WHEN ALL VENTURERS KEEP ACCQUNTS
There are two methods of keeping books:
(i) When each party informs the other party regarding transactions made by him on accou’ht of joint venture at regular intervals.
(ii) When such information is furnished at the completion of the venture. This is popularly known as ‘memorandum method’.
1. When each Venturer gets complete infonnation from other Venturer(s). In this case each party maintains the following accounts:
(a) Joint Venture Account. It is similar to an ordinary P. & L. A/c. It is debited with total purchases and total expenses incuned and credited with the amount of sales and stock in hand. The balance of this account is either a profit or a loss.
(b) Personal Account or Accounts of the Co’venturers. This personal account is written as “Joint Venture with… Account” The words “Joint Venture with.. axe added before the name of the Venturer, only to distinguish it from other personal accounts of the main business. It is a record of transactions made by the co-venturer on account of joint venture. The account is closed by settling the balance.
2. Memorandum Joint Venture Method or Memorandum Method. The following are the salient features of this method:
(i) Each party will maintain only ONE account in his books. This account will be personal account of other parties. It may be very carefully noted that even if there are more than two venturers only one personal account is to be opened in each party’s books. For example, if A, B, C, have entered into ajoint venture. A will open one personal account of B and C in his books and not separate accounts. Similarlyfl will openjoiritpcrsonal account ofA and Cand C willmaintainjoint account of A and B.
(ii) Each party will record only such transactions as entered by him on joint venture account e.g. if goods are purchased by A, it will be recorded in A’s books and not in the books ofB and C.
(iii) In order to find out profit or loss made on the venture a ‘Memorandum Joint Venture Account’ will be opened. It is merely a combination of personal accounts, i.e., debit side of personal accounts is posted on the debit side of Memorandum Joint Venture Account and credit side of personal accounts is
posted on the credit side of Memorandum Joint VentureAccount. However, such transactions which will not affect profit or loss on the venture e.g. receiving or sending of cash by one venturer from or to another will not be entered in his account.