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Zorluk: KolayJoint Venture Accounting: No Separate Books (Memorandum Method)

Audu and Musa entered into a joint venture sharing profits and losses equally. Audu supplied goods valued at N50,000\text{N}50,000 and paid expenses of N5,000\text{N}5,000. Musa supplied goods valued at N30,000\text{N}30,000 and paid expenses of N3,000\text{N}3,000. Musa subsequently sold all the joint venture goods for N110,000\text{N}110,000. What is the total profit of the joint venture in Naira?

Cevap: 22000 Naira

Cevap

The total profit of the joint venture is N22,000\text{N}22,000.
The Memorandum Joint Venture Account is prepared by combining all revenues and expenses from all co-venturers. Total sales revenue is N110,000\text{N}110,000. Total joint expenditure comprises Audu's goods (N50,000\text{N}50,000), Audu's expenses (N5,000\text{N}5,000), Musa's goods (N30,000\text{N}30,000), and Musa's expenses (N3,000\text{N}3,000), giving a total of N88,000\text{N}88,000. Subtracting N88,000\text{N}88,000 from N110,000\text{N}110,000 gives the net total profit of N22,000\text{N}22,000.

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1
Calculate total venture revenue
Total Revenue = N110,000\text{N}110,000
Musa sold all venture goods for N110,000\text{N}110,000, which forms the total revenue of the venture in the Memorandum Joint Venture Account.
2
Calculate total venture expenditure
Total Expenditure = N88,000\text{N}88,000
Combine all costs incurred by both venturers: N50,000+N5,000+N30,000+N3,000=N88,000\text{N}50,000 + \text{N}5,000 + \text{N}30,000 + \text{N}3,000 = \text{N}88,000.
3
Calculate net venture profit
Net Profit = N22,000\text{N}22,000
Deduct total expenditure from total revenue: N110,000−N88,000=N22,000\text{N}110,000 - \text{N}88,000 = \text{N}22,000.

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Calculation of total profit or loss using a Memorandum Joint Venture Account
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Joint Venture Accounting: No Separate Books (Memorandum Method)

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