Principles of Financial Accounting (B.Com) 1st Sem Previous year Solved Question Paper 2022

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13.

Black & White entered into joint venture paying Rs. 30,000 and Rs. 50,000 respectively in joint bank account and sharing profits & losses in the ratio of 3:2. It was agreed that the joint bank account is to be used to purchases and sales, while each partner is to meet his joint venture expenses out of his private funds. Each partner is to charge commission @ 5% on sales made by him. The transaction for the year ended 31 March, 2019 were as follows:

Black purchased tons of wheat @ Rs. 600/ton and his expenses were Rs. 3,000. White sold 60 tons of wheat @Rs. 750/ton and his expenses were Rs. 2,000.
White purchased 10 tons of sugar for Rs. 7,000 and his expenses were Rs. 1,000. Black sold 8 tons of sugar Rs. 8,000 and his expenses were Rs. 500.
Prepare a Joint Venture Account, Joint Bank Account and the Personal Accounts of the Co-ventures and Balance Sheet as On 31 March, 2019.

Explanation

To prepare the Joint Venture Account, Joint Bank Account, and the Personal Accounts of the Coventurers, we’ll go through the transactions step by step:

Joint Bank Account
1. Initial deposit by Black = Rs. 30,000
2. Initial deposit by White = Rs. 50,000
3. Black’s purchase of wheat (Rs. 600/ton * tons) + expenses = (600 * 60) + 3,000 = Rs. 36,000 + 3,000 = 
Rs. 39,000
4. White’s sale of wheat (Rs. 750/ton * 60 tons) – expenses = (45,000 – 2,000) = Rs. 43,000
5. White’s purchase of sugar + expenses = 7,000 + 1,000 = Rs. 8,000
6. Black’s sale of sugar – expenses = 8,000 – 500 = Rs. 7,500

Total credit side of the Joint Bank Account = 30,000 + 50,000 + 43,000 + 8,000 + 7,500 = Rs. 138,500

Joint Venture Account
1. Black’s purchases of wheat = Rs. 36,000
2. White’s sales of wheat = Rs. 45,000
3. White’s purchases of sugar = Rs. 8,000
4. Black’s sales of sugar = Rs. 7,500
5. Black’s commission (5% on sales) = 0.05 (36,000 + 7,500) = Rs. 2,175
6. White’s commission (5% on sales) = 0.05 * 45,000 = Rs. 2,250
Total debit side of the Joint Venture Account = 36,000 + 8,000 + 2,175 = Rs. 46,175
Total credit side of the Joint Venture Account = 45,000 + 7,500 + 2,250 = Rs. 54,750

Personal Accounts of Co-venturers

Black’s Account
1. Opening balance = Rs. 30,000
2. Purchases of wheat = Rs. 36,000
3. Sales of sugar = Rs. 7,500
4. Commission received = Rs. 2,175
5. Expenses = Rs. 3,000 + Rs. 500 = Rs. 3,500
Total debit side = 30,000 + 36,000 + 7,500 + 3,500 = Rs. 77,000

White’s Account
1. Opening balance = Rs. 50,000
2. Sales of wheat = Rs. 45,000
3. Purchases of sugar = Rs. 8,000
4. Commission received = Rs. 2,250
5. Expenses = Rs. 2,000 + Rs. 1,000 = Rs. 3,000
Total debit side = 50,000 + 45,000 + 8,000 + 2,250 + 3,000 = Rs. 108,250
Balance Sheet as on 31 March 2019

Liabilities:
1. Black’s Capital = Rs. 77,000
2. White’s Capital = Rs. 108,250


Assets:
1. Joint Bank Account = Rs. 138,500
The balance sheet should now balance, with the total assets equaling the total liabilities.

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