CPT Accounts Joint Venture Revision Sheet
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CPT Accounts Joint Venture Revision Sheet

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CPT Last Minute Revision Sheet

CPT Last Minute Revision Sheet

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CPT Accounts Joint Venture Revision Sheet Document Transcript

  • 1. JOINT VENTURE December 9, 2010 JOINT VENTUREA Joint Venture is avery short duration “ business “ (generally confined to a singleTransaction, like buying some surplus stores and selling them ) entered into by twoOr more persons jointly . It is a short duration special purpose Partnership . TheParties in Joint Venture are called Co-Ventures. Co-venturers may contribute fundsfor running the venture or supply stock from their regular business . Co-venturersshare profit/loss of the Venture at an agreed ratio like Partnership . GenerallyProfit/Loss of the Venture is computed on completion of the Venture .Going Concern assumption of accounting is not appropriate for Joint Ventureaccounting .There does not arise problem of distinction between Capital and Revenue expenditure .Plant, Machinery and other Fixed Assets when used in the Venture are first charged toVenture account at cost. On completion of the Venture such assets are revalued andshown as Revenue of the Venture.In case separate set of books are maintained : 1. The following accounts should be opened. (a) Joint Venture A/c (b) Joint Bank A/c (c) Co-venturer’s A/c (d) Shares/Debentures A/c 2. Order for closing the books. (a) Shares/Deb. A/c - Difference to be transferred to Joint Venture A/c. (b) Joint Venture A/c - Difference will be Profit / Loss which should be distributed among co-venturers in agreed ratio. (c) Co-venturers A/c - Difference to be transferred to Joint Bank A/c. (d) Joint Bank A/c - It has to tally. 3. If payment is received by the Joint Venture for the contract in cash and shares/debentures, separate account should be opened for shares/debentures1 Joint Bank A/c is opened. 2 Expenses are paid Joint Bank A/c Dr. Joint Venture A/c Dr. To Co-venturers A/c To Joint Bank A/c3 Expenses paid by Co-venturer 4 Goods are sold Joint Venture A/c Dr. Joint Bank A/c Dr. To Co-venturers A/c To Joint Venture A/c5 Goods taken by Co-venturer 6 Contract Price received Co-venturer A/c Dr. Joint Bank A/c Dr. To Joint Venture A/c Shares A/c Dr. To Joint Venture A/c7 Shares sold 8 Shares taken by Co-venturers Joint Bank A/c Dr. Co-venturers A/c Dr. To Shares A/c To Shares/Debentures A/cVXplain 2 Score More - Post your Doubts to us at vxplain@gmail.com Page 1
  • 2. JOINT VENTURE December 9, 2010 9 Profit on Joint Venture 10 Loss on Joint Venture. Joint Venture A/c Dr. Co-Venturers A/c Dr. To Co-venturers A/c To Joint venture A/c Cash paid to Co-venturer 1 Co-venturers A/c Dr. 1 To Joint Bank A/cDr. Joint Venture A/c Cr. To Joint Bank A/c xx By Joint Bank / Shares A/c (Sales xx (Expenses / Goods) / Contract Price ) To Co–venturer A/c (Exps./Goods) xx By Co- venturer A/c (Goods ) xx To Shares / Debentures ( Loss ) xx By Share/ Debentures (Profit) xx To Profit on Joint Venture xx By Loss on Joint Venture xx Total xx Total xx Dr. Co – venturers A/c Cr. To Joint Venture A/c (Goods) xx By Joint Bank A/c xx To Joint Venture A/c (Loss) xx By Joint Vent. A/c(Exps./Goods) xx To Shares / Debentures A/c xx By Joint Venture A/c (Profit) xx To Joint Bank A/c xx By Joint Bank A/c xx Total xx Total xx Dr. Joint Bank A/c Cr. To Co – venturer A/c xx By Joint Vent.A/c (Exps./Goods) xx To Joint Venture A/c xx By Co-venturer A/c xx To Shares / Debentures A/c xx Total xx Total xx(B) When separate set of books are not maintained. 1. Each co-venturer opens the following A/c’s. (a) Joint venture A/c (b) Co-venturer A/c (c) Agent A/c. 2. Own share of Profit/Loss is to be transferred to Profit & Loss A/c. 3. Discount on bill received from Co-venturer is to be debited to Joint Venture A/c. JOURNAL ENTRIES1 Goods purchased/Expenses paid. 2 Goods supplied Joint Venture A/c Dr. Joint Venture A/c Dr. To Cash/Bank A/c To Goods / Stock A/c3 Goods/ Exp. paid by Co-enturer 4 Goods Sold. Joint Venture A/c Dr. Cash/Bank A/c Dr. To Co-venturer A/c To Joint Venture A/cVXplain 2 Score More - Post your Doubts to us at vxplain@gmail.com Page 2
  • 3. JOINT VENTURE December 9, 20105 Goods sold by Co-venturer. 6 Goods taken for personal use Co- venturer A/c Dr. Goods/Stock A/c Dr. To Joint Venture A/c To Joint Venture A/c7 Goods taken by Co-venturer. 8 Commission due to us Co-venturer A/c Dr. Joint Venture A/c Dr. To Joint Venture A/c To Commission A/c9 Comm. Payable to Co-venturer. 10 Bill drawn on Co-venturer. Joint Venture A/c Dr. Bills Receivable A/c Dr. To Co-ventures’ A/c To Co-venturer11 Bill Accepted by Co-venturer 12 Bill discounted by self Co-venturer A/c Dr. Joint Venture A/c Dr. To Bills Payable A/c To Discount A/c13 Bill discounted by Co-venturer. 14 Goods sold by agent Joint Venturer A/c Dr. Agent A/c Dr. To Co-venturer (Discount) A/c To Joint venture A/c15 Comm./Exps. Payable to Agent. 16 Cash/Bill received from agent. Joint Venture A/c Dr. Cash/Bank/B/R A/c Dr. To Agent A/c. To Agent A/c17 Amt. paid by Agent to Co-venturer 18 Advance given to Co-venturer Co-venturer A/c Dr. Co-venturer A/c Dr. To Agent A/c To Cash A/c19 Loss on Joint Venture. 20 Profit on Joint Venture. Profit & Loss A/c Dr. Joint Venture A/c Dr. Co-venturer A/c Dr. To Profit & Loss A/c To Joint Venture A/c To Co-venturer A/c In the Books of Co - venturer Dr. Joint Venture A/c Cr.To Cash / Bank A/c (Exp./Goods) xx By Cash / Bank A/c (Sales) xxTo Co–venturer A/c (Exp./Goods ) xx By Co–venturer A/c (sales) xxTo Profit xx By Loss xx Total xx Total xx Dr. Co – venturers A/c Cr.To Bills Payable A/c xx By Joint Vent. A/c (Exps/Goods) xxTo Agent A/c xx By Bills Receivable A/c xxTo Joint Venture A/c (Loss) xx By Joint Venture A/c(Profit) xxTo Cash / Bank / Bills A/c Xx By Cash/Bank / Bills A/c xx Total xx Total xx VXplain 2 Score More - Post your Doubts to us at vxplain@gmail.com Page 3
  • 4. JOINT VENTURE December 9, 2010 Dr. Agent A/c Cr. To Joint Venture A/c (Sales) xx By Joint Vent.A/c (Exps & xx Comm.) By Co-venturer A/c xx By Cash / Bank / Bills A/c xx Total xx Total xxMEMORANDUM JOINT VENTURE METHOD :-In this method each co-venturer records only his own transactions each co-ventureropens only ‘Joint Venture with Co-venturer’. A memorandum Joint Venture A/c isopened to record all the expenses and incomes of the Joint Venture Difference inMemorandum Joint Venture A/c is the profit or loss. Journal entries are the same asseparate set of books are not maintained.Other Journal Entries(1) Amount paid to Co-venturer Joint Venture with Co-venturer A/c Dr. To Cash / Bank / Bills Payable A/c(2) Amount received from Co-venturer Cash / Bank / Bills Receivable A/c Dr. To Joint Venture with Co-venturer A/c(3) Profit on joint Venture Joint Venture with Co-venturer A/c Dr. To Profit & Loss A/c(4) Loss on Joint Venture Profit & Loss A/c Dr. To Joint Venture with Co-venturer A/c In the Books of Co - venturerVXplain 2 Score More - Post your Doubts to us at vxplain@gmail.com Page 4
  • 5. JOINT VENTURE December 9, 2010 Dr. Joint Venture with Co _ venturer A/c Cr. To Cash/Bank A/c (Exp/ Goods) xx By Cash/Bank A/c (Sales) xx Top Cash / Bank / Bills Pay. A/c xx By Cash/Bank/Bills A/c xx To Profit xx By Loss xx Total xx Total xx Dr. Memorandum Joint Venture A/c Cr. To Co – venturer (A) A/c xx By Co – venturer (A) A/c xx To Co – venturer (B) A/c xx By Co – venturer (B) A/c xx To Profit xx By loss xx Total xx Total xxVXplain 2 Score More - Post your Doubts to us at vxplain@gmail.com Page 5