Transcript Joint Venture

Business Accounting Project
Joint Venture
Fion- Fong Ching Shuen (6)
Betty- Leung Ka Yan(15)
Irene- Pai Chi Ling(20)
Introduction


A special type of partnership which
two or more people joined together to
form a business venture for a short
period
Small joint ventures – no separate set
of books or separate bank account
are kept.
Background
As we know, women like bracelets and
others decorations. Thus we choose
to form a small joint venture to sell
the above goods.
 Our leased stall is located in Maritime
Square

Features of our joint venture
Our target customers are female
 All the venturers are female, so we
can understand the taste of women
 Our products are hand-made and
diversified, so we can attract
different kinds of customers
 We hire the leased stall, so we need
not pay water and electricity bills

Details of our joint venture

Fion,Betty and Irene entered into a
joint venture(FBI Shop) to buy and
sell bracelets and others decorations.
It was agreed that Irene would be
entitled to a commission of 5% on all
gross sales made by her, and that the
joint venture profits and losses be
shared equally.
The following transactions took place in 2002
January 1
Fion purchased decorations at a cost of
$13800, paying $7000 in cash and
accepting a bill of exchange for two
months for the balance.
January 2
Fion sent to Betty decorations which had
cost $8800 and paid delivery charges of
$1300
January 18
Irene paid $40000 for rent for the five
months ending 31 May 2002
January 25
Sales proceeds of $28000 were kept by
Betty
February 4
Credit sales of $23500 were made by
Irene. A bill of $6000 was accepted
by a debtor and was then discounted
at $5560
February 10
Goods costing $3500 were stolen in
the shop. The loss was to be borne by
Fion.
February 15
Fion returned decorations costing
$700 to the supplier and full allowance
on the returned goods was given.
February 16 Irene purchased decorations at a cost
of $12800
February 22 Cash sales of $18000 were made by
Irene and half of the sales proceeds
were collected by Betty
March 1
The bill payable was honoured by Fion
March 4
The bill receivable was dishonoured and was
renewed with an extended maturity of one
month. Interest at 10% per annum was
charged on the renewed bill.
March 30 Betty sold the remaining stock for $33400
on credit
April 1
Some of the goods sold on 30 March were
returned and a credit note of $1000 was
sent to the customer
April 4
The bill receivable was honoured on
maturity
April 20
Fion agreed to take over the returned
goods at a value of $800
May 6
Betty sent a cheque for $10,000 to Irene
to provide her with funds.
May 16
Irene paid traveling expenses of $3000
May 30
$1600 of the unsettled debts in Betty’s
books was written off
May 31
Fion , Betty and Irene decided to
terminate the joint venture and settle
their accounts
In the books of Fion
Joint Venture with Betty and Irene
2002
$ 2002
$
Jan 1
Bank:
Purchases
7,000 Feb 10 Profit and
Loss:
Stock stolen
Jan 1
Bills
payable
Purchases
6,800 Feb 15 Bank:
Return
Outwards
700
Jan 2
Bank:
Delivery
Charges
1,300 Apr 20 Stock taken
over
800
May31
Profit and
Loss:
Profit on
venture
10,645 May31
25,745
Bank:
settlement
3,500
19,745
25745
In the books of Betty
Joint Venture with Fion and Irene
2002
$ 2002
Apr 1
Debtor :
returns
inwards
May 6
Bank: Irene
May30
Debtors: Bad
debts
May31
Profit and
Loss: Profit
on venture
May31
Bank:
Settlement
$
1,000 Jan 25 Bank: Sales
10,000 Feb 22 Bank: Sales
by Irene
1,600 Mar30
Debtors:
Credit Sales
28,000
9,000
33,400
10,645
47,155
70,400
70,400
In the books of Irene
Joint Venture with Betty and Fion
2002
$
Jan 18
Bank: Rent
Feb 4
Bank: Discounting
charges
Feb 16
Bank: Purchases
Apr 1
Debtors: Returns
Inwards
May 16
Bank: Traveling
expenses
May 31
Profit and Loss:
Commission
May 31
Profit and Loss:
Profit on venture
2002
$
40,000
Feb 4
Debtors: Sales
440
Feb 4
Bills Receivables Sales
6,000
Feb 22
Bank: Sales
9,000
Mar 4
Bills Receivables Interests
3,000
May 6
Bank: Betty
10,000
2,075
May 1
Bank: Settlement
27,410
12,800
1,000
17,500
50
10,645
69,960
69,960
Fion , Betty and Irene(FBI Shop)
Memorandum Joint Venture Account
$
Purchases
Less:Returns
Outwards
Rent
26,600
700
$
Cash: Sales
25,900 Debtors:Sales
40,000
Traveling expenses
3,000 Less: Return
Inwards
Delivery charges
1,300 Stock taken by
Fion
Discounting charges
440 Stock stolen borne
by Fion
Bad debt
1,600 Interest on bill
Commission
2,075
Share of profit
46,000
56,900
102,900
1,000
101,900
800
3500
50
31,935
106,250
106,250
Question 1
Which of the following are
expenses?
1. Delivery Charges
 2. Commission
 3. Sales
Answer. A. 1
B. 1, 2 &3
C. 1 & 2

The answer is
Question 1 the answer is...
C
Delivery charges
and Commission
Question 2
What is the amount of net profit in
FBI Company?
A
$31,935
B
$39,135
C
$31,539
The answer is
Question 2 the answer is...
A
$31,935
Question 3
What are the sources of goods?
 A.
Man-made
 B.
Finished Goods
 C.
Both of them
The answer is
Question 3 the answer is...
C
Both of them
Question 4
Which of the following transaction
should not be recorded in the joint
venture account?

A. Venturers sent goods to each other

B. Venturers sent cheques to each other

C. Venturers sell goods in cash
The answer is
Question 4 the answer is…
A.
Venturers sent goods
to each other
Question 5
Do you think that memorandum
joint venture account is a double
entry?

A. Yes

B. No

C. I don’t know
The answer is
Question 5 the answer is...
B.
No