Entries when Separate Books are not Maintained

Joint Venture is an agreement between two or more parties who come together for carrying a specific business for a specified period of time. The persons undertaking a Joint Venture are the Co-venturers. They jointly control the joint venture. Also, they share the profits and losses of the joint venture as per the agreement between them. It comes to an end when the time period elapses or after the fulfillment of the specific purpose.  They maintain a Joint Venture Account to measure the profit or loss from the Joint Venture. Let us study the joint venture entries in accounting.

Entries when Separate Books are not Maintained

Joint Venture Accounting is done in the following ways

1. By maintaining Separate books
2. By maintaining no separate books

Separate books are not maintained

In this case, each Co-venturer independently and separately maintains the records of the joint venture transactions.

He maintains the entire records of own transactions and that of the other co-venturers. However, if the co-venturers choose to keep the records of their own transactions only then Memorandum Joint Venture A/c is prepared.

Learn the Differences Between Joint Venture and Partnerships here in detail

When each Co-Venturer keeps records of all the transactions:

Under this method, each co-venturer prepares Joint Venture A/c and Co-venturer’s A/c in his books. the co-venturers do not contribute in cash and open no Joint Bank A/c. they supply the goods to the venture out of their own stock and also meet the expenses. Also, each co-venturer calculates profit or loss separately.

Following are the journal entries:

Journal Entries

In the books of Co-venturer X

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1. X supplies goods to venture out of business	Joint Venture A/c	Dr.	XXX
	To Purchases A/c	Cr.		XXX
	(Being supply of goods to Joint Venture from the business stock)
2. X meets the expenses of venture	Joint Venture A/c	Dr.	XXX
	To Bank/ Cash A/c	Cr.		XXX
	(Being payment of expenses regarding the Joint Venture)
3. Y incurs expenses or supply goods	Joint Venture A/c	Dr.	XXX
	To Y’s A/c	Cr.		XXX
	(Being expenses incurred or goods supplied to the Joint Venture by B)
4. X accepts a bill or gives any advance to Y	Y’s A/c	Dr.	XXX
	To Bills Payable A/c	Cr.		XXX
	To Cash / Bank A/c	Cr.		XXX
	(Being bill accepted drawn by Y or advance given to Y)
5. X receives the sale proceeds	Cash/Bank A/c	Dr.	XXX
	To Joint Venture A/c	Cr.		XXX
	(Being receipt of sale proceeds)
6. Y receives the sale proceeds	Y’s A/c	Dr.	XXX
	To Joint Venture A/c	Cr.		XXX
	(Being sale proceeds received by Y)
7. When X takes over the unsold goods	Purchases A/c	Dr.	XXX
	To Joint Venture A/c	Cr.		XXX
	(Being unsold goods taken over)
8. When Y takes over the unsold goods	Y’s A/c	Dr.	XXX
	To Joint Venture A/c	Cr.		XXX
	(Being unsold goods taken over by Y)
9. For venture profit	Joint Venture A/c	Dr.	XXX
	To Profit &Loss A/c	Cr.		XXX
	To Y’s A/c	Cr.		XXX
	(Being sharing of profit on Joint Venture)
10. For venture loss	Profit &Loss A/c	Dr.	XXX
	Y’s A/c	Dr.	XXX
	To Joint Venture A/c	Cr.		XXX
	(Being sharing of loss on Joint Venture)

Source: freepik.com

In the books of Co-venturer Y

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1. X supplies goods to venture out of business	Joint Venture A/c	Dr.	XXX
	To X’s A/c	Cr.		XXX
	(Being supply of goods to Joint Venture by X)
2. X meets the expenses of venture	Joint Venture A/c	Dr.	XXX
	To X’s A/c	Cr.		XXX
	(Being payment of expenses regarding the Joint Venture by X)
3. Y incurs expenses or supply goods	Joint Venture A/c	Dr.	XXX
	To Purchases A/c	Cr.		XXX
	To Cash/ Bank A/c	Cr.		XXX
	(Being expenses paid or goods supplied to the Joint Venture)
4. X accepts a bill or gives any advance to Y	Cash/ Bank A/c	Dr.	XXX
	Bills Receivable A/c	Dr.		XXX
	To X’s A/c	Cr.		XXX
	(Being receipt of advance or acceptance of bill by X)
5. X receives the sale proceeds	X’s A/c	Dr.	XXX
	To Joint Venture A/c	Cr.		XXX
	(Being sale proceeds received by X)
6. Y receives the sale proceeds	Cash/Bank A/c	Dr.	XXX
	To Joint Venture A/c	Cr.		XXX
	(Being receipt of sale proceeds)
7. When X takes over the unsold goods	X’s A/c	Dr.	XXX
	To Joint Venture A/c	Cr.		XXX
	(Being unsold goods taken over by X)
8. When  Y takes over the unsold goods	Purchases A/c	Dr.	XXX
	To Joint Venture A/c	Cr.		XXX
	(Being unsold goods taken over)
9. For venture profit	Joint Venture A/c	Dr.	XXX
	To Profit &Loss A/c	Cr.		XXX
	To X’s A/c	Cr.		XXX
	(Being sharing the profit on Joint Venture)
10. For venture loss	Profit &Loss A/c	Dr.	XXX
	X’s A/c	Dr.	XXX
	To Joint Venture A/c	Cr.		XXX
	(Being sharing the loss on Joint Venture)

Solved Example for you

Kanha, Hiten, and Harish are partners in a joint venture each contributing ₹50000. Kanha purchases goods for ₹130000 and also supplies goods worth ₹10000 from his stock. Harish also supplies goods worth ₹15000 and also pays expenses of ₹500. Kanha pays expenses of ₹2500. Kanha effected a sale of ₹208000 and he is eligible for a commission of 5% on sales. Unsold goods of ₹5000 were taken by Hiten. Kanha settles the accounts of Hiten and Harish by cheque.

Record the transactions in the books of Kanha.

Ans.

In the books of Kanha

Journal Entries

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1.	Bank A/c	Dr.	100000
	To Hiten’s A/c	Cr.		50000
	To Harish’s A/c	Cr.		50000
	(Being receipt of the amount for joint venture)
2.	Joint Venture A/c	Dr.	140000
	To Purchases A/c	Cr.		10000
	To Bank A/c	Cr.		130000
	(Being purchase of goods and supply of goods to Joint Venture from the business stock)
3.	Joint Venture A/c	Dr.	15500
	To Harish’s A/c	Cr.		15500
	(Being expenses incurred or goods supplied to the Joint Venture by Harish)
4.	Joint Venture A/c	Dr.	2500
	To Bank A/c	Cr.		2500
	(Being payment of expenses regarding the Joint Venture)
5.	Bank A/c	Dr.	208000
	To Joint Venture A/c	Cr.		208000
	(Being receipt of sale proceeds)
6.	Joint Venture A/c	Dr.	10400
	To Commission A/c	Cr.		10400
	(Being commission @ 5% on sales)
7.	Hiten’s A/c	Dr.	5000
	To Joint Venture A/c	Cr.		5000
	(Being Y takes over the unsold goods)
8.	Joint Venture A/c	Dr.	44600
	To Profit &Loss A/c	Cr.		14866
	To Hiten’s A/c	Cr.		14867
	To Harish’s A/c	Cr.		14867
	(Being sharing of the profit on Joint Venture)