FA – Nov 2012 – L1 – SB – Q5 – Accounting Concepts

Prepare joint venture accounts between Taiwo and Kehinde and the memorandum joint venture account.

Question

Taiwo and Kehinde entered into a joint venture to acquire packaging materials for table water production and to sell them to table water producers. They agreed to share joint venture profits or losses in the ratio 3:2, respectively.

At the outset, Taiwo sent Kehinde a cheque of N200,000 for his participation in the venture. They sold all the goods and recorded the following cash transactions:

	Taiwo (N)	Kehinde (N)
Revenue	320,000	210,000
Traveling expenses	32,700	46,300
Advertising	10,300	9,100
Stall rent	8,500	7,000
Wages of casual helper	4,800	–
Sundry expenses	5,900	2,900
Purchases	160,000	110,000

Settlement between the co-venturers took place by cheque.

Required:

a. Prepare the Joint Venture with Kehinde Account in the ledger of Taiwo. (5 Marks)
b. Prepare the Joint Venture with Taiwo Account in the ledger of Kehinde. (5 Marks)
c. Prepare the Memorandum Joint Venture Accounts. (5 Marks)

Answer