Question

Goods costing Rs. 20,000 was destroyed by an accident, insurance claim was nil. The effect will be ____________________.

• A. Rs. 20,000 will be credited to Joint Venture Account
• B. No Entry will be made in the books of Joint Venture
• C. Rs. 20,000 will be debited in Joint Venture Account as Loss
• D. None of the above

Answer 1

The correct option is B No Entry will be made in the books of Joint Venture

When goods lost are not insured - If the destroyed goods are not insured, then there is no need of passing any journal entry. This is because in joint venture, we debit all the good purchased by the joint venture. The total good purchased includes the goods that destroyed by fire.
When goods lost are insured - In this case, joint venture can file a claim with insurance company, we may or may not receive the claim, the amount of claim received will be shown in the credit side of joint venture a/c.