A, B and C enter into a joint venture to divide profits equally. They bought goods from D for Rs. 1,25,000 and from A for Rs. 25,000. A contributed Rs. 30,000, B Rs. 40,000 and CRs. 90,000 which amounts were banked in a joint account. They settled their account with D by cheque and paid for carriage and other expenses for Rs. 7,500. They sold goods for cash Rs. 65,000 and to E on credit for Rs. 1,40,000 who accepted a draft for the amount. The acceptance was cashed and realised Rs. 1,37,000. A was allowed 5% commission on sales for efecting the transactions. necessary journal entries and open accounts, assuming that the final settlement betveen parties was made by cheques.
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Explanation:
A, B and C entered into a joint venture sharing profit equally. They opened a separate bank account in State Bank on 1st January, 2017. They deposited Rs 20,000, Rs 40,000 and Rs 90,000 respectively. It is also decided to allow interest on such deposits @ 3% p.a., goods purchased from D worth Rs 1,50,000. Stock took from A worth Rs 20,000. They paid of D by cheque and paid for carriage and other expenses Rs 7,600. A sold some goods for Rs 80,000 in cash and remaining goods sold to E at credit for Rs 1,60,000. E accepted the bill for same amount. It was discounted from bank for Rs 1,57,000. Initial capital of co-venturers returned on 30th June, 2017. It is decided to allow the commission on sales @ 5% to A for his services. Give the Journal Entries in the books of Joint Venture and also prepare necessary accounts. It is assumed that final settlement has made on 31st July, 2017.