Thread and needle sharing profits and losses equally, entered into joint venture to purchase and supply teak wood to Tips Builders Ltd. they opened a joint bank account each paying Rs.800000. They purchased 6000 cubic feet timber for Rs.1500000 and spent Rs.5000 on freight and Rs.10000 as insurance in transit. They also incurred Rs.2000 as uploading charges.
It was reported to them by their manager that 500 cubic feet of timber was stolen from the warehouse for which the insurance company paid Rs.27000. Loss due to shrinkage was 100 cubic feet. The co-venturers sold 5000 cubic feet timber @500 per cubic feet to Tips Builders LTD, the consideration money being received by cheque from them.
The venture was closed after the transaction, the co-venturers taking away the remaining timber in their profit and loss sharing ratio.
Prepare necessary ledger accounts in the books of the venture.