AID15359: A and B entered into a joint venture agreement to share the profits and losses in the ratio of 2:1. A supplied goods worth Rs.60,000 to B incurring expenses amounting to Rs.2,000 for freight and insurance. During transit goods costing Rs.5,000 became damaged and a sum of Rs.3,000 was recovered from the insurance company. B reported that 90% of the remaining goods were sold at a profit of 30% of their original cost. Towards the end of the venture, a fire occurred and as a result the balance Inventories lying unsold with B was damaged. The goods were not insured and B agreed to compensate A by paying in cash 80% of the aggregate of the original cost of such goods plus proportionate expenses incurred by A. Apart from the share of profit of the joint venture, B was also entitled under the agreement to a commission of 5% of net profits of joint venture after charging such commission. Selling expenses incurred by B totalled Rs.1,000. B had earlier remitted an advance of Rs.10,000. B duly paid the balance due to A by Bank Draft.

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Q: A and B entered into a joint venture agreement to share the profits and losses in the ratio of 2:1. A supplied goods worth Rs.60,000 to B incurring expenses amounting to Rs.2,000 for freight and insurance. During transit goods costing Rs.5,000 became damaged and a sum of Rs.3,000 was recovered from the insurance company. B reported that 90% of the remaining goods were sold at a profit of 30% of their original cost. Towards the end of the venture, a fire occurred and as a result the balance Inventories lying unsold with B was damaged. The goods were not insured and B agreed to compensate A by paying in cash 80% of the aggregate of the original cost of such goods plus proportionate expenses incurred by A. Apart from the share of profit of the joint venture, B was also entitled under the agreement to a commission of 5% of net profits of joint venture after charging such commission. Selling expenses incurred by B totalled Rs.1,000. B had earlier remitted an advance of Rs.10,000. B duly paid the balance due to A by Bank Draft.

You are required to prepare in A’s books:

(i) Joint Venture Account.

(ii) B’s Account.

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