Accounting for

Joint Venture

Problems
 When one of the Co-ventures is appointed to manage the Joint Venture
Problem 1: Madhu and Muthu entered into a joint venture in
which Madhu would manage the business. They brought
Tk.10,000 each in case for the venture. Madhu purchased
goods for Tk.19,000 and sold it for Tk.25,000. Expenses on the
venture paid by him amounted to Tk.1,000. Madhu would get a
commission of 4% on sales. They shared profits and losses
equally.
Requirement:
i. Pass journal entries and prepare ledger accounts in the books
of Madhu.
 When one of the Co-ventures is appointed to manage the Joint Venture
Problem 2: Anil entered into a contract to construct a building for
Tk.200,000. Anil and Sunil contributed Tk.100,000 and Tk.75,000,
respectively. They agreed to share profits and losses in the ratio of 4:3.
It was decided that the work would be looked after by Anil who would
be paid 5% commission on contract price in addition to his share of
profit. Anil bought the necessary materials for Tk.160,000 and paid
Tk.4500 for expenses. Anil also contributed building materials from his
own stock worth Tk.10,000. Tk.2,500 remained to be paid for wages.
Sunil took over the stock of materials for an agreed valuation of
Tk.8,000. The building was completed and the contract money was duly
received.
Requirement:
i. Record the above transactions in the books of Anil and show the joint
venture account that the outstanding wages were paid by Anil.
 When one of the Co-ventures is appointed to manage the Joint
Venture
Problem 3: Mr. A and Mr. B enter into a joint speculation and
purchase an old house with extensive grounds for Tk.8,000, each
contributing Tk.4,000. For an agreed fee of Tk.500, A is to manage
the disposal of the property. Sale of internal fittings, window etc.
amounted to Tk.1,700. A pays Tk.300 for demolishing the house,
material of which realizes Tk.200. Sundry expenses paid by A were
Tk.100 and the whole of land is eventually sold for Tk.9,000. A and
B share the net profits equally; A paying B his share by cheque.
Requirement:
i. Record these transactions in A’s Journal
 When one of the Co-ventures is appointed to manage the Joint
Venture
Problem 4: Karim, Sharif and Rahim were partners in a joint venture,
each contributing Tk.5,000. Karim purchased goods for Tk.13,000 and
also supplied goods worth Tk.1,000 from his stock. Rahim also supplied
goods to the value of Tk.1,500 from stock and his expenses in
connection with the supplying of goods on account of joint venture
amounted to Tk.50. Karim paid Tk.250 for expenses in connection with
the joint venture. Karim sold goods on behalf of the joint venture and
realized Tk.20,800. Karim was entitled to a commission of 5% on sales.
Unsold goods amounting to Tk.500 were taken by Sharif, Karim
accounts of Sharif and Rahim by Bank draft. Record these transactions
in Karim’s Journal and also prepare Joint Venture Account and Sharif
and Rahim Accounts in Karim’s Books.
When a separate set of books is not maintained for recording Joint
Venture transactions
Problem 5: Mr. A and Mr. B were participants in a joint venture,
sharing profits and losses in the proportion of 10:9 respectively.
Each party maintains a complete record in his own books. A
supplies goods to the value of Tk.25,000 and incurs an expenditure
of Tk.500 on them; and B supplies goods to the extent of
Tk.21,000 and his expenses thereon amounted to Tk.1,000. A sells
all the goods for Tk.70,000 for which he is entitled to receive a
commission at 5%. Accounts are settled by bank draft. Give journal
entries and prepare necessary accounts in the book of both parties.
When a separate set of books is not maintained for recording Joint
Venture transactions
Problem 6: Aji and Giji entered into a joint venture to purchase
and sell goods, and to share profits and losses equally. Aji
supplied goods for Tk.20000 and Giji supplied for Tk.15000.
Aji paid Tk.1000 for rent while Giji paid Tk.500 for
advertisement. Aji sold some of the goods for Tk.23000 and
Giji sold for Tk.22000.on closing the venture, Aji took over the
unsold goods for Tk.1500.
Pass journal entries and prepare ledger account in the books of
both Aji and Giji.
 When a separate set of books is not maintained for recording Joint Venture
transactions
Problem 7: X and Y entered into a joint venture agreeing to share profits and losses equally. The
following transactions took place during the course of venture.
Tk.
• X purchased goods for cash 1,250
• Y purchased goods for cash 3,500
• X paid storage charges 250
• Y paid freight and insurance 400
• Y sold goods for cash 3,500
• Y received 3% commission on sale 105
• Sales made by X 2,500
• Commission payable to X 75
• Y took over the unsold stock 280
Pass the Journal entries and prepare the necessary accounts in the books of X and Y
assuming that the accounts are finally settled between them.
Problem 8: Anu and Anil entered into a joint venture agreement to share
the profits and losses in the ratio of 2:1. Anu supplied goods worth
Tk.30,000 to Anil, and incurred expenses amounting to Tk.1,000 for
freight and insurance. During transit the goods costing Tk.2,500 were
damaged and a sum of Tk.1,500 was received from the insurance
company. Anil reported that 90% of the remaining goods were sold at a
profit of 30% of their original cost. Towards the end of the venture, a fire
damaged the balance stock lying unsold with Anil. The goods were not
insured and Anil agreed to compensate Anu by paying in cash 80% of the
aggregate of the original cost of such goods, plus proportionate expenses
incurred by Anu. In addition to the joint venture share of profit, Anil was
also entitled to a commission of 5% on net profits of the joint venture after
charging such commission. Selling expenses incurred by Anil totaled
Tk.500. Anil had earlier remitted an advance of Tk.5,000. Anil paid the
balance due to Anu by a bank draft.
• Prepare the joint venture account and Anil‘s account in Anu‘s books.