Mainly there are two means of keeping joint account. Those are 1. Without keeping separate separate set of books, 2. With maintaining separate set of novels.
1. Without Maintaining Separate Set Of Novels
Another set of publications for joint venture transaction is not created under this method. Inside this method, each co-ventures record all of the transactions in his books in connection with the joint venture. There are three variants.
I. Each co-venture records his own trades in addition to the transactions of another co-venture and also opening other co-venture’s accounts for final settlement.
ii. Just One co-venture records the accounts
iii. Each co-venture records his own transactions only, which is known as memorandum joint venture method.
Those are Joint enterprise account and individual reports of the co-venture.
Joint Venture Account
Hence, it can be treated as minimal account. Goods bought, goods supplied by the co-ventures, expenses incurred etc. are debited and sale profits, unsold inventory, stock taken over by co-venture etc., are credited to joint venture accounts. The final equilibrium of joint venture account reveals profit or loss that’s moved to co-ventures’ account depending on their profit sharing ratio.
Private Account Of Co-venture
In the same way, the personal account is related to cash, goods supplied by the co-ventures.
2. With Maintaining Separate Set Of Novels
After the size of the venture is much large, then a separate set of books of accounts could be maintained. Under this method, balances are maintained like in the case of partnership. While preparing the accounts, the principle of dual entry has to be followed. Under this technique, the next ledgers are maintained.
i. Joint Venture Account
ii. Joint Bank Account
iii. Co-venture’s Account
Joint Venture Account
The joint venture account is quite unique one where all of the purchases, procurement associated expenses, selling and distribution expenses as well as expenses associated with the joint ventures are being debited such as trading and profit and loss account. No separate account of purchases, salary or some other expenses are all opened. The goods supplied by co-ventures etc. can also be reverted to it. Likewise, sale profits, closing stock, goods taken over by co-ventures are credited to joint venture account. If the joint venture account reveals credit balance, it signifies profit and if it reveals debit balance, it’s reduction and transferred to co-ventures personal account.
Joint Bank Account
It’s exactly like a cash publication. It records all the money and bank transactions. It’s opened with the contribution of cash made by co-ventures. Any receipts of cash and any expenses related to venture are listed in their accounts. The combined bank account is closed by transferring balance to the personal account of co-ventures.
Like the funds accounts in partnership, co-venture account is started in joint venture. It’s credited with the expense of every co-venture and debited with all the drawings created by them. The profits of the venture is credited and loss of partnership is debited. This account comes to end by money payment from joint bank accounts.