Example joint venture accounting

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Example Joint Venture
accounting

Example:
Bimal and Kamal enter a joint venture to do the office interiors of a Company. The Company agrees to pay ₹5,00,000.
Bimal and Kamal contribute ₹50,000 and ₹75,000 respectively and these are paid into a Joint Bank Account.
Payments made out of the joint bank account were:
Purchase of equipments 55,000 ; Wages 2,25,000; Materials 50,000 Office expenses 50,000.
Bimal paid ₹ 20,000 to a designer. On completion, the company was not happy and made a deduction of 10% on
contract price. The equipments were taken over by Kamal at a valuation of ₹ 20,000.
Separate books were maintained for the joint venture whose profits were divided in the ratio of Bimal-2/5 and Kamal-
3/5. Pass journal entries.

To Bimal 50 By Joint
Venture
3,80
To Kamal 75 By Bimal 97
To Joint
Venture
4,50 By Kamal 98
5,75 5,75
Joint Bank (₹ in ‘000)
Joint Venture (₹ in ‘000)
To Joint Bank 3,80 By Joint Bank 4,50
To Bimal 20 By Kamal 20
To Profit:
Bimal
28
Kamal
42
4,70 4,70
Bimal Kamal Bimal Kamal
To Kamal -- 20 By Joint Bank 50 75
To Joint Bank
(balancing figure)
98 97 By Joint Venture 20 --
By Joint Venture -
profit
28 42
Co venturers’ a/c (₹ in ‘000)

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Example joint venture accounting

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