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Memorandum Joint Venture Account Method.

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asked Jun 2, 2016 in Joint Ventures by kenamotiwala (37 points) 974 views

1 Answer

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Memorandum Joint Venture Method:  In this method each partner maintains an account titled 'Joint Venture with ____'.  In this account all the expenses which the co-venturer incurrs on behalf of Joint Venture or amounts receivable from Joint Venture are entered on the debit side.  Similarly all the incomes received by the co-venturer are credited to this account.

On the completion of joint venture, each co-venturer sends details of transactions entered by him on behalf of joint venture.  On receipt of this information the co-venturer prepared 'Memorandum Joint Venture A/c. which discloses the amount of profit/loss.  This profit is then debited to "Joint Venture with ____A/c".  If debit side of this account is greater than credit side, it means amount is receivable from the other co-venturer.  On receipt of this amount 'Joint Venture with ___ A/c' is credited.

Notes: 1. Memorandum Joint Venture A/c is maintained in both the co-venturer's books.

2.  Rate of gross profit :

Sales (Rs.350000+Rs.240000) = Rs.590000

Cost of Goods sold (Rs.600000-15000-32000-22000) = Rs.531000

Gross Profit (Rs.590000-531000)= Rs.59000

Gross Pofit Ratio = (59000/590000)X100= 10%.

3. So 10% will be added to the cost of goods taken over by X and Y respectively.

answered Jun 3, 2016 by jbsclasses (3,971 points)