Ram and Rajiv entered into a Joint venture to construct a conference hall at a contract price of Rs. 3,00,000. Ram contributed Rs. 1,00,000 and Rajiv contributed Rs. 1,50,000. Ram brought in material worth Rs. 2,000 and Rajiv Paid transportation charges worth Rs. 6,000 Plant was purchased for Rs. 50,000 and material worth Rs. 2,00,000 were also purchased. On completion, plant was sold for Rs. 20,000. Due to certain defect, one bill of Rs. 20,000 was not recovered and the balance was received in cash. Venturers share profits in the ratio of their initial contributions. Prepare Joint Venture A/c, Joint Bank A/c and Co – venturer’s A/c and pass Journal entries.
Solution:
Journal entries in the books of Joint venture
| Date | Particulars | Lf | Debit (Rs.) | Credit (Rs.) |
| ? 1. | Joint Bank A/c ……… Dr. To Ram's A/c To Rajiv's A/c [Being the initial contribution is made] | | 250000 | 100000 150000 |
| 2. | Joint venture A/c ……… Dr. To Ram's A/c To Rajiv's A/c [Being the material purchased and transportation charges paid] | | 8000 | 2000 6000 |
| 3. | Joint venture A/c …………. Dr. To Joint Bank A/c [Being the materials purchased and plant purchased] | | 250000 | 250000 |
| 4. | Joint Bank A/c ……… Dr. To Joint venture A/c [Being the plant was sold] | | 20000 | 20000 |
| 5. | Joint Bank A/c ……… Dr. To Joint venture A/c [Being the contract price received after the deduction of Rs. 20000] | | 280000 | 280000 |
| 6. | Joint venture A/c ……… Dr. To Ram's A/c To Rajiv's A/c [Being the profit made on joint venture] | | 42000 | 14800 25200 |
| 7. | Ram's A/c ………… Dr. Rajiv's A/c ………… Dr. To Joint Bank A/c [Being the final settlement is made] | | 118800 181200 | 297000 |