A and B entered into a joint venture agreement to share the profits and losses in the ratio of 2:1. Asupplied goods worth Rs. 60,000 to B incurring expenses amounting to Rs. 2,000 for freight andinsurance. During transit goods costing Rs. 5,000 became damaged (having no residual value) anda sum of Rs. 3,000 was recovered from the insurance company. B reported that 90% of theremaining goods were sold at a profit of 30% of their original cost. Towards the end of the venture,a fire occurred and as a result the balance Inventories lying unsold with B was damaged. Thegoods were not insured and B agreed to compensate A by paying in cash 80% of the aggregate ofthe original cost of such goods plus proportionate expenses incurred by A. Apart from the share ofprofit of the joint venture, B was also entitled under the agreement to a commission of 5% of netprofits of joint venture after charging such commission. Selling expenses incurred by B totalled
Rs. 1,000. B had earlier remitted an advance of Rs. 10,000. B duly paid the balance due to A byBank Draft.You are required to prepare the following accounts in A’s books:(i) Joint Venture Account and(ii) B’s Account.
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