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CA-Foundation > Principles and Practice of Accounting > Accounting for Special Transactions - Joint Ventures >

Accounting for Special Transactions - Joint Ventures Notes

Q1. Consignment and Joint Venture.

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Q2. Joint venture and partnership.

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Q3.

A of Delhi and B of Bangalore entered into a joint venture for purchase and sale of one lot of mopeds.The cost of each moped was Rs.3,600 and the fixed retail selling price; Rs.4,500. The following were the recorded transactions:

2016

Jan 1     A purchased 100 mopeds paying Rs.72,000 in cash on account

           A raised a loan from X Bank for Rs.50,000 at 18% p.a., interest repayable with loan amount on1.3.2016.

             A forwarded 80 mopeds to B incurring Rs.2,880 as forwarding and insurance      charges.     

Jan. 7  B received the consignment and paid Rs.720 as clearing charges.

            A sold 5 mopeds for cash.

            B sold 20 mopeds for cash.

Feb. 1 B raised a loan of Rs.1,50,000 from Y Bank, repayable with interest at 18% p.a on  1.3.2016.

           B telegraphically transferred Rs.1,50,000 to A incurring charges of Rs.50. A paid balance due for the mopeds.

 Feb. 26  A sold the balance mopeds for cash.    

               B sold balance mopeds for cash.

               A paid selling expenses Rs.5,000. 

               B paid selling expenses Rs.20,000.  

Mar. 1 Accounts settled between the venturer and loans repaid, profit being appropriated equally.

You are required to show Memorandum Joint Venture A/c. You are also required to show

(1) Joint Venture with B A/c in A’s books; and

(2) Joint Venture with A A/c in B’s books.

Assume each venturer recorded only such transactions as concluded by him

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Q4. K and A of Nagpur entered into a joint venture to trade in silk goods in the ratio 2:1. On June 1, 2016, K bought goods worth Rs.7,200 and handed over half of the goods to A. On July 1, 2016, K bought another lot of goods costing Rs.2,400 and paid Rs.180 as expenses. On September 1, A purchased goods for Rs.4,500 and on the same day he sent to K a part of these goods costing Rs.1,800 and paid Rs.240 towards expenses.On the same day K remitted Rs.1,800 to A. The goods were invariably sold by the venturers at a uniform price of 33.33% above cost price excluding expenses. Each of the venturers collected cash proceeds on sales excepting an amount of Rs.250 owing to K by a customer and this was written off as a loss relating to the venture. In addition, goods costing Rs.600 in possession of A were destroyed by fire and an amount of  Rs.500 was realized by him as compensation from the Insurance Company. On December 20, unsold goods costing Rs.1,500 (at cost) were lying with K. Of these, goods costing Rs.600 were taken by K for personal use and the balance was purchased by him at an agreed value of Rs.1,000. A disposed of all the goods with him on December 31, excepting some damaged goods costing Rs.300 which were written off as unsaleable. You are required to prepare a Memorandum Joint Venture Account to find the amount of profit or loss

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Q5.

Arjuna and Bheema entered into a Joint Venture for the production and sale of “Mahabharat” CDs during a festival season. Arjuna contributed Rs. 3,00,000 and Bheema contributed Rs. 2,00,000 to the venture. They incurred the following expenses towards Joint Venture - (a) Payment to Artists and Technicians - Rs. 2,80,000, (b) Hire Charges for Equipment, Lab Fees, etc. - Rs. 1,20,000, (c) CD Making, Packing and Promotion Expenses - Rs. 75,000.

They made 20,000 CDs and sold 16,000 CDs during the festival season at Rs.45 per CD. Bheema directly received the sale proceeds of 2,500 CDs out of the above 16,000 CDs.

Arjuna took over 3,000 CDs at an agreed cost of Rs. 25 per CD. 1,000 CDs were found defective at the end of the season and had to be scrapped.

Separate books were maintained for the Venture, and the profits were divided in the ratio 3:2.

Give Journal Entries and Ledger Accounts in the books of the Joint Venture.

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