Question

For purchase of plant from Joint Bank Account, in case separate sets of books are maintained for joint venture, the journal entry will be _______________.

• A. Plant A/c debited and Joint Bank A/c credited.
• B. Joint Venture A/c debited and Joint Bank A/c credited.
• C. Plant A/c debited and Venturers Capital A/c credited.
• D. Joint Venture A/c debited and Plant A/c credited.

Answer 1

Answer: (B)

Joint Venture A/c debited and Joint Bank A/c credited.

This account is prepared for measurement of venture profit. This account is debited with all venture expenses and credited with all sales or collections. The excess balance of credit side over the debit side shows the profit on joint venture and vice versa. Profit /Loss are transferred to co-venturer’ accounts in the profit-sharing ratio.

However, if any co-venture make direct payments and direct collections; in such a case their Personal Accounts will be credited/ debited for the transactions done. On completion of the venture, the Joint Bank Account is closed by paying the balance to co-ventures.