Raghu and Ramesh entered into a joint venture to produce an advertisement film for Bharati Traders, at a contract price of 40,000. Raghu contributed Rs. 10, 000 and Ramesh Rs. 20,000 and opened a joint account in the bank with these contributions. Raghu purchases from his own funds raw film for Rs. 8, 000 and a Camera for Rs. 7,000 for joint venture. They Paid from the Joint Bank Account: Artist’s fees Rs. 18, 000, Hire of sets Rs. 2,000 and technician Charges RS. 10,000. The firm was completed but due to certain defects in the firm, the contract Price was reduced by 10% the amount being received by cheque from Bharati Traders. At the end of venture, the camera was sold for Rs. 5,000 and Ramesh took over the unused film for Rs. 400. Raghu and Ramesh shared profit and losses in the proportion of 1:2 and settled account of the venture. Prepare the Joint venture Account the Joint Bank account and the accounts of the Co – ventures.
Solution:
Journal entries in the books of Joint venture
| Date | Particulars | Lf | Debit (Rs.) | Credit (Rs.) |
| ? 1. | Joint Bank A/c ………… Dr. To Raghu's A/c To Ramesh's A/c [Being the initial contribution is made] | | 30000 | 10000 20000 |
| 2. | Joint venture A/c ……… Dr. To Raghu's A/c [Being the raw film and camera purchased] | | 15000 | 15000 |
| 3. | Joint venture A/c ………… Dr. To Joint Bank A/c [Being the artists fees, hire of sets and technician charges paid] | | 30,000 | 30000 |
| 4. | Joint Bank A/c ………… Dr. To Joint venture A/c [Being the contract price received after a deduction of 10%] | | 36,000 | 36,000 |
| 5. | Joint Bank A/c ………… Dr. To Joint venture A/c [Being the camera was sold] | | 5000 | 5000 |
| 6. | Ramesh's A/c ……… Dr. To Joint venture A/c [Being the unused film was taken over] | | 400 | 400 |
| 7. | Raghu's A/c ………… Dr. Ramesh's A/c ……… Dr. To Joint venture A/c [Being loss made on joint venture] | | 1200 2400 | 3600 |
| 8. | Raghu's A/c ………… Dr. Ramesh's A/c …… Dr. To Joint Bank A/c [Being the final settlement is made] | | 23800 17200 | 41000 |