crossorigin="anonymous"> joint venture Meaning | Methods of transactions best 01 Ans

joint venture

joint venture
joint venture

Methods of recording transactions relating to joint ventures. There are two distinct methods of recording transactions concerned with the joint ventures. These are

  1. No Separate Set of Books
  2. Separate Set of Books


( A ) No Separate set of Books:- When the size of business is small and Co-venturers are concerned with the distinct place then recording of all joint venture transactions are done in the books of one/each co-venture and no separate set of books are maintained in the business. These types of records are maintained by two types.

(i) When only one Co-venturer keeps record of transaction 

(ii) When each Co-venturers keeps a record of transaction

(i) When only one Co-venturer keeps record of transactions:- Under this method only one person takes the responsibility of maintaining the books of accounts. He records all transactions regarding cost, expenses, amount realized, and so on. He finds out the profits or losses on joint ventures and settles the accounts of other Co-venturers. He mainly maintains following accounts.

  • Joint Venture Account
  • Personal Accounts of other Co-venturers

Joint venture Accounts:- It is a nominal account which is prepared for finding the profit and loss for the joint ventures accounts. His own share of profits and loss is transferred to Profit and Loss Account. Whereas shares of profit and loss of other Co-venturers are transferred to their respective personal accounts.

Personal Accounts of other Co-venturers:- These personal accounts are prepared for the purpose of to find out the amount payable to or receivable from them. This account is debited with the sales made by a Co-venturer, Stock taken by him and loss on account of joint venture. This account is credited when goods are purchased or supplied by a Co-venturer, Expense incurred by him, Commission earned by him and share of Profit on joint venture.

If not finally settled these accounts are shown in the Balance Sheets. All Co-venturers will send from time to time a statement of the transaction entered into by him to such Co-venturer who made such accounts. Thus, he will make appropriate entries in his own books of account.

Accounting Entries

( a ) For Cash Received from Co-venturers

    Cash / Bank Account              Dr.

             To Co-venturers Accounts

( b ) For Purchase of goods for the Venture

     Joint Venture Account            Dr.

           To Cash/Bank Account

( c ) For Supply of goods from own Stock

     Joint Venture Account              Dr.

         To Purchase Account

( d ) For Supply of goods by Co-venturers

      Joint Venture Account            Dr.

          To Co-venturers Accounts

( e ) For Expense Incurred by himself who prepare accounts

      Joint Ventures Account             Dr.

          To Cash/ Bank Account

( f ) For Expenses Incurred by other Co-venturers

        Joint Venture Account          Dr.

           To Co-venturers Accounts

( g ) For Sale of Goods by himself working 

 Cash/Bank Account     Dr.   ( If Cash Sales )

 Customers Account      Dr.   ( If Credit Sale )

    To joint Venture Account

( h ) For sale made by other Co-venturer

   Co-venturers Accounts          Dr.

      To Joint Venture Account

( i ) For bad debts, Cash discount, allowance to customers

    Joint Venture Account          Dr.

       To Customer’s Account 

( j ) For Salary or Commission receivable by working Co-venturer

   Joint Venture Account           Dr.

     To Salary/Commission Account

( k ) For unsold goods taken over by working Co-venturer

    Purchase Account             Dr.

      To Joint Venture Account

( i ) For Unsold goods taken over by other Co-venturers

   Co-venturer Accounts             Dr.

      To Joint Venturer Accounts

( m ) For Profit on joint Venture

 Joint Venture Account            Dr.

   To Profit & Loss Account     ( Own Share )

   To Co-venturers Accounts ( others Co-venturers Share )

In case of loss the above entry will be reversed.

( n ) For settlement of personal accounts of Co-venturers

  • If Amount Received

Cash/Bank Account              Dr.

   To Co-venturers Accounts

  • If Amount Paid

Co-venturers Accounts        Dr.

    To Cash/Bank Account


Where the size of a joint Venture is large and its work duration is longer than usual, then joint venture transactions may be recorded in a separate set of books kept under the double entry system. The following accounts are opened in the books of joint ventures.

( i ) Joint Bank Account

( ii ) Joint Venture Account

( iii ) Co-venturers Accounts

( i ) Joint Bank Account:- When separate books of account are maintained, A joint bank account is opened specially for ventures. When cash is deposited into the bank this account is debited and when the amount is withdrawn from the bank then this account is credited. Contributions of capital and Sales proceeds are deposited. And all payments are made from this account. It is closed at the time of final settlement of accounts by payment to Co-venturers.

( ii ) Joint Venture Account:- It is a nominal account and is prepared for the purpose of ascertaining the profit or loss on joint ventures. When all expenses are incurred this account is debited and when sales and income comes this account is credited. The balance of this account will represent profit or loss on joint ventures. And this profit and loss are transferred to Co-venturers accounts in their profit sharing ratio. 

( iii ) Co-venturers Accounts:- These are the personal accounts of Co-venturers accounts. With the capital contributed by Co-venturers this account is credited. These accounts are debited with the goods and sales proceeds taken over by the Co-venturers. These accounts are closed by payments from the joint bank.


The following journal entries are passed in the books of joint venture:

( 1 ) For Cash Contributed by Co-venturers by opening a joint bank account

   Joint Bank Account      Dr.

     To Co-venturers Accounts

( 2 ) For Purchase Made

 Joint Venture Account    Dr.

To Joint Bank Account  ( For Cash purchase )

To Supplier Account    ( For Credit Purchase )

( 3 ) For Expenses Incurred Out of joint Bank account

   Joint Venture Account       Dr.

    To Joint Bank Account

( 4 ) For Expense incurred by Co-venturers on behalf of joint Venture

   Joint Venture Account       Dr.

     To Co-venturers Accounts

( 5 ) For goods sold

  Joint Bank Account    Dr.  ( If Cash Sales )

  Customers Account   Dr.   ( If Credit Sales )

   To Joint Venture Account

( 6 ) For Goods sold by Co-venturers Who retained the sale proceeds

  Co-venturers Accounts    Dr.

   To Joint Venture Account

( 7 ) For unsold goods taken over by Co-venturers

  Co-venturers Accounts     Dr.

   To Joint Venture Account

( 8 ) For Cash Collected from Debtors

   Joint Venture Accounts     Dr.

    To Customers Account

( 9 ) For Bad Debts, Discount, Allowance to Debtors

   Joint Ventures Account      Dr.

    To Customers Account

( 10 ) For Payment to supplier

    Supplier Account          Dr.

     To Joint Bank Account

( 11 ) For Commission/Salary Payable to Co-venturers

    Joint Venture Account    Dr.

    To Co-venturers Accounts

( 12 ) For Profit or Loss on Joint Venture

  1. For Profit

Joint Venture Account     Dr.   } In profit Sharing Ratio 

To Co-venturers Accounts 

  1. For Loss

Difference between joint venture and partnership

Departmental Accounting Methods of allocation expenses

Voyage Account and incomplete voyage account treatment

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