Recording in the Books of One Co-venturer

If the joint venture business is not very large, the task of recording transactions can very well be entrusted to one of the Co-venturers. He will prepare a Joint Venture Account and the personal accounts of other Co-venturers. The Joint Venture Account is prepared for ascertaining the profit or loss of the joint venture. The personal account of other co— venturers are prepared to find out the amount due from them. As stated earliest, each co-venturer is also entitled to carry on his own business and these transactions will be in addition to what he records in respect of his own business. The following journal entries are passed in his books before preparing the necessary accounts of the joint venture.

 



1. When the co-venturers send their contribution:

 

Cash/Bank A/c                                           Dr.

To Co-venturer’s Personal A/c

 

2. When the goods are purchased for the joint venture:

 

Joint Venture A/c                          Dr.

To Cash/Bank A/c

 

3. When the goods are supplied from his own stock by the Co-venturer who is recording the transactions:

 

Joint Venture A/c                          Dr.

To Purchases A/c

Here we are crediting Purchases Account because he is supplying the goods from his own stock at cost. But if the goods are supplied by him at a price other than the cost price, we shall credit the Sales Account instead of the Purchases Account.

 

4. When the goods are supplied by other Co-venturers:

 

Joint Venture A/c                          Dr.

To Co-venturer’s Personal A/c

 

5. When some expenditure is incurred on account of the joint venture:

 

Joint Venture A/c                          Dr.

To Cash/Bank A/c

 

But, if expenses are paid by a Co-venturer other than the one who is recording the transactions, then the entry will be:

 

Joint Venture A/c                                  Dr.

To Co-venturer’s Personal A/c

 

Here we have debited the Joint Venture Account because it is an expenditure on account of the joint venture business.

 

6.    When the Co-venturer recording the transactions sells the goods:

a) For cash sales:

 

Cash/Bank A/c Dr.

   To Joint Venture A/c

 

b) For credit sales:

 

Debtor’s Personal A/c Dr.

  To Joint Venture A/c

 

7. When cash is received from debtors:

Cash/Bank A/c                                           Dr.

To Debtor’s Personal A/c

 

8. When some cash discount is allowed to the debtor making payment, or some bad debts are incurred:

 

Joint Venture A/c                                       Dr.

To Debtor’s Personal A/c

 

9. When sales are made by other Co-venturers:

 

Co-venturer’s Personal A/c Dr.

To Joint Venture A/c

 

10. When some cash or bills receivable are received from other co-venturers on account of sales made by them:

 

Cash/Bank/Bills Receivable A/c               Dr.

To Co-venturer’s Personal A/c

 

11. When the Co-venturers recording the transactions is entitled to some commission or salary:

 

Joint Venture A/c                                       Dr.

To Commission/Salary A/c

 

Joint Venture Account is debited as it is an expenditure related to the joint venture business.

 

12. When the unsold stock ofjoint venture is taken over by the co-venturer recording the transactions:

 

Purchases A/c                                             Dr.

To Joint Venture A/c

 

If the unsold stock is taken over by some other Co-venturer, the journal entry will be:

 

Co-venturer’s Personal A/c Dr.

To Joint Venture A/c

 

After passing the above entries, the Joint Venture Account is prepared. The balance of this account will show either profit or loss which is to be shared by all the Co-venturers in their profit sharing ratio. This will require the following further entries:

 

a) If it shows profit:

 

Joint Venture A/c                                            Dr.

To Profit & Loss A/c

(his own share)

To Co-venturers’ Personal A/cs

(individually for their shares)

 

b) If it results in loss:

 

Profit & Loss A/c                                          Dr.

(his own share of loss)

Co-venturers’ Personal A/c Dr.

(individually for their shares)

To Joint Venture A/c

 

After closing the Joint Venture Account, we have to find out the amount due to other Co-venturers. When this amount is sent to them, we record the following entry.

 

Co-venturers’ Personal A/c Dr.

To Cash/Bank A/c

 

 

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