CMA Foundation · Fundamentals of Financial and Cost Accounting · Joint Venture
Rohit, a co-venturer, personally pays freight of Rs 3,000 on goods bought for a joint venture kept in separate books. How is this recorded in the joint venture's own books?
Debit Joint Venture Account and credit Rohit's account for Rs 3,000. The freight is an expense of the venture, and since Rohit paid it personally rather than through the joint bank, the venture now owes him that amount. Joint Bank Account is not affected.
- ADebit Joint Bank A/c; credit Rohit's A/c
- BDebit Rohit's A/c; credit Joint Venture A/c
- CDebit Joint Venture A/c; credit Rohit's A/cCorrect
- DDebit Joint Venture A/c; credit Joint Bank A/c
Explanation
Freight is a venture expense, so Joint Venture A/c is debited. Since Rohit paid it from his own funds and not from the joint bank, the venture owes him Rs 3,000 and his account is credited. Crediting Joint Bank A/c would be wrong because no money left the joint bank account.
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