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.