CPT Last Minute Revision Sheet

1. JOINT VENTURE December 9, 2010
JOINT VENTURE
A Joint Venture is avery short duration “ business “ (generally confined to a single
Transaction, like buying some surplus stores and selling them ) entered into by two
Or more persons jointly . It is a short duration special purpose Partnership . The
Parties in Joint Venture are called Co-Ventures. Co-venturers may contribute funds
for running the venture or supply stock from their regular business . Co-venturers
share profit/loss of the Venture at an agreed ratio like Partnership . Generally
Profit/Loss of the Venture is computed on completion of the Venture .
Going Concern assumption of accounting is not appropriate for Joint Venture
accounting .
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 to
Venture account at cost. On completion of the Venture such assets are revalued and
shown 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/debentures
1 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/c
3 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/c
5 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/c
7 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/c
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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/c
Dr. 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 ENTRIES
1 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/c
3 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/c
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3. JOINT VENTURE December 9, 2010
5 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/c
7 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/c
9 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-venturer
11 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/c
13 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/c
15 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/c
17 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/c
19 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) xx
To Co–venturer A/c (Exp./Goods ) xx By Co–venturer A/c (sales) xx
To 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) xx
To Agent A/c xx By Bills Receivable A/c xx
To Joint Venture A/c (Loss) xx By Joint Venture A/c(Profit) xx
To Cash / Bank / Bills A/c Xx By Cash/Bank / Bills A/c xx
Total xx Total xx
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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 xx
MEMORANDUM JOINT VENTURE METHOD :-
In this method each co-venturer records only his own transactions each co-venturer
opens only ‘Joint Venture with Co-venturer’. A memorandum Joint Venture A/c is
opened to record all the expenses and incomes of the Joint Venture Difference in
Memorandum Joint Venture A/c is the profit or loss. Journal entries are the same as
separate 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 - venturer
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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 xx
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