UNIT 3 JOINT VENTURE ACCOUNTS

SR.NO TOPICS
1 INTRODUCTION
2 DIFFERENCE BETWEEN JOINT VENTURE AND
PARTNERSHIP
3 DIFFERENCEBETWEEN JOINT
VENTURE AND CONSIGNMENT
4 METHODS OF KEEPING ACCOUNTS OF JOINT
VENTURE
5 COMPREHENSIVE ILLUSTRATION
6 SECTION –A[ Theory Questions]
7 SECTION –B [MCQs]
8 SECTION –C [Short Questions]
9 SECTION –D [Practice Sums]
10 SECTION –E [Home Work]

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 UNIT -3
JOINT VENTURE ACCOUNTS
INTRODUCTION
• Sometimes two or more persons come together to undertake some
business temporarily. It may be to build a bridge or construction of a road
or selling seasonal goods and to close the undertaking after the work is
completed. This is called Joint Venture
• Joint Venture is a temporary partnership. It is entered into for a limited
purpose of undertaking some special transaction or a contract or for
underwriting the shares of a company.
• It does not extend beyond the limited purpose for which it is entered into.
• The partners [ who are called co-adventures] contribute capital necessary
for the venture and they agree to share the profits or loss in an agreed
proportion.
• When the purpose is over, the temporary partnership is dissolved.
• JV is undertaken for the following purposes
1. To sell goods on consignment
2. To underwrite shares or debentures of a joint stock company
3. To undertake a contract for constructing a bridge, a building etc
4. To charter a ship
5. To undertake any venture which may not last for a long time
Profit or loss of joint venture is shared in an agreed proportion but in the
absence of any agreement, it is shared equally.
DEFINATION
• “Joint venture is a partnership without firm name, limited to a particular
venture, in which two or more persons contribute capital in a particular
proportion and agree to share profits and losses in that proportion or in
any other agreed proportion”

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DIFFERENCE BETWEEN JOINT VENTURE AND PARTNERSHIP

In both the cases, two or more persons join to carry on some business activity,
contribute towards the finances and share the profits and losses. But, they differ
in following respects :
(l) Separate name : Partnership has a separate firm name. But no such firm's
name is necessary in case of a joint venture.
(2)Purpose: The purpose of joint venture is to take advantage of opportunity that
has arisen, while in partnership, the business is permanent
(3) Duration : Partnership is a permanent relationship between persons joining it
(of course, it can be dissolved), but joint venture is restricted to a particular
transaction or contract only. It is only a temporary partnership.
(4) Separate Business : Generally, partners in a partnership are not allowed to
carry on business competing with that of the firm, but in case of a joint venture,
the partners may have their own separate business.
(5) Separate Accounts : Partnership being permanent, separate set of books is
maintained for the business of the firm, whereas, in case of joint venture,
separate books are not always kept. Many times, the partners keep accounts of
joint venture in their own books of accounts kept for their own separate
business.
(6) Liability : The liabilities of partners in joint venture is limited to the limited
purpose for which is entered into. Their liability ends as soon as the venture is
over.
(7) Annual Accounts : If the joint venture is for a very short term, the final
accounts are not postponed till the end of the year. While in partnership,
accounts are prepared annually.
(8) Calculation of Profit : In joint venture profit is calculated separately for each
venture, when it is completed, while in partnership it is prepared at the end of
every year
(9) Law: There is no separate law for joint venture, while, the Indian
Partnership Act 1932 applies to partnership.
(10) Accounts : Accounts of joint venture are prepared on the basis of
dissolution, while the accounts of partnership firm are prepared on the basis of
'going concern' principle.

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DIFFERENCE BETWEEN JOINT VENTURE AND CONSIGNMENT
JOINT VENTURE CONSIGNMENT
[1] It is temporary partnership and the [1] There is no partnership between the
relation between the co-ventures is that consignor and the consignee. Their
of partners. relationship is that of a principal and
an agent.
[2] Sale is effected on behalf of and at [2] Sale in consignment is on behalf
the risk of all partners of and at the risk of the consignor
only.
[3] Any partner can be entrusted with [3] The responsibility of selling is
the responsibility of selling and he given to the consignee and he is paid a
may or not be paid any commission. commission for this service.
[4] All partners share profits or losses [4] A consignee is not concerned with
of the business and they all prepare profit or loss of consignment business
Joint Venture Account in their books and he does not prepare the
(if separate books are not kept) Consignment Account.
[5] A joint venture can be undertaken [5] Consignment is only a method of
not only for buying and selling goods selling goods through an agent in a
but also for construction work, foreign country or in a distant market.
underwriting share, or chartering a It is of no use for other types of
ship etc. business activity.
[6] All partners Contribute towards [6] Only the consignor invests money
finance of joint venture in an agreed in consignment and the consignee is
proportion. concerned with his commission only.
[7] Joint venture is always for a short [7] Consignment business may be run
duration on a permanent basis
[8] There is no separate law for Joint [8] The business of consignment is
venture carried on according to contract of
agency
[9] The closing stock of joint venture [9] The closing stock of consignment
belong to all ventures jointly belongs to only consignor
[10] Business of Joint venture can be [10]Consignment business can be done
carried on for movable as well as for in respect of movable goods only.
immovable both types of assets.

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 METHODS OF KEEPING ACCOUNTS OF JOINT VENTURE

JOINT VENTURE ACCOUNT

• In order to find out the profit or loss of joint venture, a separate account
called Joint Venture Account is opened by active partner. The Joint
Venture Account is similar to the Consignment Account
[A] SEPARATE BOOKS FOR JOINT VENTURE
Bank Account

• Sometimes, a separate set of books is also kept for joint venture. When
the joint venture is expected to last longer and when a considerable
amount of capital is invested, it is preferable to have a separate set of
books.
• Generally a Joint Bank Account is opened in such a case. The partners
contribute agreed amount of capital and it is paid into Joint Bank account.
Similarly any amount received on account of JV is credited to Joint Bank
A/c. When the Joint venture is closed, the amount due to each partner are
paid to them from the JOINT BANK Account and thus Joint Bank Acc is
closed.
When Separate boos are kept
Necessary Accounts
i. Joint Venture A/c
ii. Joint Bank A/c
iii. Partner’s Capital A/c

[B] SEPARATE BOOKS FOR JOINT VENTURE ARE NOT KEPT

When the joint venture may not last for a long time, the partners may not keep
separate books for the joint venture but only one of the partner may be asked to
keep accounts or all partners may take actively part in joint venture business.

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Journal Entries – When all partners keep accounts in their own books
X’s Journal Y’s Journal
[1] Joint venture A/c Dr. [1] Joint Venture A/c Dr.
To Sales / Goods A/c To X’s A/c
[ For goods supplied from Stock] [For goods purchased for joint
Or venture]:
[1] Joint venture A/c Dr. [1] There is no difference in the entry
To cash A/c whether the goods are given from
[For goods purchased for joint stock or purchased from market by X
venture]
[2] Joint Venture A/c Dr. [2] Joint Venture A/c Dr.
To Cash A/c To X’s A/c
[ For expenses paid for joint venture] [ For expenses paid by X]
[3] Joint venture A/c Dr. [3] Joint venture A/c Dr.
To Y’s A/c To cash A/c
[For Goods supplied by Y] [For Goods purchased on account of
JV]
[4] Joint venture A/c Dr. [4] Joint venture A/c Dr.
To Y’s A/c To Cash A/c
[For expenses paid by Y] [For expenses paid for JV]
[5] Cash A/c or B/R A/c Dr. [5] X’s A/c Dr.
To Y’s A/c To Cash A/c or B/P A/c
[ For advance received from Y] [For advance given to X]
[6] Cash/Bank A/c Dr. [6] X’s A/c Dr.
To Joint Venture A/c To Joint Venture A/c
[ For sale of goods on account of Joint [ For sale of goods on account of Joint
Venture] Venture by X]
[7] Y’s A/c Dr. [7] Cash/Bank A/c Dr.
To Joint Venture A/c To Joint Venture A/c
[For sale of goods by Y] [For sale of goods by us]
[8] Purchases A/c Dr. [8] X’s A/c Dr.
To Joint Venture A/c To Joint Venture A/c
[For retaining the closing stock of [For retaining the closing stock of
Joint venture] Joint venture goods by X]
[9] Joint Venture A/c Dr. [9] Joint Venture A/c Dr.
To P&L a/c To P&L a/c
To Y’s A/c To X’s A/c
[ For distribution of Profit of joint [ For distribution of profit of joint
venture] venture]

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MEMORANDOM JOINT VENTURE ACCOUNT
Another method of keeping accounts of joint venture is to open a Memorandum
Joint Venture Account
1. Each partner will open a Memorandum Joint Venture Account, which is
not a part of accounts. It is opened simply to find out the profit or loss of
joint venture.
2. Each partner will open the account of other partner [a] The cost of goods
sent by the partner and expenses paid by him on account of joint venture
will be debited to the personal account of the other partner[b] The sales
effected by one partner on account of joint venture is credited to the other
partner’s account. [c] His share of profit is also debited to the other
partner’s account

CONSIGNMENT BUSINESS IN JOINT VENTURE

Two or more persons can enter into joint venture for selling goods on
consignment.
[1] When a third party acts as a consignee
The consignee may be a third party. In such a case, both the partners will
open Joint Venture Account, Consignee’s Account and also the Account of
the other Partner.
[2] When a partner acts as a consignee
Sometimes, the consignee may be a partner in joint venture. He gets not only
the commission on sale, but also a share in profit of joint venture. Separate
account of consignee is not to be opened in this case, as the account of the
other partner is itself the Consignee’s Account
Remember –
When joint venture is undertaken to sell goods on consignment,
Consignment Account should not be opened. Each partner will open Joint
Venture Account. All items that can be posted to Consignment Account are
posted to Joint Venture Account.

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 ILLUSTRATION [1]
On 1st October, 2018 Dev and Anand entered into joint venture shari profits
and losses in the ratio of 3 : 2. They deposited Rs. 50,000 and Rs. 30,000
respective into their Joint Bank Account and decided that Joint Bank
Account is to be used for purchase and sale, while joint venture expenses
should be paid by each partner out of their private funds. Dev is to be paid
salary of Rs. 200 per month for general administration and Anand to be paid
commission at 5% on sales he effects.

Dev purchased goods worth Rs. 65,000 and paid for expenses Rs. 5 ,000.
Anand sold some of the goods for Rs.60,000 and paid selling expenses Rs.
500. Unsold goods worth Rs. 20,000 were taken over by Dev.
Accounts were settled on 31st March, 2019. Prepare necessary accounts to
record the above transactions.
Joint Venture Account

Particulars Amoun Particulars Amount

t
To Joint Bank A/c 65,000 By Joint Bank A/c 60,000
[Purchases] [sales]
To Dev’s A/c [expenses] 5,000 By Dev’s A/c [ stock 20,000
taken over]
To Anand’s A/c [expenses] 500
To Dev’s A/c [Salary] 1,200
To Anand’s [com 5% on 3000
60,000]
Profit Dev’s A/c[3/5] 3,180
Anand’s A/c [2/5] 2,120 5,300
80,000 80,000

Joint Bank Account

Particulars Amount Particulars Amount

To Dev’s A/c 50,000 By Joint Venture 65,000
a/c[Purchases]
To Anand’s A/c 30,000 By Dev’s A/c 39,380
To Joint Venture a/s[sales] 60,000 By Anand’s A/c 35,620

1,40,000 1,40,000

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 Partners capital Account
Particulars Dev Anand Particulars Dev Anand
To joint venture 20,000 - By Joint Bank A/c 50,000 30,000
A/c [stock taken
over]
To Joint Bank A/c 39,380 35,620 By Joint venture 5,000 500
[ settled] A/c [exp]
By Joint venture 1,200
A/c [Salary]
By Joint venture 3,000
A/c [Com]
By Joint venture 3,180 2,120
A/c [Profit]
59,380 35,620 59,380 35,620

ILLUSTRATION [2]
• On 1—7—2020 H and S entered into a joint venture with a condition to
share profits and losses equally. It was decided that H is to be paid a
commission at the rate of 10% on sales made by him and S is to be paid a
salary of RS. 1,000 per month.
• Following were the transactions relating to joint venture for the period
ended on 31—3—2021

(1) H gave goods worth Rs.44,000 from his own stock and paid Rs, 2,500
for freight and insurance.
(2) S purchased goods worth Rs. 40,000 at 10% trade discount and gave
the same in joint venture. He paid Rs. 1,500 for freight and carriage
charges.
(3) H sold some of the goods for Rs 1,00,000. and paid Rs. 2,000 as sales
expenses.

(4) H sold remaining unsold goods worth Rs. 20,000, after adding therein
20% profit on cost price and paid Rs. 1,180 for carriage outward.

(5) S agreed to pay Rs. 500 for stationery purchased for joint venture
from Shilpa Stationery Mart on credit
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 (6) On 31-3-2021 the joint venture business was closed and both the co-
ventures settled their accounts.
From the above particulars prepare
In the books of S
(1) Joint Venture Account &
(2) H’s Account

SOLUTION

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 ILLUSTRATION [3]
H and P entered into a joint venture business of buying and selling of toys. They
purchased toys worth Rs. 75,000. H sold toys for Rs. 62,500, whereas P sold
toys for Rs. 36,500. At the end. Toys of cost price of Rs. 3,000 and Rs. 6,000
remained with H and P respectively, which they purchased themselves at a price
after adding profit margin equal to percentage of gross profit on entire sales.
How much amount would P be required to pay for such toys purchased by her?
SOLUTION
Toys purchased = 75,000
- Stock [ 3000+ 6000] = 9000
Toys sold = 66,000
Toys sold at = 62,500 + 36,500 = 99,000

Therefore
66,000 : 99,000 :: 6000 : [?]
9000= Toys purchased by P

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SECTION – A [Theory Questions]
1. What is difference between Joint Venture and Consignment?
2. Distinguish between Partnership and Joint venture
3. What is Joint venture? For what type of businesses is joint venture
suitable?
4. Explain different methods of keeping accounts of Joint Venture.
5. Write a note on ‘Joint Bank Account’
6. Write a note on ‘Memorandum Joint Venture Account’

SECTION –B [MCQs]

[1]In Joint venture, the association of person is of a _______ nature.

(a)Permanent
(b) Temporary
(c) Casual
(d) Formal

[2] Joint venture is also known as___________ partnership.

(a)Restricted
(b) Unrestricted
(c)Limited
(d) Unlimited
[3]The co-venturers enter into a ______ with each other.
(a) Contract
(b) Personal touch
(c) Agreement
(d) None of these

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[4]Co- ventures agree to contribute _______ required to business.
(a)Capital
(b) Loan
(c)Cash
(d) Skill
[5]Co- ventures agree to share _______ or _____ arising out of business.
(a) Profit or loss
(b) Receipt, Payment
(c) Income, Expenses
(d) None
[6]The persons entered into joint ventures are called_______
(a)Partners
(b)Co-ventures
(c) Associates
(d) Members
[7]Which of the following is a correct statement
(a) JV is always for short duration

(b)Consignment business may be run on permanent basis

(c) Both A and B
(d) None
[8]Joint venture business is possible in case of _____
(a)Moveable and immovable goods
(b) only moveable goods
(c)Only immoveable goods

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 (d) None
[9]Joint venture is a partnership without firm name, limited to a particular____
(a)venture
(b) person
(c) year
(d) None
[10]JV is undertaken for the following purposes
(a)To sell goods on consignment
(b)To underwrite shares or debentures of a joint stock company
(c)To undertake a contract for constructing a bridge, a building etc
(d) All of the above
[11] Joint venture account is a _____ Account.
(a)Nominal (b) Real (c) Personal (d) Valuation

[12]Joint Bank Account is opened

(a)When no separate books are maintained
(b)When separate are maintained
(c)Under no circumstances
(d) When business is done by co-ventures
[13].Discount on bills discounted is debited to
(a) Joint Venture Account (b)Co-Venturer’s Account
(c)Bills of Exchange Account (d)Loan Account
[14] Unsold stock on Joint Ventutre taken over by a co-venturer is credited to
(a) Co-Venturer’s Account (b) Stock Account
(c) Joint Venture Account (d) Joint Bank Account

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[15] Expenses incurred by the co-venturers for joint venture is credited to
(a) Joint Venture Account (b)Co-Venturer’s Account
(c)Joint Bank Account (d)Cash Account
[16] When Co-venturers decide to maintain a separate set of accounts, they
open ______ Account with their bank.
(a) Joint Bank (b) Cash (c)Goodwill (d)Loan
[17] Joint venture is not a ________ partnership.
(a)Casual (b) Temporary (c)Permenent (d)Formal
[18]Partners in _________ are called Co-Venture₹
(a) Joint Venture (b)Partnership (c)Association (d) Union
[19] A debit balance of Joint Venture account indicates_______
(a) Expenses (b) Income (c) Loss (d) Profit
[20] Expenses incurred by Co-venturers are debited to________
(a)Co-Venturers (b) Joint Bank (c)Joint Venture (d) Partner’s Capital
[21].Latta purchased goods woth ₹ 2,12,500. Mehul sold goods costing ₹
2,00,000 at ₹ 2,50,000. Balance goods were taken over by Latta at same gross
profit % in case of sale. The amount of goods taken over will be ₹ _______
(a)15,625 (b) 12,500 (c) 15,000 (d) 20,000
[22].Amount spent on purchase of goods and expenses of joint venture will be
shown on debits side of ______ Account.
(a) Joint venture (b) Cash (c) Profit & Loss (d) None of these
[23].Which of the following statement is not correct?
(a) Partnership and joint venture are the same
(b) Only one Co-venture takes the risk
(c) Only one Co- venture can sell or purchase the goods
(d) All of the above

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[24]. Which of the following statement is correct?
(a) Co venturers always share profit and losses equal
(b) Number of coventurers can never be more than two
(c) The relationship between co venturers is principal and Agent
(d)Co venturers may contribute funds for running the venture
[25]. following are the features of Joint venture except_____
(a) No common firm name
(b) temporary partnership
(c) possible in case of movable and immovable goods
(d) None of these
[26]. In case of joint venture , a minor____
(a) can be a co-venturer for the benefit of the firm
(b) can be a co-venturer if all other co-venturers agree.
(c) Cannot be a co venturer.
(d) none.
[27]. For purchase of plant from funds of joint bank account , in case of
separate books are maintained, the correct journal entry will be
(a) Plant A/c Debited and Joint Bank A/C Credited
(b) Joint Venture A/C Debited and Joint Bank A/C credited.
(c) Pant A/C Debited and Venture capital A/C credited.
(d) Joint venture debited and Plant A/C credited.
[28]. If any stock is taken over by the venture, it will be treated as __________

(a)Income of the joint venture, hence credited to joint venture Account.

(b) Expense of the joint venture, hence debited to joint venture Account.
(c) To be ignored as joint venture transaction.

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 (d)It will be treated in personal books of joint venture.
[29] . Which of the following statement is correct?
(a) The joint venture can be formed by a single person only.
(b)A legal deed should be drafted before forming joint venture.
(c)Joint venture follows going concern concept.
(d)The profit to be shared between the venturer in agreed ratio.
[30] Goods costing ₹ 20,000 destroyed by an accident, insurance claim nil
(a)₹ 20,000 will be credited to Joint venture account.
(b)No entry will be made in books of joint venture.
(c) ₹ 20,000 will be debited to Joint venture account as loss.
(d)None of these
[31]. Joint bank account is opened _____
(a) When no separate books for the venture are maintained
(b) When separate books for the venture are maintained
(c) Under no circumstance
(d) None of these
[32]. When goods are purchased for the joint venture, the amount is debited
to______ Account.
(a)Purchase (b) Joint venture (c) Venture’s Capital (d) None of these
[33] Each partner will open a _________Account, which is not a part of
accounts. It is opened simply to find out the profit or loss of joint venture.
(a) Joint venture
(b) Memorandum Joint Venture
(c) Joint Bank account
(d) None

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[34] Journal entry for capital brought by co ventures, when separate set of books
are kept in Joint Venture, is _____
(a) Joint Bank Account Dr. To Co venture’s capital account
(b) Joint venture account Dr To co venture’s account
(c) Cash account Dr To Co venture’s account
(d) None
(35). For goods supplied from own stock by any of the venture, the correct
journal entry will be in case of separate set of books.
(a) Joint venture Account will be debited and venture capital Account
will be credited.
(b) Joint venture Account will be debited and Joint Bank Account will be
credited.
(c) Joint venture Account will be debited and Material Account will be
credited.
(d) Joint Bank Account will be debited and Joint venture A/C will be
credited.
(36). X and Y purchased a piece of land for ₹ 20,000 and sold it for ₹ 60,000 in
2019. Originally X had contributed ₹ 12,000 and Y ₹ 8,000. What will be the
profit on venture?
(a) ₹ 40,000 (b) ₹ ₹ 20,000 (c) ₹ 60,000 (d) None of these
(37).If unsold goods costing ₹ 20,000 is taken over by venture at ₹ 15,000. The
joint venture Account will be credited by

(a) ₹ 20,000 (b) ₹ 15,000 (c) ₹ 5,000 (d)Nil

(38). When purchases are made for the joint venture out of joint bank account,
the _____account is debited.
(a) Joint venture (b) Expenses (c) Joint Bank (d) None
(39) Memorandum of Joint venture account is prepared _______________.
(a)To find out profit or loss on venture.

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 (b)To find out amount due from co-ventures.
(c) When separate set of books is prepared.
(d) When co-ventures record all the joint venture transactions in his
books.
(40). Which of these accounts are not opened in a joint venture.
(a)Stock reserve
(b)Joint bank A/c
(c) Joint venture A/c
(d)Co-venturers personal A/c 5.
(41)Profit or loss on joint venture business is shared by the co-
venturers_______
(a)Equally
(b)In the ratio of capital contributed
(c)In the agreed upon ratio
(d)A per seniority
(42). The balance of Memorandum joint venture account indicates
(a)Amount payable to co-venturer
(b) Profit or Loss
(c)Amount of balance to be carried forward
(d) Closing stock
(43).Closing stock of joint venture business
(a) Shall be valued at cost
(b) Shall be valued at original price
(c)Shall be valued at lower of cost or original Price
(d) None of these

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(44). Following activities are appropriate for joint venture business
(a) Construction of over bridge
(b) Shoes Shop
(c) Medical store
(d) Plumbing agency
(45) When there is an abnormal loss in joint venture business, it is to be borne
by joint venture account and is not transferred to Profit and Loss account.
(a) True
(b) False
(c) Can’t say
(d) None
(46) When joint venture is undertaken to sell goods on consignment,
consignment Account should not be opened. Each partner will open JV account,
all items that can be posted to Consignment Account are posted to JV account
(a) True
(b) False
(c) Can’t say
(d) None
(47).Joint venture Account is similar to ______

(a) Only Trading Account

(b) Only Profit or Loss Account
(c) Trading and P&L Account
(d)Balance sheet and P&L Account
(48). Bonds of ₹ 1,00,000 received against the work done in joint venture
business they are sold for ₹ 80,000 then ₹ __________ recorded on debit side
of joint venture account.

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 (a|)₹ 1,00,000 (b) ₹ 80,000 (c) ₹ 20,000 (d) None of these
(49). Bonds of ₹ 1,00,000 received against the work done in joint venture
business they are sold for ₹ 1,20,000 then ₹ __________ recorded on credited
to joint venture account.
(a|)₹ 1,00,000 (b) ₹ 80,000 (c) ₹ 20,000 (d) None of these
(50).When independent books of accounts are maintained for join venture
business, the expenses paid for join venture is________
(a) Credited to Expenses Account
(b) Debited to partners who paid it
(c) Credited to Joint Venture Account
(d) credited to Joint Bank Account

(51). A Joint venture can be undertaken for ,

(a) Construction work (b) Underwriting shares
(c) Chartering a sheep (d) All of these
(51).The closing stock of Joint Venture belongs to _____ co-ventures
(a) All (b) Only one (c) None of the co-venturers (d) None of these
(52).In case of all partners keep accounts in their own books, when any partner
of the joint venture business sells goods on credit then both the partners debit
______ Account.
(a)Joint Venture (b) Debtors’ (c) Creditors’ (d) None of these
(53). When sale for joint venture business is made ____Account is debited.
(a) Cash (b) Joint venture (c) Venturer’s (d) None of these
(54) When bad debt arises in joint venture business____ A/c is credited.
(a) Debtor’s (b) Joint venture (c) Profit & Loss (d) None of these
(55)When joint venture is undertaken to consign goods to a consignee then only
_____ Account is prepared.
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 (a) Joint Venture (b) Consignment (c) Joint Bank (d) None of these
(56)When interest to be allowed on capital invested by one of the partners, then
he will debit ____ Account with the amount of interest.
(a) Joint Venture (b) Venturer’s (c) Interest (d) None of these
(57)In which of the following joint venture can be adopted?
(a)Steel plant (b)Construction of college building
(c) book store(d) Food grain shop
(58). Joint venture business is suitable for which of the following type of
business.
(a) Paper Mill (b) Film Distribution (c) Construction of house (d) b and c

(59) Which of the following accounts is not opened in case of separate books
for joint venture business are kept?
(a) Joint venture account
(b) Joint bank account
(c) Partner’s capital account
(d) Memorandum Joint venture account
(60) When separate books of joint venture business are kept, the joint venture
expanses shall be ___
(a) Credited to ‘Joint venture account’
(b) Credited to ‘Other partner’s account’
(c) Credited to ‘ Joint bank account’
(d) Debited to ‘Memorandum joint venture account’
(61) ‘A’ and ‘B’ entered into a Joint Venture. ‘B’ gives Rs. 45,000 to ‘A’. To
which account this transaction will be recorded in the books of ‘B’?
(a) No Entry

22
 (b) Expense Account
(c) Joint venture Account
(d) A’s Account
(62) Which of the following statement is correct?
(a) There is no separate law for Joint venture
(b) The closing stock of consignment belongs to only consignor
(c) The closing stock of joint venture belong to all ventures jointly
(d) All of the above
(62) Sometimes, the consignee may be a partner in joint venture. He
gets not only the commission on sale, but also a share in profit of joint
venture.

(a) True

(b) False

(c) Can’t say

(d) None

(63) Sale is effected on behalf of and at the risk of all partners, in case
of Joint venture Business

(a) True

(b) False

(c) Can’t say

(d) None

(64) In case of Joint venture business, any partner can be entrusted with
the responsibility of selling and he may or not be paid any commission

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 (a) True

(b) False

(c) Can’t say

(d) None

(65) A and B entered into a joint venture as dealer in land. They

deposited Rs.2,00,000 and Rs. 3,00,000 respectively in their Joint Bank
Account. Which entry will be passed?

(a) Joint Bank A/c Dr. To Cash A/c

(b) Joint Bank A/c Dr. To A’s Capital A/c and B’s Capital A/c

(c) Cash A/c Dr. To A’s Capital A/c and B’s Capital A/c

(d) None

(67) A and B purchased a plot of land measuring 6,000 sq. meter at a

cost of Rs. 150 per sq. meter. They prepared a plan for selling the plot
of land. In the said plan 20% of the land left over for public roads and
10% of the land left over for public park and remaining land was
divided into 15 plots of equal size. What is plot size of each plot?

(a) 200 Sq meter

(b)280 Sq meter

(c) 190 Sq meter

(d) None
(68) Unsold goods worth Rs. 20,000 were taken over by Dev, one of the
co-ventures. What entry will be passed in this situation?

(a) Stock a/c Dr … To Dev’s A/c

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 (b) Joint Venture A/c……To Dev’s Capital A/c Dr

(c) Dev’s Capital A/c Dr. ….To Joint Venture A/c

(d) None

(69) The liabilities of partners in joint venture is limited to the limited

purpose for which is entered into. Their liability ends as soon as the
venture is over.

(a) True

(b) False

(c) Can’t say

(d) None
(70) If the joint venture is for a very short term, the final accounts are
not postponed till the end of the year.

(a) True (b) False

(c) Can’t say (d) None

SECTION –C [Short Questions]

SUM 1

The following particulars are available from books of account of a joint

venture business:

JOINT VENTURE ACCOUNT

To Joint Bank 5,000 To Joint 10,000

A/c [Goods] Bank A/c

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 [sales]
To A A/c 500 To B A/c 1,000
[expenses] [stock]
To Joint Bank 1,000
A/c [Wages]
To Joint Bank 500
A/c [Custom]
To A A/c 2,000
[profit]
To B A/c 2,000
[profit]
11,000 11,000
CAPITAL ACCOUNTS

PARTICULARS A B PARTICULARS A B
To Joint Venture -- 1,000 By Joint Bank A/c 5,000 3,000
A/c [cash]
To Joint Bank A/c 7,500 4,000 By Joint Venture 500 --
[Amount paid] A/c [Exp]
By Joint Venture 2,000 2,000
[profit]
7,500 5,000 7,500 5,000
Prepare Joint Bank A/c from the above particulars

SUM 2

A and B are the partners in joint venture. B has to pay Rs. 300 to A as
interest on capital invested in joint venture.

Write Journal entries in the books of A and B

SUM 3

Bonds of Rs. 1,00,000 are received against sale in joint venture business
and they are sold for Rs. 85,000. Write Journal Entry.
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SUM 4

For which type of business, out of the following is joint venture

suitable?

[1] Construction of College building [2] Film Distribution

[3] Paper mill [4] Steel Factory

SUM 5

Dev and Dhruv are partners in a joint venture. Dhruv has to pay Rs.
5,000 to Dev as interest for capital invested in Joint Venture. Write
journal entries in the books of both the partners.

SUM 6

Bonds of Rs. 1,50,000 are received against sale in joint venture business
and they are sold for Rs. 1,30,000. Write Journal Entries.

SUM 7

For which type of business, out of the following is joint venture

suitable?

[1] Paper mill [2] House Building contract [3] Poltry farming [4] Steel
Factory [5] Sale and purchase of old books [6] Underwriting of shares
[7] Film Distribution

SUM 8

Hima and Purva entered into a joint venture business of buying and
selling of toys. They purchased toys worth Rs. 75,000. Hima sold toys
for Rs. 62,500, whereas Purva sold toys for Rs. 36,500. At the end.
Toys of cost price of Rs. 6,000 and Rs. 6,000 remained with Hima and
Purva respectively, which they purchased themselves at a price after

27
adding profit margin equal to percentage of gross profit on entire sales.
How much amount would Purva be required to pay for such toys
purchased by her?

SECTION –D [Practice Sums]

SUM-1

Disha and Nisha entered into a joint venture as dealer in land. They a ready to
share profits and losses in the ratio of 3: 2. They deposited Rs.2,00,000 and Rs.
3,00,000 respectively in their Joint Bank Account.
They purchased a plot of land measuring 3,000 sq. meter at a cost of Rs. 150 per
sq. meter. They paid following expenses from Joint bank account:
Registration charges Rs. 20,000
Stamp Duty Rs. 12,000
Legal Adviser's Fee Rs. 2,000
Miscellaneous expenditure Rs. 6,250
They prepared a plan for selling the plot of land. In the said plan 20% of the
land left over for public roads and 10% of the land left over for public park and
remaining land was divided into 15 plots of equal size.
10 plots were sold by Disha for Rs. 275 per sq. meter and remaining plots were
sold by Nisha for Rs. 300 per sq. meter, Both are entitled for 5% commission on
sales.
Prepare.
(l) Joint Venture Account. (2) Joint Bank Account
(3) Capital Accounts

SUM 2
Kajol and Ajay agreed to construct community hall They decided to
are profit or loss in 10: 6 respectively.
A bank account is opened in which Kajol and Ajay deposited Rs. and
The contract price was agreed at Rs. 36,00,000 payable 70% by cash and the
balance 30% by debentures
Amount paid as expenses from their joint bank account :
Architect fees 2,00,000
Materials 15,00,000

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Wages 4,60,000
Materials of Rs. 2,60,000 supplied by Kajol from her stock and paid Rs. 2,400
for carriage. Remuneration of Rs. 72,000 is to be paid to Ajay for his
supervision work.
Contract price was received as per agreement on completion of the contract.
Debentures of Rs.6,00,000 were sold at 20% discount and remaining debentures
were purchased by Kajol at half the price.
Partners accounts were closed after amount paid from joint bank account.

From the above details prepare:

Joint Venture Account

Joint Bank Account
Partners Accounts
SUM 3
Narmadabhai of Bharuch entered into a joint venture with Tapibhai of Surat to
sell Refrigerators and to share profit or losses in the proportion of 1 : 2. The
former contributed Rs 87,500 and the later Rs. 1,75,000 towards the venture and
a joint bank account was opened. Narmadabhai bought 10 Refrigerators at Rs.
15,750 and paid for them from the joint bank account. Customs charges and
insurance premium Rs. 700 and Rs. 2,800 respectively were paid by
Namadabhai from his private cash. Tapibhai bought 7 Refrigerators at Rs.
14,000 each, the price of which was paid from the joint bank account. The
whole lot (except 2 Refrigerators which were damaged in transit) was sold at a
price of Rs. 21,000 each Tapibhai spent Rs. 1,095 for each of the two damaged
Refrigerators for repairs and paid for them from his private cash. They were
finally sold by Tapibhai at Rs 14,000 each.
Prepare Joint Venture Account, Joint Bank Account and Partners' Accounts.
SUM 4
AAM of Ahmedabad entered into a joint venture with BAM of Baroda to sell
and to share profits and losses in the proportion of 1 : 2. AAM contributed Rs.
2,00,000 and BAM contributed Rs. 4,00,000 towards the joint venture, with
which a Joint Bank Account was opened. AAM bought 30 TV at Rs. 7,000 each
and paid for them from the joint bank account. Customs charges and insurance
premium Rs. 800 and Rs. 2,200 respectively were paid by AAM from his

29
private cash. BAM bought 20 TV at Rs. 6,000 each, the price of which was paid
from the joint bank account. The whole lot (except 5 TV which were damaged
in transit) was sold at price of Rs. 8,000 each. BAM spent Rs. 500 for each of
the five damaged TV for repairs and paid for them from his private cash. They
were sold by BAM at Rs. 8,000 each.
Prepare Joint Venture Account, Joint Bank Account and Ledger Account of the
Co-ventures.
SUM 5

On 1—7—2019 Hitesh and Shailesh entered into a joint venture with a

condition to share profits and losses equally. It was decided that Hitesh is to be
paid a commission at the rate of 10% on sales made by him and Shailesh is to
be paid a salary of RS. 1,000 per month.
Following were the transactions relating to joint venture for the period ended on
31—3—2020
(1) Hitesh gave goods worth Rs.44,000 from his own stock and paid Rs, 2,500
for freight and insurance.
(2) Shailesh purchased goods worth Rs. 40,000 at 10% trade discount and gave
the same in joint venture. He paid Rs. 1,500 for freight and carriage charges.
(3) Hitesh sold some of the goods for Rs.1,00,000 and paid Rs. 2,000 as sales
expenses.
(4) Hitesh sold remaining unsold goods worth Rs. 20,000, after adding therein
20% profit on cost price and paid Rs. 1,180 for carriage outward.
(5) Shailesh agreed to pay Rs. 500 for stationery purchased for joint venture
from Shilpa Stationery Mart on credit
(6) On 31-3-2020 the joint venture business was closed and both the co-ventures
settled their accounts.
From the above particulars prepare
(A) In the books of Hitesh
(1) Jotnt Venture Account &
(2) Shailesh's Account
(B) In the books of Shailesh
(1) Joint Venture Account &
(2) Hitesh’s Account

30
SUM 6
Hathi and Mankad entered into venture on the following conditions. Each will
get 5 per cent commission on sales effected by him. But if they allow any
commission on sales, it should not be treated as an expense of joint business and
balance to share profits and losses in the ratio of 3: 2 respectively.
They purchased goods worth Rs. 1,87,500 which was financed by Hathi. Hathi
drew a bill of Rs. 1,25,000 on Mankad and discounted the same for Rs.
1,23,500. Discount must be treated as an expense of the joint business. All the
goods were sold for cash. The details about expenses and incomes were as
follows:
Hathi Mankad
Carriage 1500 500
Travelling Expenses 1,625 1,500
Commission allowed to sales agent 2500 1,250

Sales Proceeds 1,07,500 1,17,500

The unsold stock was Rs. 18,750 which was taken over by Hathi, yielding a
gross profit at half the average rate made on sales. Hathi paid the amount due to
Mankad. Prepare necessary accounts in the books of both the parties.

SUM 7
Deepak and Krunal entered into a joint venture to purchase and sell new year
gifts. They agreed to share profits and losses equally. Deepak purchased goods
worth Rs. 90,000 and drew a bill of exchange upon Krunal for Rs. 60,000 for 3
months. He got the bills discounted @ 10% per annum. The transactions were
as follows:
(1) Deepak paid Rs. 600 for freight, Rs. 1,800 for sales commission and Rs.
1,200 for advertisement
(2) Krunal spent Rs. 600 for traveling expenses.
(3) Deepak sold some of the goods for Rs. 63,960 and allowed discount of Rs.
1,000 for defective goods,

31
(4) Krunal sold some of the goods for Rs. 45,040.
The unsold goods worth Rs. 3,600 and Rs. 5,400 were taken by Deepak and
Krunal respectively after adding gross profit on the cost price, at the rate earned
on sales made. The discount paid for discounting the bills of exchange is to be
considered as an expense of joint venture.
Show:
(1) Joint Venture Account and Krunal's Account in the books of Deepak.
(2) Joint Venture Account and Deepak's Account in the books of Kunal

SUM 8
A of Ahmedabad entered into joint venture with B of Bombay to consign cotton
piece goods to Africa. A sent goods of Rs. 50,000 and paid Rs, 2000 for freight
and Rs. 1,850 for sundry expenses. B purchased and sent goods worth Rs.
45,000. He pays Rs. 1,680 for freight arid insurance, dock charges Rs. 450;
customs Rs. 725 and sundry expenses Rs 875. B received an Account Sales
from Africa and also Rs. being sale proceeds of the whole of consignment.
Prepare Memorandum Joint Venture Account and other partner's account in the
books of both the partners.

SECTION –E [Home Work]

SUM 1
Mayur and Palak begins joint venture for buying and selling gift articles and
decided to share profit and loss in ratio of 3: 2. Mayur paid Rs. 2,00,000 for
purchase of gift articles. Mayur sent Bills Receivable of Rs. 1,25,000 of three
months on Palak, which was discounted by Mayur at 8% p.a. Following
transactions regarding joint venture were recorded :
(i) Mayur paid Rs. 6,000 travelling expenses, Rs. 1,000 carriage, Rs. 4,000
selling commission and Rs. 1,000 other expenses.
(ii) Palak paid Rs. 800 advertising expense, Rs. 500 travelling expenses and Rs.
200 other expenses.
(iii) Mayur sold gift articles for Rs. 1,35,000 but was compensated Rs. 2,000 for
damaged gift articles.
(iv) Palak sold gift articles worth Rs. 90,000.

32
(v) Gift articles of Rs. 5,000 and Rs. 8,000 remain unsold. Mayur and Palak
agreed to purchase them at a price equivalent to cost plus percentage of gross
profit on sale.
(vi) Discount charges of Bills receivable are considered as joint venture
expenses
(vii) Mayur paid Rs. 1,000 for Insurance Premium.
Prepare in the books of Mayur :
(a) Joint Venture A/C (b) Palak's A/C
[Profit of Joint Venture Rs 21,503 ( 12,902 and 8,601), Percentage of GP on
cost + 19.25%( Total cost of goods Rs 2,00,000 – Unsold goods 13,000 =
1,87,000 cost of goods sold, and sold for Rs. 2,23,000, Thus there is profit of
Rs. 36,000, Percentage of profit 19.25% ( 36000 x 100 / 187000), value of
goods taken by Mayur Rs 5963( 5000 + Profit 963) and palak Rs. 9540 (
8000+ Profit Rs. 1540) , Mayur paid to Palak Rs. 35,561]

SUM 2
X and Y entered into joint venture sharing profits and losses in the ratio of 5:3
1. Y purchased goods worth Rs. 20,000 and paid Rs. 300 for expenses.
2. X sold some ofthe goods for Rs. 28,000 andpaid Rs. 200 for selling expenses.
3. X purchased goods worth Rs. 50,000 and paid Rs. 500 for expenses.
4. Y sold some of the goods for Rs. 40,000 and paid Rs. 1,000 for selling
expenses.
5. Each is to paid commission at 5% on sales made by him.
6. Remaining stock of goods were taken over by Y at Rs. 28,000.

Y paid to X a bank draft for necessary amount and settled the accounts.
Prepare Joint Venture Account and Y's Account in the books of X and X's
Account in the books of Y.
[Profit of Joint Venture A/c Rs. 20,600 (12,875 and 7,725), Commission : X
Rs. 1400 and Y Rs 2000, Y sent bank draft to X Rs. 36,975, Total of Joint
Venture A/c Rs. 96,000]

33
SUM 3
On 1-7-2019 Dhruv and Jay entered into a joint venture with a condition to
share profits and losses equally. It was decided that Dhruv is to be paid a
commission at the rate of 5% on sales made by him and Jay is to be paid a
salary of Rs. 500 per month.
Following were the transactions relating to joint venture for the period ended on
31-3-2020 •
(1) Dhruv gave goods worth Rs. 40,000 from his own stock and paid Rs. 2,500
for freight and insurance.
(2) Jay purchased goods worth Rs. 40,000 at 10% trade discount and gave the
same in joint venture. He paid Rs. 1,500 for freight and carriage charges.
(3) Dhruv sold some of the goods for Rs. sales expenses.
(4) Dhruv sold remaining unsold goods worth Rs. 19,000 after adding therein
20% profit on cost price and paid Rs. 1,150 for carriage outward.
(5) Jay agreed to pay Rs. 1,000 for stationery purchased for joint venture
co-venturers settled their accounts.
From the above particulars prepare — In the books of
(i) Joint Venture Account (ii) Jay's Account.

[ Profit of Joint Venture Account Rs. 29,150, sold remaining goods Rs.
24,000( Goods Rs. 19,000 + Prop exp 1000 = 20,000 + 20% Profit Rs 4000 =
24,000) Jay will get Rs. 57,575 in cash]
SUM 4
Kamchor and Pramadilal enter into a joint venture as dealer in land. They
agreed to share profit and loss in the ratio of 4 : 1 . They deposited Rs. 2,50,000
and Rs. 3,50,000 respectively in their joint bank account.
They purchased a plot of Land measuring 5,000 sq. meter at a cost ofRs. 105
per sq. meter.
They paid following expenses from joint bank account :
Registration Charges Rs. 22000, Stamp Duty Rs. 15,000 Legal Adviser's Fee
Rs. 2,500, Miscellaneous Expenditure Rs. 4,250, BrokerageRs. 12,000.
They prepared a plan for selling the plot of land. In the said plan 20% of the
land left over for public roads and 10 % of the land left over for public-park and
remaining land was divided into 25 plots of equal size.
15 plots were sold by Kamchor for Rs. 300 per sq. meter and remaining plots
were sold by Pramadilal for Rs. 325 per sq. meter. Both are entitled for 5%

34
commission on sales.
Prepare :
Joint Venture Account
Joint Bank Account
[ Profit Rs. 4,50,000, Total of Joint Bank Rs. 16,85,000]
SUM 5
Maganbhai of Surat entered into a joint venture with Shanker bhai of Mumbai
sell refrigerators and to share profits or losses in the proportion of 1 : 2. The
former contributed Rs. 50,000 and the latter Rs.1,00,000 towards the venture
with which a Joint Banking Account was opened. Maganbhai bought 10
refrigerators at Rs. 9,000 each and paid for them from the Joint Banking
Account, customs charges and insurance premium Rs. 400 and Rs. 1 ,600
respectively were paid by Maganbhai from his private cash. Shankerbhai bought
7 refrigerators at Rs. 8,000 each, the price of which was paid from the joint
Banking Account. The whole lot (except 2 refrigerators which were damaged in
transit) was sold at a price of Rs. 12,000 each. Shankerbhai spent Rs. 625 for
each of the two damaged refrigerators for repairs and paid for them from his
private cash. They were finally sold by Shankerbhai at Rs. 8,000 each.
Prepare Joint Venture Account, Joint Bank Account and Partner’s Capital
Account
[ Profit : Maganbhai Rs. 15,583, Shanker bhai Rs. 31,167. Total of joint
bank a/c Rs 3,46,000]

SUM 6
On 1st October, 2019 A and B entered into joint venture share profits and
losses in the ratio of 3 : 2. They deposited Rs. 1,00,000 and Rs. 60,000
respective into their Joint Bank Account and decided that Joint Bank Account is
to be used for purchase and sale, while joint venture expenses should be paid by
each partner out of their private funds. A is to be paid salary of Rs 400 per
month for general administration and B to be paid commission at 5% on sales
he effects.
A purchased goods worth Rs 1,30,000 and paid for expenses Rs. 10,000.
B sold some of the goods for Rs. 1,20,000 and paid selling expenses Rs, 1,000.
Unsold goods worth Rs 40,000 were taken over by A.

35
Accounts were settled on 31st March, 2020. Prepare necessary accounts to
record the above transactions.
[Profit = 10,600, A = 6,360 B = 4,240. Total of Joint Bank Account = 2,80,000]

36