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Q: David of Mumbai and Khosla of Delhi entered into a joint venture for the purpose of buying and selling second-hand motor cars: David to make purchases and Khosla to effect sales. The profit and loss was to be shared equally. Khosla remitted a sum of Rs.1,50,000 to David towards the venture.
David purchased 5 cars for Rs.1,60,000 and paid Rs.60,000 for their reconditioning and sent them to Delhi. He also incurred an expense of Rs.5,000 in transporting the cars to Delhi.
Khosla sold 4 cars for Rs.2,40,000 and retained the fifth car for himself at an agreed value of Rs.50,000. His expenses were: Insurance Rs.1,000; Garage Rent Rs.2,000; Brokerage Rs.2,000; and Sundry Expenses Rs.400.
Each party’s ledger contains a record of his own transactions on account of joint venture. Prepare a Memorandum Joint Venture Account showing the result of the venture and the joint venture account with David in the books of Khosla as it will appear, assuming that the matter was finally settled between the parties.