CMA Foundation · Fundamentals of Financial and Cost Accounting · Joint Venture
Ravi and Sunil run a joint venture sharing profits equally. In Ravi's books (all transactions recorded), Sunil purchased goods worth ₹40,000 for the venture and paid it from his own funds. What is the correct entry in Ravi's books?
Ravi debits Joint Venture A/c and credits Sunil's A/c with the full ₹40,000. Because Ravi records all transactions, the venture bears the whole purchase cost, and Sunil, who paid from his own funds, is shown as a creditor for that amount.
- AJoint Venture A/c Dr 40,000 to Sunil's A/c 40,000Correct
- BSunil's A/c Dr 40,000 to Joint Venture A/c 40,000
- CJoint Venture A/c Dr 20,000 to Sunil's A/c 20,000
- DPurchases A/c Dr 40,000 to Sunil's A/c 40,000
Explanation
Ravi records all transactions, so the full ₹40,000 is debited to Joint Venture A/c. Sunil paid personally, so Sunil becomes a creditor and his account is credited. Option 3 wrongly records only Sunil's share of the purchase.
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