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FA-III Question Bank Unit 1

The document provides 15 theory questions and 6 possible questions related to the accounting treatment of joint ventures. Some key topics covered include: - Distinguishing between joint venture accounts and accounts maintained with co-venturers - Accounting for abnormal losses in joint ventures - Journal entries for various joint venture transactions when separate books are maintained - Preparation of joint venture, joint bank, and individual accounts of co-venturers.

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262 views3 pages

FA-III Question Bank Unit 1

The document provides 15 theory questions and 6 possible questions related to the accounting treatment of joint ventures. Some key topics covered include: - Distinguishing between joint venture accounts and accounts maintained with co-venturers - Accounting for abnormal losses in joint ventures - Journal entries for various joint venture transactions when separate books are maintained - Preparation of joint venture, joint bank, and individual accounts of co-venturers.

Uploaded by

meenasaratha
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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SRI KRISHNA ADITHYA

COLLEGE OF ARTS AND SCIENCE


KOVAIPUDUR, COIMBATORE – 641042

DEPARTMENT OF COMMERCE (CA&CS)


FINANCIAL ACCOUNTING-III QUESTION BANK
UNIT –I

Joint venture accounts (Separate Book Maintenance only)

Theory Questions:

1. Differentiate between Joint venture and Partnership.


2. Differentiate between Joint venture a/c and Joint venture with co-venturer a/c.
3. Define joint venture.
4. Differentiate between Joint Venture account and JV with …… account.
5. Under what circumstances are no separate set of books kept for joint venture?
6. Differentiate between Joint venture a/c and Joint Bank a/c.
7. How do you give accounting treatment to Abnormal Loss of Goods in Joint Venture
accounts?
8. Why are abnormal losses ignored when calculating the profit of the Joint Venture?
9. Why is the word Memorandum affixed to the Memorandum Joint Venture Account?
10. What journal entry will you pass when unsold stock is taken over by a co venturer
assuming that a separate set of books is maintained?
11. In what ways is a Joint venture different from a Partnership?
12. Why is abnormal loss not included in the books of a joint venture?
13. How do you give accounting treatment to Abnormal Loss of Goods in Joint Venture
accounts?
14. Distinguish between abnormal loss of stock and normal loss of stock.
15. What journal entry will you pass when unsold stock is taken over by a co- venturer
assuming that a separate set of books is maintained?

Possible Questions:

1. S and P entered into a joint venture and agreed to divide the profit as to S 60% and P 40%. S
and P contribute Rs.1,80,000 and 1,20,000 respectively for carrying on transactions relating
to the venture. They opened a joint bank account with the above contributions. They
purchased three old state buses for Rs.2,40,000. S and P personally paid Rs.45,000 and
Rs.30,000 respectively for Repairs and renewals. They purchased a few tyres and tubes
costing Rs.54,000. Two buses were sold for Rs.2,70,000 and the third one was taken by P at
cost price. Pass the journal entries and prepare Joint Venture account, Joint bank account and
close the accounts of the venture.
2. Das and krishnan entered into a joint venture sharing profits and losses as 3:2 they opened a
Bank a/c by depositing Rs.40,000 each. Das purchased 800kg of an item @ Rs.60 per kg, and
his expenses were Rs.13,000. Krishnan purchased a second item of 10,000 kg @ Rs.2.10 per
kg and his expenses were Rs.11,000. Expenses were met from private sources and purchase
were paid from bank account. Krishnan sold 600kg of first item @ Rs.100 per kg and his selling
expenses were Rs.5500. Das sold 8,000 kg of the second item @ Rs.5 per kg, and his selling
expenses were Rs.6,000. All the sale proceeds were deposited in bank account and expenses
were met from private sources. Write up necessary accounts in the books of the venture. Also
prepare a Balance sheet of the venture.

3. A and B doing business separately as building contractors, undertake jointly to construct a building
for a newly started joint stock company for a contract price of Rs. 1,00,000 payable as to Rs.80,000
by installments in cash and Rs.20,000 in fully paid shares of the company. A banking account is
opened in their joint names, A paying Rs.25,000 and B Rs.15,000. They are to share profits and losses
in the proportions of 2/3 and 1/3 respectively. Their transactions were as follows:

Paid wages -30,000 Bought materials-70,000 Materials supplied by A-5,000

Materials supplied by B-4,000 Architect’s fees paid by A-2,000

The contract was completed and price (cash and shares) duly received.The joint venture was closed
by ‘A’ taking up all the shares of the company at an agreed valuation of Rs.16,000 and ‘B’ taking up
the stock of materials at an agreed valuation of Rs.3,000. Show the necessary ledger Accounts.

4. Sheela and Mala entered into a joint venture agreement to underwrite the subscription of 50,000
equity shares of Rs.10 each issued by a newly formed limited company at a premium of Rs. 2 per
share. The underwriting commission is 4% as provided in the articles. Public subscriptions were
received for 38,000 shares and the underwriters duly discharged their obligation by taking up the
remaining shares. Sheela and Mala contributed Rs.80,000 each and deposited the same in a joint
bank account sundry expenses incurred out of the joint bank amounted to Rs.5,000. Underwriting
commission was received by cheque. Towards the end of the venture, 10,000 shares were sold by
them in the open market @ Rs.14 per share and the rest of the shares were taken up by them
equally at Rs.13 per share. Profits of the venture were shared equally. You are required to prepare
the Joint venture Account, Joint bank Account, and the personal Accounts of the Co-Ventures
recording the above mentioned transactions.

5. Vasu and Ganesh jointly underwrite and place on the market 1,00,000 shares of Calcutta
Machinery ltd. Of Rs.10 each. It was agreed with company that they would be allotted 4,000 shares
as fully paid towards their remuneration. Their profit sharing ratio 2:1. Applications were received
from the public only for 90,000 shares. Vasu paid Rs.8,000 for postage and advertisement in addition
to 70% of the amount required to take up the short subscription. Ganesh financed the balance
amount. These are accounted for through the joint bank account. All the shares including those
allotted for remuneration were sold. Vasu sold 6,000 shares for Rs.70,000 and Ganesh sold the
balance shares for Rs.96,000. Ganesh incurred expenses Rs.4,000.Sales proceeds were retained
individually. Show the necessary accounts in the books of Co-ventures, which were separately
started for the purpose. The Inter-se account was settled through the Joint Bank Account.

6. Raj and shahul entered into joint venture for purchase and sale of cotton. They agreed to share
profit in the proporation of 2:1 and also to be entitled to a interest of 6 % per annum .(on monthly
basis) on capital invested by each of them the following transaction take place in between
themselves :
 On 1st Nov, Raj purchased 2100 bales of cotton @ Rs.110 per bale, the brokerage being Rs.4
per bale.

 On 1st Dec, shahul purchased 1800 bales of cotton @ Rs.124 per bale, the brokerage
beingRs.4 per bale.

 On 1st Jan, shahul sold 1050 bales of cotton @ Rs.132 per bale(the brokerage being RS.2 peR
Bale) and took the sale proceeds to him self

 On 15th Jan, Raj sold 2400 bales of cotton @ Rs.132 per bale (the brokerage being Rs.2 per
bale) and took the sale proceeds to himself.

It was also agreed that each of the partners will at first sell cotton from his own purchase and then, If
required, From the stock purchased by the other one. The balance of stock was to be divided
between the partners in proportion of their profit sharing Ratio, Goods been valued at the cost of
the partners concerned. On 31st Jan the partners settled their accounts. So the accounts of Raj,
shahul and the joint venture has they would appear when maintained in a separate set of books.

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