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Difficulty: MediumJoint Venture Accounting: Separate Set of Books Method

Under the separate set of books method of accounting for a joint venture, which of the following is the correct double entry to record goods supplied directly by a co-venturer from their existing business stock?

  1. Debit Joint Venture Account and Credit Co-venturer's Personal AccountAnswer
  2. B
    Debit Joint Bank Account and Credit Co-venturer's Personal Account
  3. C
    Debit Joint Venture Account and Credit Joint Bank Account
  4. D
    Debit Co-venturer's Personal Account and Credit Joint Venture Account

Answer

Debit Joint Venture Account and Credit Co-venturer's Personal Account
When a co-venturer supplies goods from their existing business stock under a separate set of books, the joint venture incurs a cost (recorded by debiting the Joint Venture Account) and becomes indebted to that co-venturer (recorded by crediting the co-venturer's personal account).

Step-by-Step Solution

1
Identify the nature of the transaction
Goods are supplied directly by a co-venturer from their stock to the joint venture without involving cash from the Joint Bank Account.
Understanding whether funds or physical inventory from a venturer are involved dictates which ledger accounts are affected.
2
Determine the debit entry for the cost incurred by the venture
Debit Joint Venture Account.
All goods, materials, and expenses related to the venture are debited to the Joint Venture Account to compute overall profit or loss.
3
Determine the credit entry for the supplying venturer
Credit Co-venturer's Personal Account.
The co-venturer who supplies the goods acts as a creditor to the venture for that amount, so their personal capital/settlement account is credited.

Key Concept

Accounting entries for venturer-supplied goods under the separate set of books method
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Topics

Joint Venture Accounting: Separate Set of Books Method

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