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Unit IVAccounting for Joint venture Q.1). RAWAL RATAN SINGH of Chittorgarh consigned 1000 units of 100 each to RANI PADMAVATI of SINGHAL. Expense made by RAWAL RATAN SINGH in such consignment are Rs. 20,000.RANI PADMAVATI paid unloading charges Rs. 5,000 and Rs.2 P.U. selling expenses.She sold all the goods at Rs.140 each and deducted 5% as commission and remitted draft for the balance. Prepare Ledger accounts in the books of Consignor. A1): - Ledger of Rawal Ratan Singh(Consignor) Dr.    CONSIGNMENT A/c                Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Goods sent on Consignment (1000 X 100)

1,00,000

By Padmavati

(Sales-1000 X 140)

1,40,000

T0 Cash (1000 X 20)

20,000

 

 

To Padmavati

Non selling exp (1,000 X 5)

Selling exp (1,000 X 2)

 

5,000

2,000

 

 

To Padmavati

(Comm-1,40,000 X 5%)

7,000

 

 

To P&L (Bal.Fig)

6,000

 

 

 

 

 

 

TOTAL

1,40,000

TOTAL

1,40,000

 Dr.           PADMAVATI   A/c                                                         Cr.             

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Consignment

1,40,000

By Consignment

6,600

 

 

By Consignment

5,600

 

 

By Bank (Bal.Fig)

1,27,800

 

 

 

 

TOTAL

1,40,000

TOTAL

1,40,000

 Dr.    Goods Sent On Consignment A/c                 Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

 

 

By Consignment

1,00,000

To Trading (transfer)

1,00,000

 

 

TOTAL

1,00,000

TOTAL

1,00,000

 Q.2). On 15 Jan, 2013 J&K Co. of Mumbai sent to Muku & Co. of Kolkata 400 bicycle at an invoice price of Rs.100 per bicycle to be sold on commission. Freight and insurance were Rs.600. Accounts sale was received from consignee as follow: -15 March - 100 per bicycle were sold @ Rs.145 on which 5%. Commission and Rs.375 for expenses were deducted.10 April - 150 per bicycle were sold @ Rs.140 on which 5%. Commission and Rs.290 for expenses were deducted.From the above information prepare Consignment A/c in the books of J&K Co. and close it on 30 April, 2013 keeping in mind that no salves were made afterwards. Also show accounts in the books of Muku & Co.A2): -Ledger of J&K CO. (Consignor)Dr.     CONSIGNMENT A/c                  Cr.

DATE

PARTICULAR

AMOUNT

DATE

PARTICULAR

AMOUNT

2013

 

 

2013

 

 

Jan 15

To GSOC

40,000

Mar. 15

By Muku (sales)

14,500

Jan 15

To Cash/Bank

(J&K exp.)

600

Apr. 10

By Muku (sales)

21,000

Mar. 15

To Muku (exp.)

375

Apr. 30

By Stock on Consignment

15,225

Mar. 15

To Muku (commission)

725

 

 

 

Apr. 10

To Muku (exp.)

290

 

 

 

Apr. 10

To Muku (commission)

1,050

 

 

 

Apr. 30

To P&L (Bal. Fig.)

7,685

 

 

 

 

 

 

 

 

 

 

TOTAL

50,725

 

TOTAL

50,725

 Dr.    MUKU’s A/c (Consignee)                  Cr.

DATE

PARTICULAR

AMOUNT

DATE

PARTICULAR

AMOUNT

2013

 

 

2013

 

 

Mar. 15

To Consignment (Sales)

14,500

Mar. 15

By Consignment (expense)

375

Apr. 10

To Consignment (Sales)

21,000

Mar. 15

By Consignment (Commission)

725

 

 

 

Apr. 10

By Consignment (expense)

290

 

 

 

Apr. 10

By Consignment (Commission)

1,050

 

 

 

Apr. 30

By Balance c/d

33,060

 

TOTAL

35,500

 

TOTAL

35,500

 Dr.    Goods sent on Consignment A/c                 Cr.

DATE

PARTICULAR

AMOUNT

DATE

PARTICULAR

AMOUNT

2013

 

 

 

2013

 

Apr. 30

To Trading A/c (transfer)

40,000

Jan. 15

By Consignment

40,000

 

 

 

 

 

 

 

TOTAL

40,000

 

TOTAL

40,000

 LEDGER OF MUKU & CO. (Consignee)Dr.     J&K Co. A/c         Cr.

DATE

PARTICULAR

AMOUNT

DATE

PARTICULAR

AMOUNT

2013

 

 

2013

 

 

Mar. 15

To Cash/Bank (expense)

375

Mar. 15

By Cash/Bank (Sales)

14,500

Mar.15

To Commission

725

Apr. 10

By Cash/Bank (Sales)

21,000

Apr. 10

To Cash /Bank (expense)

290

 

 

 

Apr. 10

To Commission

1,050

 

 

 

Apr. 30

To Balance c/d

33,060

 

 

 

 

 

 

 

 

 

 

TOTAL

34,500

 

TOTAL

34,500

 Dr.     COMMISSION A /c                  Cr.

DATE

PARTICULAR

AMOUNT

DATE

PARTICULAR

AMOUNT

2013

 

 

2013

 

 

Apr. 30

To P&L (Bal.Tfd.)

1,775

Mar.15

By J&K

(14,500 X 5%)

725

 

 

 

Apr. 10

By J&K (21,000 X 5%)

1,050

 

 

 

 

 

 

 

TOTAL

34,500

 

TOTAL

34,500

 Working note: -Closing StockCost of Goods Sent.                     Quantity sent        400      Cost of Goods (400 X 100)  40,000Add: - J&K Co. Expense   600b) Total Cost     40,600c) Quantity Sold     250d) Quantity in stock    150e) Closing Stock - Cost= Total Cost X Quantity in Stock / Quantity Sent= 40,600 X 150/400= 15,225Note: - It is assumed that the consignee's expenses are incurred after the goods have reached their godown and hence not included in valuation of stock. Q.3). On 1st November,2015, A of Calcutta sends goods costing Rs.1,00,000 to B of Delhi on Consignment basis. A paid Rs. 5,000 as freight and Rs. 2,000 as insurance.On 31st December,2015, an Account Sales was received from B disclosing that the entire quantity of goods were sold for Rs.1,50,000 out of which Rs. 30,000 was sold on credit A customer who purchased goods for Rs. 5,000 failed to pay and the debt proved bad. All other debts were collected by B in full. As per the agreement, B is allowed a commission @ 10% on sales. B sends the amount due to A by cheque.Prepare necessary Ledger accounts in the books of A & B. A3): -LEDGER OF ADr.     CONSIGNMENT A/c                  Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Goods sent on Consignment

1,00,000

By B’s (Cash sales)

1,20,000

To Cash/Bank

Freight.               5,000

Insurance.             2000

7,000

By B’s (Cr. Sales)

30,000

To B's (commission)

(10% of 1,50,000)

15,000

 

 

To B's A/c (Bad debt)

5,000

 

 

To P&L A/c (bal.fig.)

23,000

 

 

 

 

 

 

TOTAL

1,50,000

TOTAL

1,50,000

 Dr.         B's A/c.        Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Consignment (Cash sales)

1,20,000

By Consignment (commission)

15,000

To Consignment (Cr. Sales)

30,000

By Consignment (bad debts)

5,000

 

 

By Bank A/c (Remittance)

1,30,000

 

 

 

 

TOTAL

1,50,000

TOTAL

1,50,000

   Dr.                             Goods sent on Consignment A/c.              Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Trading A/c (transfer)

1,00,000

By Consignment A/c

1,00,000

TOTAL

1,00,000

TOTAL

1,00,000

 LEDGER OF BDr.      A's A/c.     Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Commission

15,000

By Cash/ Bank (Sales)

1,20,000

To Consignment Debtors (Bad debts- no del credere comm)

5,000

By Consignment Debtors (Cr. Sales)

30,000

To Cash/Bank (Remittance)

1,30,000

 

 

TOTAL

1,50,000

TOTAL

1,50,000

 Dr.       CONSIGNMENT DEBTORS A/c                 Cr.

PARTICULAR

AMOUNT

PARTICULAR

AMOUNT

To A's

30,000

By Cash/Bank (collection)

25,000

 

 

By A's (Bad debts no del cr. commission)

5,000

TOTAL

30,000

TOTAL

30,000

 Q.4) Refer to question 3. Prepare the necessary ledger account, if in the above question the consignee is given a del credere commission of 5% on sales (In addition to ordinary commission)—other things remaining the same. A4): - LEDGER OF ADr.     CONSIGNMENT A/c.    Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To GSOC

1,00,000

By B’s (Cash sales)

1,20,000

To Cash/Bank

Freight.               5,000

Insurance              2000

7,000

By B's (Cr. Sales)

30,000

To B's (commission)

(10% of 1,50,000)

15,000

 

 

To B's (Del-Credere Commission)

7,500

 

 

To P&L (bal.fig.)

23,000

 

 

TOTAL

1,50,000

TOTAL

1,50,000

 Dr.       B's A/c.      Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Consignment (Cash sales)

1,20,000

By Consignment (commission)

15,000

To Consignment (Cr. Sales)

30,000

By Consignment (Del-cr. commission)

7,500

 

 

By Cash/Bank(Remittance)

1,27,500

TOTAL

1,50,000

TOTAL

1,50,000

 Dr.    Goods sent on Consignment A/c                 Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Trading A/c (transfer)

1,00,000

By Consignment A/c

1,00,000

TOTAL

1,00,000

TOTAL

1,00,000

 LEDGER OF BDr.      A's A/c.         Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To commission

15,000

By Cash/ Bank (Sales)

1,20,000

To Del credere commission

7,500

By Consignment Debtors (Cr. Sales)

30,000

To Cash/Bank (Remittance)

1,27,500

 

 

TOTAL

1,50,000

TOTAL

1,50,000

    Dr.             CONSIGNMENT DEBTORS A/c     Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To A's

30,000

By Cash/Bank (collection)

25,000

 

 

By A's (Bad debts Adjusted)

5,000

TOTAL

30,000

TOTAL

30,000

 Dr.                 Del Credere Commission A/c    Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Consignment Debtors (Bad Debts)

5,000

By A's

7,500

To P&L (Bal. Fig)

2,500

 

 

TOTAL

7,500

TOTAL

7,500

 Dr.          COMMISSION A/c     Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To P&L (Bal. Fig)

15,000

By A's

15,000

TOTAL

15,000

TOTAL

15,000

 Dr.                 PROFIT & LOSS ACCOUNT    Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Profit c/d to B/S

17,500

By Commission

15,000

 

 

By Del Credere Commission (Net trfd.)

2,500

TOTAL

17,500

TOTAL

17,500

  Q.5). Amit of Mumbai consigned 100 sewing machines to Sanjay of Surat to be sold on his risk. The cost of one machine was Rs.150, but the invoice price was Rs.200. Amit paid freight Rs. 600 and insurance in transit Rs.200 Sanjay sent a draft to Amit for Rs. 10,000 as advance and later sent an account sales showing that 80 machine were sold at Rs.220 each. Expenses incurred by Sanjay were carriage inward Rs. 25, Octroi Rs.75, godown rent Rs.500 and advertisement Rs.300. Sanjay is entitled to a commission of 5% on sales.Journalise the above transaction in the books of Amit and Sanjay. A5): - LEDGER OF AMITDr.     CONSIGNMENT A/c                  Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To GSOC

20,000

By Sanjay (Sales)

17,600

To Cash/Bank (Amit expenses)

800

By Stock on Consignment

4,180

To Sanjay (Expenses)

900

By GSOC (Load)

5,000

To Sanjay (Commission)

880

 

 

To Stock Reserve c/d

1,000

 

 

To P&L(bal.fig.)

3,200

 

 

TOTAL

26,780

TOTAL

26,780

 Dr.     SANJAY A/c.       Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Consignment (Cash Sales)

17,600

By Cash/ Bank (Advance)

10,000

 

 

By Consignment (Expenses)

900

 

 

By Consignment (Commission)

880

 

 

By Balance c/d

5,820

TOTAL

17,600

TOTAL

17,600

 Dr.    Goods sent on Consignment A/c                 Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Consignment

5,000

By Consignment A/c

20,000

To Trading A/c (transfer)

15,000

 

 

TOTAL

20,000

TOTAL

20,000

 LEDGER OF SANJAYDr.     AMIT A/c      Cr.

PARTICULAR

AMOUNT

PARTICULAR

AMOUNT

To Cash/ Bank (Advance)

10,000

By Cash/ Bank

17,600

To Cash/ Bank (Expenses)

900

 

 

To Commission

880

 

 

To Balance c/d

5,820

 

 

TOTAL

17,600

TOTAL

17,600

 Q.6). On 1st July,2016, Rustom House of Ahmedabad consigned 100 keyboards to TCS of Mumbai. The cost of each keyboard was Rs.450 but the pro forma invoice price was Rs.600. Rustom House paid Rs.3000 for freight and insurance. On 7th July,2016, TCS accepted a 3 months’ bill drawn upon them by Rustom House for Rs. 30,000. TCS paid Rs. 1,200 as rent and Rs.750 for advertisement and up to 31st December,2016(On which Rustom House closes their books) they sold 80 keyboards @ 615 each. TCS were entitled to a commission of 5% on sales. Show the ledger accounts recording the above transaction in the books of Rustom House and TCS A6): -LEDGER OF Rustom HouseDr.     CONSIGNMENT A/c                  Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To GSOC

60,000

By TCS (Sales)

49,200

To Cash/Bank (Rustom House expenses)

3,000

By Stock on Consignment

12,600

To TCS (Expenses)

1,950

By GSOC (Load)

15,000

To TCS (Commission) (49,200 X 5%)

2,460

 

 

To Stock Reserve (Load)

3,000

 

 

To P&L(bal.fig.)

6,390

 

 

TOTAL

17,600

TOTAL

17,600

 Dr.             TCS A/c     Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Consignment (Cash Sales)

49,200

By Bills Receivable (Advance)

30,000

 

 

By Consignment (Expenses)

1,950

 

 

By Consignment (Commission)

2,460

 

 

By Balance c/d

14,790

TOTAL

49,200

TOTAL

49,200

  Dr.    Goods sent on Consignment A/c                 Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Trading A/c (transfer)

45,000

By Consignment A/c

60,000

To Consignment

15,000

 

 

TOTAL

60,000

TOTAL

60,000

 LEDGER OF TCSDr.     Rustom House A/c                  Cr.

PARTICULARS

AMOUNT

PARTICULARS

AMOUNT

To Bills Payable (Advance)

30,000

By Cash/ Bank(Sales)

49,200

To Cash/ Bank (Expenses)

1,950

 

 

To Commission

2,460

 

 

To Balance c/d

14,790

 

 

TOTAL

49,200

TOTAL

49,200

  Q.7). D. Dogra of Delhi sent to his agent, M. Monga of Madras, 500 articles costing Rs.15/- per article at an invoice price of Rs.20 per article. The following payments were made by D. Dogra in this connection: freight and carriage Rs. 450, miscellaneous exp. Rs. 50. M. Monga sent a bank draft for Rs. 3,000 as an advance against the Consignment M. Monga sold 300 articles at a flat rate of Rs.28 per article and sent an Account Sales showing deduction for storage charges Rs.550 insurance Rs.550 and his Commission of 3% plus 2% Del Credere on gross sale proceeds, and remitted the amount due on consignment. M. Monga also informed D. Dogra that 50 articles were damaged in transit and thus they were valued at Rs.550. Journalise the above transactions in the books of the consignor and consignee. A7): -Books of Dogra (Consignor)Journal

 

 

 

 

Dr.

Cr.

 

 

Rs.

Rs.

(1)

Consignment to madras A/c                                  Dr

7,500

 

 

      To Goods sent on Consignment A/c

 

7,500

     (500 articles sent to M. Monga, Agent, Cost being Rs.15 per article).

(2)

Consignment to Madras A/c                                  Dr

500

 

 

     To Bank Account

 

500

      (Expenses incurred on the Consignment)

 

Freight & Carriage

Rs.

450

 

 

 

Miscellaneous Exp.

Rs.

50

 

 

 

 

 

500

 

 

(3)

Bank Account                                                Dr

3,000

 

 

     To M. Monga

 

3,000

      (Advance received from the Agent in the form of Bank Draft.)

(4)

M. Monga                                                   Dr

8,400

 

 

     To Consignment to Madras A/c

 

8,400

      (Sales affected by M. Monga as per Account Sales.)

(5)

Consignment to Madras A/c                                  Dr

570

 

 

     To M. Monga

 

570

       (Expenses incurred by M. Monga Rs.150 and Commission due to him, Rs.550

       (5% of Rs. 8,400).

(6)

Bank Account                                                Dr

4,830

 

 

     To M. Monga

 

4,830

      (Amount due from the consignee received.)

(7)

P & Loss A/c                                                Dr

350

 

 

     To Consignment to Madras A/c

 

350

      (Abnormal Loss on 50 damaged Articles)

(8)

Stock on Consignment A/c                                   Dr

2,850

 

 

To Consignment to Madras A/c

 

2,850

 

(Value of stock unsold at Madras)

 

Rs.

 

 

 

150, goods articles, @ Rs.20

 

2,250

 

 

 

Add: Expenses Rs.150

 

150

 

 

 

50 damaged articles

 

450

 

 

 

 

 

2,850

 

 

(9)

Consignment to Madras A/c                                 Dr

3,030

 

 

     To Profit & Loss Account

 

3,030

      (Profit on consignment transferred to Profit & Loss Account)

(10)

Goods sent on Consignment A/c

7,500

 

 

     To Trading A/c

 

7,500

      (Goods sent on consignment A/c closed by transfer to trading Account)

 Books of M. Monga (Consignee)Journal

 

 

 

 

Dr.

Cr.

 

 

Rs.

Rs.

(1)

 D.Dogra A/c                                                Dr

3,000

 

 

     To Bank A/c

 

3,000

      (Advance sent to the Consignor against consignment)

(2)

 D. Dogra A/c                                               Dr

150

 

 

     To Bank A/c

 

150

      (Expenses incurred on the Consignment on behalf of D. Dogra

 

Storage

 

50

 

 

 

Insurance

 

100

 

 

 

 

 

150

 

 

(3)

 Bank A/c                                                   Dr

8,400

 

 

      To D. Dogra A/c

 

8,400

      (Sale of 300 articles @ Rs.28 each out of the Consignment.)

(4)

 D. Dogra A/c                                               Dr

420

 

 

     To Commission A/c

 

420

             (5% Commission on Sales made on half of D. Dogra; 3% Commission +

      2% Del Credere)

(5)

 D. Dogra A/c                                               Dr

4,830

 

 

     To Bank A/c

 

4,830

      (Amount due to D. Dogra remitted).

  Q.8). Philips Radio of Calcutta despatched 1,000 transistors at Rs.700 each to Mohan Bros. of Delhi, the consignors paid freight Rs.7,500, cartage Rs.500 and insurance Rs.2,500 Mohan Bros. received only 900 sets and incurred he following expenses.          Rs.Octroi and other Expenses    1,00,000Cartage        5,000Sales expenses       6,000The consignee sold 600 sets only. You are required to calculate the value of closing stock. A8): -Calculation of value of unsold stock

Particulars

Units

Sets Received

900

Sets Sold

300

Unsold Stock

600

 

Particulars

Rs.

Cost of Unsold Stock (300 x 700)

2,10,000

Add: Proportionate expenses of Consignor (7500 + 500 + 2500) x 300/1000

3,150

Add: Proportionate expenses of Consignee (Octroi & Cartage)

(1,00,000 + 5000) x 300/900

35,000

 

2,48,150

 Q.9). Deepak sold goods on behalf of Geep Sales Corporation on consignment basis. On 1 January 2002 he had with him a stock of Rs.20,000 on consignment. During the year he received goods worth Rs.2,00,000.Deepak had instructions to sell goods at cost plus 25% and was entitled to a commission of 4% on sales in addition to 1% del credere commission.During the year ended 31 December 2002 cash sales were Rs.1,20,000; credit sales Rs.1,05,000; Deepak’s expenses relating to consignment Rs.3,000 being salaries and insurance bad debts amounted to Rs.3,000.Prepare necessary accounts in the books of Geep Sales Corporation. A9): -

Solution :

 

 

 

In the books of Geep Sales Corporation

Consignment Account

Dr.

 

 

Cr.

 

Rs.

 

Rs.

To Consignment Stock b/d

20,000

By Deepak

 

To Goods sent on Consignment Account

2,00,000

Cash Sales       1,20,000

 

To Deepak (Commission)

9,000

Credit Sales     1,05,000

2,25,000

To Deepak (Commission)

2,250

By Consignment Stock c/d

40,000

To Deepak (expenses)

3,000

 

 

To Profit & Loss Account

 

 

 

(Profit)

30,750

 

 

 

2,65,000

 

2,65,000

 

Deepak’s Account

Dr.

 

 

Cr.

 

Rs.

 

Rs.

To Consignment account (Sales)

2,25,000

By Consignment account

 

 

 

(Commission)

9,000

 

 

By Consignment Account

 

 

 

(Commission)

2,250

 

 

By Consignment Account

 

 

 

(Exp.)

3,000

 

 

By Balance c/d

2,10,750

 

2,25,000

 

2,25,000

 Working Notes:(1) Calculation of Consignment Stock Sale Price = 100 + 25 = 125Cost of Sales  = Sales × 100/125= 2,25,000 × 100/125= Rs.1,80,000Cost of the goods available for sale = Rs. 20,000 + Rs. 2,00,000 = Rs.2,20,000. Hence stock at the end = Rs. 2,20,000 - Rs. 1,80,000 = Rs. 40,000(2) Since Deepak is paid del-credere commission, bad debts of Rs. 3,000 would be borne by him. Q.10). S of Bombay consigned 10,000 kg. of oil to D of Calcutta. The cost of oil was Rs.2 per kg. S paid Rs. 5,000 as freight and insurance. During transit 250 kg were accidentally destroyed for which the insurers paid directly to the consignors Rs.450 if full settlement of the claim.D reported that 7,500 kg were sold @ Rs.3 per kg. The expenses being on godown rent Rs. 200 on advertisement Rs. 1,000 and on salesman salary Rs. 2,000 D. is entitled to a commission of 3% plus 1.5% del credere. D reported a loss of 100 kg. due to leakage. D. settled the accounts by bank draft. Prepare the accounts is the books of S. A10): -

Consignment to Calcutta A/c

Dr.

 

 

 

 

Cr.

 

 

Rs.

 

 

Rs.

To Goods on Consignment A/c

 

20,000

By Bank (Ins. Co.)

 

450

To Bank—Freight & Insurance

 

5,000

By P & L A/c (abnormal loss

 

175

To D—Expenses

 

3,200

By D— (Sale proceeds)

 

22,500

To D—Commission

 

 

 

 

 

Ordinary 3%

675

 

By Consignment Stock A/c

 

5,431

Del Credere 1.5%

338

1,013

By P & L A/c—Loss

 

657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,213

 

 

29,213

Goods Sent on Consignment A/c

Dr.

 

 

 

 

Cr.

 

 

Rs.

 

 

Rs.

To Trading A/c

 

20,000

By Consignment to Calcutta A/c

 

20,000

 

Consignment Stock A/c

Dr.

 

 

 

 

Cr.

 

 

Rs.

 

 

Rs.

To Consignment Calcutta A/c

 

5,431

By Balance c/d

 

5,431

 

D’s A/c

Dr.

 

 

 

 

Cr.

 

 

Rs.

 

 

Rs.

To Consignment to Calcutta A/c

 

 

By Consignment to Calcutta A/c

 

 

—(sale proceeds)

 

22,500

(Exp.)

 

3,200

 

 

 

By Consignment to Calcutta A/c

 

 

 

 

 

(commission)

 

1,013

 

 

 

By Bank

 

18,287

 

 

22,500

 

 

22,500

 

Working Notes:

 

 

 

 

 

(A) Cost of Goods destroyed

 

 

Rs.

 

 

Cost of 10,000 kg.@Rs.2

 

 

20,000

 

 

Freight

 

 

5,000

 

 

Total cost of 10,000 kg.

 

 

25,000

 

 

 

 

 

 

 

 

(B) Value of Stock still unsold

 

 

 

 

 

Quantity received by D

(Excluding accidental loss)

9,750

 

 

Less: Normal Leakage

 

 

(100)

 

 

 

 

 

9,650

 

 

Cost of 9,650 kgs (25,000-625)

Rs. 24,375

 

 

Cost of 2,150 kgs

(24,375 / 9650 x 2150)

 

 

Rs. 5,431

 

 

 

 

 

 

 

 

 Q11). What is Joint Venture?A11). Joint Venture is a temporary form of business, where two or more persons join together to meet the short term objectives. It is quiet similar to Partnership firm, but established without name or registration separately under any law. Q12). Who are Co-Ventures?A12): The two or more people who start Joint Venture to achieve the short term objectives and ready to share the risk and return in the venture, are called Co-Ventures. They are similar to Partners in the Partnership firm. Q13). State any four features of Joint Venture.A13). The following are the important features of Joint Venture.
  • Joint is a temporary business arrangement.
  • It is quiet similar to the form of partnership.
  • Two or more people join together to meet the short term objectives.
  • It does not have any name or registration separately under any law.
  •  Q14). State any two differences between Joint Venture and Partnership.A14). Joint Venture is a temporary partnership; partnership is a long term Joint Venture. The following are the differences between Joint Venture and Partnership. 

    BASIS

    JOINT VENTURE

    PARTNERSHIP FIRM

    1. Name of the

    Venture

    Joint Venture does not have any

    name of running business.

    Partnership has its own name of

    running business.

    2. Nature of

    members

    Members in Joint Venture are

    Co-Ventures

    Members in Partnership firm

    are partners

    3. Nature of

    objectives

    Temporary / short term

    objectives are set in joint venture

    Long term objectives are set in

    partnership firm.

    4. Registration of

    Firm

    No registration of business under

    any law

    Registration is optional, but

    available.

    5. Books of accounts

    No separate set of books are

    maintained in the books of joint venture.

    Separate set of books are

    maintained in the books of partnership firm.

    6.Freedom for additional business

    Co-ventures have freedom to do similar business and complete.

    Partners do not have freedom to

    do similar business and complete.

    8. Maintenance of separate set of

    Books

    Not necessary

    Mandatory

    9. Status of Minor

    A minor cannot become a co-

    venturer.

    A minor can become a partner

    to the benefits of the firms.

    10. Governing Act

     

     

    There is no such specific act.

     

     

    The partnership is governed by the Indian Partnership Act,

    1932.

    11. Dissolution

    Joint venture is dissolved as soon as its work has been completed.

    Partnership is dissolved only at the mutual opinion of partners.

     

     

     Q15).State any two differences between Joint Venture and Consignment.A15). the following are the important differences between Joint Venture and Consignment.

    BASIS

    JOINT VENTURE

    CONSIGNMENT

    1. Nature of parties

    The parties of Joint Venture are Co-Venturers.

    The parties of

    Consignment are Consignor and Consignee.

    2. Nature of relationship between

    Parties

    Relationship of  Parties in Joint Venture are called

    partners

    Relationships of Parties in consignment are Principal

    and Agent.

    3.Powers to Parties

    Co-venturers have full powers to purchase and sale

    of assets, collection of dues.

    Consignee has to act like an agent to consignor and

    has limited power.

    4. Law applicability

    Partnership act is applicable

    to joint venture

    Law of agency is

    applicable.

    5. sharing of profits or loss

    Co-ventures have right to

    share profit or loss of venture.

    Consignor and consignee

    do not share the profit or loss of consignment.

    6. scope of business

    There is a wide scope for joint venture business. It includes different ventures.

    The scope of consignment is narrow. It is concerned with the sale of movable

    goods.

    7. Number of persons

    More than two persons are possible in joint venture.

    One consignor, but more

    than two consignees in consignment.

      Q16). State the methods of accounting for Joint Venture.A16). The accounting treatment for Joint Venture has been studied under two board classifications they are.
  • When separate set of books are maintained for Joint Venture.
  • When no separate set of books are maintained for Joint Venture.
  •  Q17).  Why do you prepare Joint Venture Account?A17).It is a normal ledger account, incorporates transactions made exclusively in Joint venture to find out its profit of loss. It is maintained from the starting date of Joint venture to the date of dissolution. Q18).What is joint bank account?A18).It is similar to normal bank account. It records all expense in the credit side and all incomes in the debit side. The contribution of cash made by co-venture’s, income through sale of goods etc., are debited and expenses of joint venture, purchase of goods are credited. Q19).What is memorandum joint venture account?A19).It is not an account prepared under double entry principles of accounts. All the expenses paid  by each co-ventures are debited and income (sales) made by each co-ventures are credited in the respective co-ventures name. it is prepared to find out the profit or loss of joint venture. Q20). State the feature of joint ventures.A20)
  • Joint venture is a temporary business arrangement
  • It is quiet similar to the form of partnership.
  • Two or more people join together to meet the short-term objectives.
  • It does not have any name or registration separately under any law.
  • The people, who are starting the joint venture and sharing the risk, return, are called co- ventures.
  • The profit of loss of joint venture is ascertained at the time of closing the business.
  • Co-ventures have unlimited liability if there is a huge loss in the venture.
  • All the assets are received in cash and all liabilities are paid in cash.
  • Joint venture is a special partnership without a firm name.
  •