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Memorandum  Joint  Venture  System


When all the parties keep the A/cs, the system is known as MJV System. The main features are as follows:

(1)    Each co-venturer records the entries which are related to him only.

(2)    The account opened under this method is named as “Joint Venture with ……………..A/c”.

The other co-ventuirer’s name is written in the blank space.

(3)    This account is PERSONAL in nature. It does not show profit or loss.

(4)    Each party will record only those transactions which is effected by him.

(5)    The profit or loss will be known by preparing “Memorandum Joint Venture A/c”. This account is so called because it is not based on double entry system of book keeping. It is prepared just to know profit or loss on the venture.

(6)    No party will record the transfer of goods anywhere.

(7)    Amount paid by one party to another party will be recorded in their respective accounts but not in Memorandum Joint Venture Account.

(8)    If some goods are taken for personal use, it will be recorded in the books of that party which has taken the goods.

E.g. If X takes some goods for personal use, the entry will be :

Purchases A/c.   Dr.
  To JV with ‘Y’ A/c.


(9)    If Y returns the goods, there will be no entry.


X and Y entered into a joint venture of underwriting the subscription at par for the entire share capital of Rama Ltd. consisting of 10,000 Equity shares of Rs.10 each and to pay all expenses up to allotment. They were to share profits in the ratio of 3:2 respectively. The consideration in return for the guarantee was 1,200 other shares of Rs.10 each fully paid to be issued to them.

X provided the funds for Registration fee Rs.1,200; advertising Rs.1,100 and printing and stationery Rs.950.Y contributed towards payment of office rent Rs.300. legal charges Rs.1,550 and staff  salaries Rs.900.
The prospectus was issued and applications fell short of the full issue by 1,500 shares.X took these over on joint account and paid for the same in full. They received the 1,200 fully paid shares as underwriting commission. They sold their entire holding at Rs.12 per share. The proceeds were received by X for 1,500 shares and Y for 1,200 shares.
Write up Joint venture account and coventurer’s A/c in the books of both the parties.


Particulars   Rs. Particulars Rs.
To Bank - 1,200   By Bank- Sale proceeds of  
Registration fees 1,100   1,500 shares @ Rs.12 18,000
Advertising 950 3,250 To Y-Sale Proceeds of 1,200  
Printing & stationery     Shares @ Rs.12 14,400
To Y- Office rent 300      
Legal Charges 1,550      
Staff salaries 900 2,750    
To Bank – subscription        
For shares not applied for   15,000    
To Profit -        
X 3/5th 6,840      
Y 2/5th 4,560 11,400    
    32,400   32,400

Particulars   Rs. Particulars Rs.
To J V A/c - sale proceeds   14,400 By Joint venture account – exp. 2,750
      To Joint venture – 2/5th profit 4,560
      To Bank 7,090
    14,400   14,400

In the Books of Y
Particular Rs. Particulars Rs.
To Bank -   By Bank – sale proceeds 14,400
Office rent 300   of 1,200 shares at Rs.12  
Legal Charges 1,550   By X – sales proceeds of 18,000
Staff salary 900 2,750 1,500 shares at Rs.12  
To –X        
Registration fees
Printing & stationery 950 3,250    
To X- subs. for shares   15,000    
To Profit Tfd to P & L A/c 2/5 4,560      
To x- 3/5th



Dr.                                                                                                               X                                                       Cr.
Particulars   Rs. Particulars Rs.
To Joint venture
Account - Sale proceeds
To Bank (final settlement)
By Joint venture
Account – expenses
By Joint – venture
Account – subscription
By Joint venture Account


      -3/5th profit 6,840
    25,090   25,090

Note: The student should remember that no entry will be passed for the shares received form the company in consideration for the guarantee.



Ram and Mohan entered into a joint venture to purchase and sell new year gifts. They agreed to share the profits and losses equally.
On 4th November,1997, Ram purchased goods worth Rs.1,00,000 and spent Rs.6,000 in sending the goods to Mohan. He also paid Rs.2,000 for insurance. On the same date, Ram drew a bill of exchange upon Mohan for Rs.1,00,000 at two months. He got the bills discounted @ 18% per annum.

Mohan spent Rs.3,000 on cartage, Rs.5,000 as rent and Rs.5,000 on advertisement .He sold all the gift for Rs.2,00,000 after retaining gifts worth Rs.2,000 for his personal use. He sent a cheque to Ram for the amount due on 8th January, 1998.You are required to prepare:

(i) Memorandum joint venture account; and (ii) Joint venture with Mohan account in the books of Ram.
Particulars   Rs. Particulars   Rs.
To Ram :     By Mohan :    
Purchases 1,00,000   Sales 2,00,00  
Freight 6,000   Drawings 2,000 2,02,000
Insurance 2,000        
Discount 3,000 1,11,000      

To Mohan
Cartage 3,000        
Rent 5,000        
To Profit
5,000 13,000      
Mohan 39,000        
Ram 39,000 78,000
Books of Ram
Particulars   Rs. Particulars Rs.
To Ram :     By Bills Receivable 1,00,000
Purchases 1,00,000   By Bank 50,000
Freight 6,000   (balancing figure)  
Insurance 2,000 1,08,000    
To Discount   3,000    
To Profit & Loss A/c   1,50,000   1,50,000


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