Joint venture question with solution


Q. 4   Urmila and Umesh decided to undertake a venture jointly. They agreed to share profits & losses in the ratio of 3 : 2.
  Urmila supplied from her own stock goods worth `. 2,00,000 and paid `. 4,950 for freight and `. 1,200 for Sundry Expenses.
  Umesh purchased goods of `. 1,95,000 for the venture and paid `. 7,000 for selling expenses. Umesh accepted a bill for 3 months of `. 95,000 drawn by Urmila as an advance. This bill was discounted immediately by Urmila for `.92,000 and the amount of discount was charged to joint venture A/c. Umesh sold all the goods for `. 5,00,000.
          At the end of the venture, the accounts were settled.
  Give journal entries for the above transactions, in the books of Urmila and Show Joint Venture Account and Urmila’s Account, in the books of Umesh.         (12)
In the books of Urmila
Date
Particulars
LF
Debit Amt (Rs.)
Credit Amt. (Rs.)
1.
Joint Venture A/…………………………...Dr.
     To Goods A/c
(Being goods supplied)

2,00,000

2,00,000
2.
Joint Venture A/c………………………….Dr.
     To Cash / Bank A/c
(Being paid for expenses)

6,150

6,150
3.
Joint Venture A/c………………………….Dr.
     To Umesh A/c
(Being goods purchased)

1,95,000

1,95,000
4.
Joint Venture A/c………………………….Dr.
     To Umesh A/c
(Being paid for expenses)

7,000

7,000
5.
Bills Receivable A/c……………………….Dr.
     To Umesh A/c
(Being bill drawn and accepted due after 3 months as an advance)

95,000

95,000
6.
Bank A/c…………………………………..Dr.
Discount A/c………………………………Dr.
     To Bills Receivable A/c
(Being bill discounted)

92,000
3,000


95,000
7.
Joint Venture A/c…………………………Dr.
     To Discount A/c
(Being discount treated as expense)

3,000

3,000
8.
Umesh A/c…………………………………Dr.
     To Joint Venture A/c
(Being goods sold)

5,00,000

5,00,000
9.
Joint Venture A/c………………………….Dr.
     To Profit & Loss A/c
     To Umesh A/c
(Being profit on Joint venture transferred)

88,850

53,310
35,540
10.
Cash / Bank A/c…………………………..Dr.
     To Umesh A/c
(Being account settled)

1,69,460

1,69,460


In the books of Umesh
Joint Venture Account
Particulars
Rs.
Rs.
Particulars
Rs.
Rs.
To Urmila A/c (Goods)

2,00,000
By Cash/Bank A/c
(Sales)

5,00,000
To Urmila A/c
     Freight
     Sundry Exp.

4,950
1,200


6,150



To Cash/Bank A/c
(Purchase)

1,95,000



To Cash/ Bank A/c
(Selling Expenses)


7,000



To Urmila (discount)A/c

3,000



To Profit
    Profit & Loss A/c
    Urmila A/c

35,540
53,310


88,850





5,00,000


5,00,000
Urmila A/c
Particulars
Rs.
Particulars
Rs.
To Bills Payable A/c
95,000
By Joint Venture A/c
2,00,000


By Joint Venture A/c
By Joint Venture A/c
6,150
3,000
To Cash / Bank A/c
1,69,460
By Joint Venture A/c
53,310

2,61,460

2,61,640