joint venture Suresh and Ramesh entered into a joint venture

Suresh and Ramesh entered into a joint venture to construct a building at a contract price of Rs. 7,00,000. They agreed to share profits and losses in the ratio of 2:1. Suresh deposited Rs. 5,00,000 and Ramesh Rs. 1,00,000 into joint bank. The transactions were as follows.
  • Purchase of materials Rs. 3,50,000
  • Tools and equipment Rs. 1,00,000.
  • Wages Rs. 1,20,000
  • Architect fees Rs. 25,000
Besides these, Suresh supplied material worth Rs. 15,000 and Ramesh supplied material worth Rs. 13,500. Building was ready and contract price received. Prepare Joint venture A/c, Joint Bank A/c & Co – Venturer’s A/c.

Solution:

Journal entries in the Books of Joint venture

Date
Particulars
Lf
Debit (Rs.)
Credit (Rs.)
? 1.
Joint Bank A/c ……… Dr.
To Suresh's A/c
To Ramesh's A/c
[Being the initial contribution is made]

600000

500000
100000
2.
Joint venture A/c ……… Dr.
To Joint Bank A/c
[Being the materials and tools and equipments were purchased and wages and architect fees paid]

595000

595000
3.
Joint Venture A/c ……… Dr.
To Suresh's A/c
To Ramesh's A/c
[Being the materials supplied]

28500

15000
13500
4.
Joint Bank A/c ……… Dr.
To Joint venture A/c
[Being the contract price is received]

700000

700000
5.
Joint venture A/c ………… Dr.
To Suresh's A/c
To Ramesh's A/c
[Being profit made on joint venture]

76500

51000
25500
6.
Suresh's A/c ……… Dr.
Ramesh's A/c ……… Dr.
To Joint Bank A/c
[Being the final settlement is made]

566000
139000



705000

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