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 |
