have implied authority.
- It has firmi name.
- It is not restricted to a particular venture or business.
- It is a going concern.
- It is for a longer duration.
- The persons carrying on business are called partners.
- Accounts are prepared annually.
- There is a limit on maximum number of partners…
- Partners of a firm have implied authority.
What are the differences between joint venture and consignment?
Joint venture :
- It is a temporary partnership.
- The relationship between venture is that of partners.
- All the ventures are the owners of the business.
- All the ventures may buy and sell the goods.
- A venture is not allowed to any commission on sales.
- The finance is contributed by all the ventures.
- All the ventures share the profits or losses in an agreed proportion.
- It is governed by partnership act.
- There is no partnership in consignment.
- The relationship between consignor and consignee is that of principal and gagent.
- Consignor is the owner of the business.
- Only consignor buys the goods and consignee sells the goods.
- The consignee is allowed to any commission or sales.
- The finance is contributed by only the consignor.
- The entire profit or loss go to consignor.
- It is governed by the law of agency.
A & B enter into joint venture. A agrees to bring in cash are capital accordingly a joint bank account was opened by A for 80,000. B buys goods worth 50,000 as part of his capital. Further goods worth 1,18,000 were purchased from C paying 60,000 and balance by a promissory note signed by A & B.
The goods were sent to Davangere for sale. Expenses totalling 5,000 were incurred on sending the goods. Part of the goods were damaged in transit and a sum of 25000 were recovered from insurance company, the reaming goods were sold for 2,20,000.
Pass journal entries in common books assuming that the promissory note was duty honoured.
AB and entered into a joint venture and agreed to divide profits as A – 60%, B-305 and C-10%. They purchased by Auction several new machines for 50,000. A contributed 30,000, B 20,000 and C 10,000, for carrying on transactions relating to venture. A joint bank account was opened. The ventures were successful in selling the machines for 1,25,000. Excepting one machine which had to be scrapped and it fetched 750 only. A spent 2,450 and two other ventures spent 1,250 each in connection with the venture.
Prepare joint venture a/c and ventures accounts.
A and B agreed to import timer into India. They opened a joint bank account with 25,000 towards which A contributed 15,000 and B 10,000. They A agreed to share profits and losses in proportion to their cash contributions. They remitted to their agent 20,000 to pay for timber purchased and later 2100 insettlement of his account. Freight insurance and dock charges were paid in India which amounted to 3,900. The sales amounted to 28,740 which enabled him to repay themselves and cash originally advanced. They then decided to close the venture and B agreed to take over the balance of timber unsold for 1,260 which is to be deducted from his share of profit.
Prepare joint venture a/c and ventures a/c.
A and B entered in to a joint venture sharing profits and losses in the ratio of 3:2. They opened a joint account by depositing 40,000 each.
A purchased 800 kgs of A grade Tea at 60 per Kg and his expenses were 13,000. B purchased 400 kgs of B grade tea at 55 per kg. and his expenses were 11,000. Expenses were met from private sources and purchases were met from joint bank account.
B sold 600 kgs of A grade tea at 100 per kg and his selling expenses were 5,500: A sold 300 kgs of B grade tea at 110 per Kg and his selling expenses were 6m000. All the proceeds were deposited in the joint bank account and expenses were met by private sources.
Prepare joint venture a/c and ventures a/c.
X and Y entered into a joint venture sharing profit and loss in the ratio of 3:2.X supplied goods to the venture worth 10,000 and incurred expenses 1,000. Y also supplied goods valued 8,000 and paid 500 for expenses.
X and Y sold on behalf of the venture realized 16,000 and 12,000 respectively. They are entitled to get a commission at 10% on their respective sales.
Un sold goods valued 1000 were taken over by X and Y in their profit sharing ratio.
Show ledger accounts in the books of X.
Ajay and Vijay entered into a joint venture in timber business Vijay is allowed a commission on sales at 10% and profits are to be shared in the Ratio of 2:1. Ajay provides timber from stock for 10,000 and incurs expenses amounting to 1000. Vijay pays 1000 for unloading and other non-recurring expenses. Ajay drew on Vijay for 6000. The draft was accepted and Ajay got it discounted for 5,760. Vijay sold 90% of the timber for 15,000 and took over the remaining timer at cost plus 20% and settles his account by Bank draft.
Write joint venture account and Vijay’s account in the books Ajay.
Veena and Meena entered into a joint venture sharing profits and losses in the ratio of 3:2. Veena contributed Rs. 60,000 and Meena Ks. 80,000. The amounts contributed by them were deposited into a joint bank account. They bought goods for cash Rs. 1,00,000 and from Veena for Rs. 40,000. They paid for carriage Rs. 7,000, Rent Rs. 2,000, insurance Rs. 3,000 and other expenses Rs. 4,000. All the goods were sold for Rs. 1,80,000.
Pass the necessary journal entries.
Deepa and Eswari entered into a joint venture to purchase stationeries and supply them to colleges. They agreed to share profits in the ratio of 5:3 and to maintain books of accounts for the joint venture under memorandum Joint Venture Method.
Deepa and Eswari purchased stationeries for Rs. 6,00,000 and Rs. 4,50,00 respectively and sold them for Rs. 7,50,000 and Rs. 5,25,000 respectively. Selling expenses incurred by them are Rs. 35,000 and Rs. 25,000 respectively. No goods remained unsold and the final amount is settled by cheque.
Prepare necessary accounts in the books of Deepa.
Kavitha and Kalpana are entered into a joint venture sharing profits and losses in the ratio of 3:2 Kavitha contributes Rs. 1,20,000 and Kalpana Rs. 1;60,000. The amount contributed by them were deposited into a joint bank account. They bought goods for cash Rs. 2,00,000 and from Kavitha for Rs. 80,000. They paid for carriage Rs. 15,000. Rent Rs. 4,000 Insurance Rs. 5,000 and other expenses Rs. 9,000. All the goods were sold for Rs. 3,50,000
Pass necessary journal entries.
Radha and Sowmya entered into a Joint – Venture to buy and sell goods and share profits and losses equally. They opened a Joint Bank Account to which Radha contributed Rs. 55,000 and Sowmya contributed Rs. 50,000. Radha and Sowmya purchased goods for Rs. 1,05,000. Radha also supplied goods worth Rs. 7,500 and paid rent for the venture Rs. 1,500. They sold goods for Rs. 1,60,000. The expenses incurred on advertisement amounted to Rs. 4,000 which were paid by Sowmya and she took balance of stock for Rs. 3,000.
Prepare Joint Venture Account in the books of Radha.
Praveen and Karthik were partners in a joint venture sharing profits and losses equality. Praveen supplied goods to the value of Rs. 20,000 and incurred expenses amounted to Rs. 1,600. Karthik supplied goods to the value of Rs. 16,000 and his expenses amounted to Rs. 1,600. Karthik sold the entire goods on behalf of the joint venture and realized Rs. 48,000. Karthik was entitled to a commission of 5% on sales. Praveen settled his account by bank draft.
Show the Ledger Accounts in the books of Praveen and Karthik under Memorandum Joint Venture method.
Naveen and Praveen entered into a joint venture to construct a building for Rs. 7,50,000. Naveen and Praveen contributed Rs. 3,75,000 and Rs. 2,85,000 respectively. They agreed to share profits and losses in the ratio of 3 : 2. It was i decided that the work would be looked after by Naveen, who would be paid 10% commission on contract price in addition to his share of profits. Naveen bought the necessary materials for Rs. 6,00,000 and paid Rs. 18,000 for expenses. He also contributed building materials from his own stock worth Rs. 37,500. There was an outstanding wages of Rs. 9,000.
The building was completed and the contract money was duly received. Praveen took over the stock of materials at an agreed value of Rs. 30,000 and outstanding wages were paid by Naveen.
Prepare Joint Venture A/C and Praveen’s A/c in the books of Naveen.
Accounting For Joint Long Answer Type Questions
XYZ jointly under took to construct a building for Patil and Co., at a price of 2,50,000. The price was to be paid as follows.
2,00,000 in cash and the balance in preference shares of the company. Profit was agreed to be divided in the Ratio 2:2:1. The participants contributed cash as follows X – 30,000, Y – 25,000 and Z-20,000. These amounts were credited to a joint bank account. Y was to be paid a remuneration of 1500 for managing the business.
X prepared the plans and paid 3500 for them. Y brought concrete mixed for 12,000 and Z brought a truck for 25,000. They brought plant for 15,000, materials 1,20,000 and wages 1,05,000.
When contract was completed X took over unused materials for 10,000, Y took back concrete mixer for 11,000 and Y agreed to take back the truck 18,000. The plant was sold as scrap for 6,000.
When the contract price was received. X agreed to take over the preference shares for 40,000. All the accounts were closed. Pass journal entries assuming that the accounts are finally settled among the partners.
A, B and C enter in to a joint ventures to divide profits equally. They bought goods from smart and Co.for 12,500 and from Xher 2,500. X contributed 3,000, Y-4,000 and Z-9,000 which amounts where banked in a joint account. They settled their accounts with smart and Co. by cheque and paid for carriage and other expenses 750. They sold goods by cash 6,500 and to Smit and son on credit for 14,000 who accepted a draft for the amount. The acceptations was cashed and realized 13,700. X was allowed 5% commission on sales for effecting the from tranctions.
Prepare necessary accounts, assuming that final settlement between parties was made by cheques.
Arun and Varun entered into a joint venture for dealing in second hand cars. It was agreed that Arun should buy cars that Varun should attend to the reconditioning of them. That a commission of 5% should be allowed on sale made by each and that profits and losses should be divided equally.
Arun purchased 7 cars for 18,500 and paid 210 fro insurance and 130 for advertising. Varun contributed 3000 for the purchase money and paid for repairing – batteries 180 for repairing types 330 and for repairs 630 and charged 1000 for garaging the cars.
Arun sold 2 cars for 6,600 and Varun sold 4 cars for 13,360. Arun took over the remaining car at 2,900 and the venture was closed.
Show ledger accounts of the venture in the books of each party.
A and B entered in to a joint venture sharing profits and losses in the ratio of 3:2 X supplied goods to the venture worth 20,000 and incurred expenses 2,000 Y also supplied goods valued 16,000 and paid 1,000 for expenses.
X and Y sold goods on behalf of the venture and realized 32,000 and 24,000 respectively, They are entitled to get a commission at 10% on their respective sales.
Unsold goods valued 2000 were taken over by X and Y in their profit sharing ratio.
Show ledger accounts of the venture in the books of each party.
A and B enter into a joint venture to consigin 100 sales to C to be sold on their joint stock. They agree to share profits or losses equally.
A sent 50 bales valued at 60,000 and pays fright and expenses 1200. B sent 50 bales valued at 55,000 and paid expenses 900.
All the bales reached to Kolkotta in time. However 5 bales were found to have tampered with during the transit. A recovered 3000 from insurance company. C sold the remaining bales for 1,35,000. He chared 3% as selling commission and deducted 1,500 towards expenses. He remitted the balance to A by DD on SBI of India payable at Ahmedabad.
Prepare necessary accounts in the books of both parties assuring that each venture records in his books only the joint venture transactions effected of him.
M and N decided to work the following scheme in partnership agreed to share profits as 3 : 2 ratio.
They guaranteed the subscription at par of 10,00,000 shares of 1 each in the Vijaya Ltd., And to pay all expenses upon allotment in consideration of the Vijaya Ltd., issuing to them 1,00,000 other shares of 1 each.
Mintroduced cash in to the business to meet the following expenses
Stamp charges and registration fees – 4,000
Advertising charges – 3,000
Printing charges of MOA, AOA and prospectus – 3,000
N introduced cash to meet the following expenses, Rent – 2,000
Solicitors charges – 3,000
The application fell short of the 10,00,000 shares by 20,000 shares. N introduced further cash on joint account for the said 20,000 shares. This amount was utilized to the said 20,000 shares and paid to the company.
The guarantee having been fulfilled, the Vijaya Ltd. Handed over to M & N 1,00,000 shares. The partnership sold all the shares. N received the sale proceeds of 80,000 share amounting to 60,000 and M of the remaining 40,000 shares amounting to 25,000.
Give the necessary accounts in the books of each venture to record his own transactions assuming that final settlement by made between the ventures.
Rajesh, Satish and Mahesh Entered into a joint venture according to which Rajesh and Satish purchase goods and send the same to mahesh who is a marketer. Mahesh would sell the goods for a commission of 10% Rajesh and Satish agreed to share the remaining profit in the ratio of 3:2. Rajesh purchased goods for Rs. 1,00,000 and sent them to Mahesh incurring an Expenditure of Rs. 4,000. Satish purchased goods for Rs. 60,000 and sent the same to mahesh by incurring an Expenditure of Rs. 3,000.
Mahesh Exported all the goods and realised Rs. 2,00,000, by paying Rs. 1000 as insurance premium. He also received Rs. 8,000 as insurance compensation for some goods destroyed.
Mahesh paid the balance of cash to Rajesh and Satish.
a) Memorandum Joint venture account
b) Co-ventures accounts.
Jayanth, Kumar and Lakshman entered into Joint Venture and agreed to share profits and losses in the ratio of their capital contributions. They contributed Rs. 2,50,000, Rs. 1,50,000 and Rs. 1,00,000 respectively into the Joint Bank Account. The purchases and sales were as follows:
Credit purchases from A Ltd. Rs. 5,00,000
Credit purchases from B Ltd., Rs. 3,00,000
Cash purchases from C Ltd., Rs. 4,00,000
Cash sales Rs. 9,00,000
Credit sales to C Ltd., Rs. 6,50,000
Office expenses Rs. 30,000. The unsold goods were taken over by Kumar at an agreed value of Rs. 20,000. Lakshman is entitled to a special commission of 5% on gross sales. all balances were settled through Joint Bank Account at the end.
a) Joint Venture A/c
b) Joint Bank A/C
c) A Ltd. Alc
d) B Ltd., A/C
e) C Ltd., A/c and
Akash and Ashwin undertook a joint venture for construction of a college building. A joint bank account was opened in which Akash deposited Rs. 2,00,000 and Ashwin Rs. 50,000. The contract price was Rs. 10,00,000. The profit of joint venture was to be shared as to Akash 2/3 and Ashwin 1/3.
The details of the transactions are as follows:
Salaries – 30,000
Wages – 1,80,000
Materials supplied by Akash – 35,000
Building materials purchased – 4,00,000
Materials supplied by Ashwin – 35,000
Architect’s fees – 25,000
Carriage – 45,000
Machinery purchased – 80,000
On the completion of the contract the unused materials of the value Rs. 40,000 were taken over by Akash. The machinery was sold for Rs. 60,000. Mr. Ashwin was to be paid a remuneration of Rs. 30,000 for his service which is to be charged to the joint venture.
Prepare the necessary ledger account.
M, N and O enter into a joint-venture and decided to divide profits/losses equally. they bought goods from Suvarna and Co. for Rs. 4,00,000 and from ‘A’fro Rs. 50,000 and spent Rs. 4,500 as carriage. M contributed Rs. 1,10,000, ‘N’ Rs. 1,50,000 and ‘O’Rs. 2,00,000 which were deposited into a joint bank account. they paid Rs. 50,000 to Mr. ‘A’and Suvarna and Co. received Rs. 3,96,000 for full settlement of their account. they sold for cash Rs. 95,000 and to Z Co. on credit Rs. 4,55,000. The amount due from ‘Z’Co. received fully. ‘M’ was allowed 5% commission on sales for effecting the transactions.
Prepare the necessary ledger accounts.
Das and Boss entered into a joint venture sharing profits and losses as 3:2. They opened bank a/c by depositing Rs. 40,000 each. Das purchased 800 kg. of an item @ 60 per kg. and his expenses were Rs. 13,000. Boss purchased a second item of 10,000 kg. @ 2.10 per kg. and his expenses were Rs. 11,000. Expenses were met from private sources and purchases were paid from bank account. Boss sold 600 kg. of the first item @ 100 per kg. and his selling expenses were Rs. 5,500. Das sold Rs. 8,000 kg. of second item at Rs. 5 per kg and his selling expenses were Rs. 6,000. All the sale proceeds were deposited in bank account and expenses were met from private sources.
Write up necessary accounts in the books of the joint venture.
Charith and Chinmay entered into a joint venture and agreed to share profits and losses in the ratio of 3:2 after providing for interest on capital at 10% p.a. A joint bank account was opened in which Charith deposited Rs. 4,00,000 and Chinmay deposited Rs. 2,00,000 on 1.4.2017. goods purchased for Rs. 3,75,000 in cash and was sent to Bengaluru agent for sale.
Freight and insurance amounted to Rs. 7,500 was paid. All the goods were sold by the agent for Rs. 7,00,000. The agent remitted the balance amount after deducting his commission at 3% and expenses of Rs. 4,000.
a) Joint venture A/c,
b) Co-venture’s A.c,
c) Joint Bank A/c and
d) Agent’s A/c in the books of joint venture.