Fundamentals of Financial and Cost Accounting · Joint Venture

Joint Venture: Venturer Records Only Own Transactions

Updated 10 October 2026 · Fact-checked

In this method each venturer opens only a Joint Venture with Co-venturer account in his own books and records only the transactions he handles. A Memorandum Joint Venture account, kept outside double entry, combines everyone's transactions to find profit. Each venturer then books his profit share and settles the balance in cash.

Understand Joint Venture: Venturer Records Only Own Transactions

A joint venture is a business taken up by two or more persons for a single project, with profit or loss shared in an agreed ratio. In this method no separate set of books is kept for the venture. Each venturer uses his own books.

Each venturer records only the transactions he himself carries out. He opens one personal account, called Joint Venture with B A/c in A's books. He debits it for what he pays (goods, expenses, cash sent to B). He credits it for what he receives (sale proceeds, cash received from B). He makes no entry for what B pays or collects.

Because no one venturer sees the whole picture, nobody can find the profit from his own books. So you prepare a Memorandum Joint Venture Account. It is a statement outside the double-entry system. Its debit side lists all expenses and purchases of all venturers. Its credit side lists all sales, receipts and any unsold stock taken over. The difference is the profit or loss.

Then each venturer brings in his share of profit or loss in his own JV with Co-venturer account. The balance left in that account is what the co-venturer owes him, or what he owes the co-venturer. A cash payment settles it and closes the account. With two venturers, the two balances are equal and opposite. That is your check.

Key formulas to remember

Profit or loss from Memorandum JV account: Profit = Total credits (sales, receipts, stock taken over) − Total debits (purchases and expenses of all venturers); A negative result is a loss. Do not include profit shares while finding this figure.
Venturer's share of profit: Share = Total profit × His profit-sharing ratio; If no ratio is given, assume equal sharing.
Balance in a venturer's JV with Co-venturer account: Balance = (His payments − His receipts − Value of stock taken over by him) + His share of profit (or − share of loss); A positive (debit) balance means the co-venturer owes him. A negative (credit) balance means he owes the co-venturer. If a venturer takes over unsold stock, he owes that value to the venture, so it is credited in his own JV account.
Entry when venturer pays: JV with B A/c Dr; To Cash/Bank A/c; Use it for goods bought, expenses paid and cash sent to B.
Entry when venturer receives: Cash/Bank A/c Dr; To JV with B A/c; Use it for sale proceeds he collects and cash received from B.
Entry for profit share: Profit: JV with B A/c Dr; To Profit on Joint Venture A/c. Loss: Loss on Joint Venture A/c Dr; To JV with B A/c; Profit or loss on joint venture is transferred to the venturer's own Profit and Loss account.

How to solve Joint Venture: Venturer Records Only Own Transactions questions

Follow the same order for every question. It keeps the two venturers' transactions apart and stops you from mixing them up.

1Read the question and list the transactions separately under each venturer: what A paid, what A received, what B paid, what B received.
2Note any stock unsold, stock taken over by a venturer, commission and the profit-sharing ratio.
3Prepare the Memorandum JV account. Debit all purchases and expenses of every venturer. Credit all sales, and the value of unsold stock taken over.
4Find the balancing figure. It is the profit if credits exceed debits, otherwise a loss. Divide it in the sharing ratio.
5Prepare the JV with Co-venturer account in the books of the venturer asked about. Debit only his payments. Credit only his receipts and the value of any stock he himself takes over.
6Add his profit share to the debit side (or his loss share to the credit side). Find the balancing figure.
7Read the balance. Debit means he receives cash from the co-venturer. Credit means he pays. Pass the settlement entry.
8Check that the other venturer's balance is equal and opposite.

Quickest way: Net outlay plus profit share

When to use it: Use it when an MCQ asks how much one venturer receives from or pays to the co-venturer, or asks for the closing balance of his JV account.

Total only the questioned venturer's payments. Then subtract only his receipts and the value of any stock he takes over himself, because he owes that stock to the venture. This gives his net outlay.
Find total profit as total sales and stock taken over minus total costs of both venturers. Take his share.
Add his share of profit to net outlay. Subtract his share if it is a loss.
A positive result means he receives that amount from the co-venturer. A negative result means he pays it.
Cross-check by computing the other venturer's figure. It should be the same amount in the opposite direction.

Common mistakes in Joint Venture: Venturer Records Only Own Transactions

Recording the co-venturer's transactions in his own books.
Students are used to full records, as in the other joint venture methods.
Fix: In this method, write in your JV account only what you paid and what you received. The memorandum account is the only place for everyone's figures.
Treating the Memorandum JV account as part of double entry.
It looks like a normal ledger account with two sides.
Fix: Remember it is only a statement to find profit. Its balance is not posted anywhere. Only the profit share is posted to each venturer's own books.
Deducting or adding profit shares as items in the Memorandum JV account.
Students confuse the memorandum account with the JV with co-venturer account, where the profit share is entered, and carry the share into the memorandum account. This distorts the profit figure.
Fix: Find profit from sales and costs only. The memorandum account has no profit-share item. Split the profit in the ratio afterwards.
Forgetting the value of unsold stock taken over by a venturer.
Stock is not a cash receipt, so it is left out.
Fix: Credit it in the memorandum account at the agreed value. It is part of the venture's revenue.
Wrong side for expenses in the JV with Co-venturer account.
Students think expenses should be credited, as in the expense account itself.
Fix: The JV account is a personal account. Cash paid out is debited, cash received is credited.
Closing balances of the two venturers do not match, and the student does not notice.
A figure is missed or put on the wrong side, and no check is done.
Fix: With two venturers the balances must be equal and opposite. If not, recheck the transactions you have assigned to each venturer.

Worked examples

Example 1

A and B enter into a joint venture and share profits in the ratio 3:2. A buys goods for ₹60,000 and pays expenses of ₹5,000. B sells all the goods for ₹1,00,000 and pays expenses of ₹3,000. Each venturer records only his own transactions. Prepare the Memorandum JV account and the JV with B account in A's books, and state the settlement.

Show the solution

Total debits in memorandum account: goods ₹60,000 + A's expenses ₹5,000 + B's expenses ₹3,000 = ₹68,000.
Total credits: sales by B = ₹1,00,000.
Profit = ₹1,00,000 − ₹68,000 = ₹32,000.
A's share = ₹32,000 × 3/5 = ₹19,200. B's share = ₹32,000 × 2/5 = ₹12,800.
A's books, JV with B A/c: debit goods ₹60,000, debit expenses ₹5,000, debit profit share ₹19,200. Total debit = ₹84,200. The credit side is empty, as A received nothing himself. B collected the sale proceeds.
Balance is a debit of ₹84,200, so B owes A. A receives ₹84,200 from B.
Quick-method check for A: net outlay = ₹60,000 + ₹5,000 − ₹0 receipts = ₹65,000. Add his profit share ₹19,200. Total = ₹84,200, a positive result, so A receives ₹84,200 from B.
Why B owes this amount: B holds the sale proceeds of ₹1,00,000. From this, B keeps back his own expenses of ₹3,000 and his profit share of ₹12,800. So B's net holding = ₹1,00,000 − ₹3,000 − ₹12,800 = ₹84,200, which equals A's debit balance.
Check in B's books: credit sales ₹1,00,000, debit expenses ₹3,000, debit profit share ₹12,800. Net credit = ₹84,200, which B owes A. This matches.

Answer: Profit on the joint venture is ₹32,000. A's share is ₹19,200 and B's share is ₹12,800. B pays ₹84,200 to A in settlement.

Example 2

X and Y are in a joint venture sharing profit equally. X buys goods for ₹80,000 and pays expenses of ₹4,000. Y sells goods for ₹70,000 and pays expenses of ₹2,000. X also sells goods for ₹40,000. Y takes over the unsold stock at ₹6,000. Find the profit and the amount settled between them.

Show the solution

Memorandum debits: X's goods ₹80,000 + X's expenses ₹4,000 + Y's expenses ₹2,000 = ₹86,000.
Memorandum credits: sales by Y ₹70,000 + sales by X ₹40,000 + stock taken over by Y ₹6,000 = ₹1,16,000.
Profit = ₹1,16,000 − ₹86,000 = ₹30,000. Each share = ₹15,000.
X's books, JV with Y A/c: debit ₹80,000 + ₹4,000 = ₹84,000 and profit share ₹15,000. Total debit = ₹99,000.
X's credit is the sales he received, ₹40,000. Balance = ₹99,000 − ₹40,000 = ₹59,000 debit.
So Y owes X ₹59,000.
Check in Y's books: Y holds the sales of ₹70,000 and also owes the venture ₹6,000 for the stock he took over, so both are credited to JV with X, totalling ₹76,000. Debits are Y's expenses ₹2,000 and profit share ₹15,000, totalling ₹17,000. Y owes X ₹70,000 + ₹6,000 − ₹2,000 − ₹15,000 = ₹59,000. This matches X's debit balance.

Answer: Profit is ₹30,000, shared as ₹15,000 each. Y pays ₹59,000 to X to settle the venture.

Exam tips

Questions often ask only for the final settlement figure. Use the net outlay plus profit share method and skip full ledger accounts.
Read carefully which venturer's books are asked about. The same data gives opposite balances for the two venturers.
Always add the value of unsold stock taken over to the credit side of the memorandum account. Missing it is the most common cause of a wrong profit figure. If a venturer takes over the stock, also credit it in his own JV account, because he owes it to the venture.
If the ratio is not stated, take equal sharing. If a commission is given, treat it as a cost in the memorandum account, as per the question's wording.
If two options differ by exactly the profit share, you have probably added or left out the profit share. Recheck that step.

Practice questions from Joint Venture

Joint Venture: Venturer Records Only Own Transactions in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Joint Venture: Venturer Records Only Own Transactions: frequently asked questions

What is the Memorandum Joint Venture account?

It is a statement that combines the transactions of all venturers to find the profit or loss of the venture. It is not part of double entry, and its balance is not posted to any account. Only the profit share it gives is entered in each venturer's books.

Which accounts does a venturer keep in this method?

He keeps one personal account, Joint Venture with Co-venturer A/c, and records only his own payments and receipts in it. He then adds his profit or loss share. The final balance shows what is to be paid or received.

How is this method different from keeping separate books for the joint venture?

In the separate books method, a full set of books records the transactions of all venturers. In this method no separate books are kept. Each venturer records only his own dealings, and profit is found with a memorandum statement.

Will the balances of both venturers always match?

With two venturers, yes. One has a debit balance and the other a credit balance of the same amount. If they do not match, a transaction is missing or on the wrong side.