Question

Question 3 a) GHC Define Joint Venture and explain two (2) of its advantages. (6 marks) b) Dansoa and Cecilia entered into a Joint Venture to trade in electronic machines They agreed to share Joint Venture profit as follows: Dansoa 3/5 and Cecilia 2/5. On 1/3/2018 Dansoa sent a GHC 10,000 cheque to Cecilia to start the business. They managed to dispose of all the goods they bought by 31/03/2018 by which date their cash transaction had been as below: Dansoa Cecilia GHC Sales 3.500 2,600 Traveling expenses 360 450 Advertising Market tools Wages of casual worker 50 Sundry expenses 70 90 91 70 95 10 30 Purchases 1,650 1.150 Settlement between the co-ventures then took place by cheque Required: 0 Memorandum Joint Venture Account (1) Joint Venture with Dee account in Cee's ledger (ii) Joint Venture with Cee's account in Dee's ledger (12 marks)

Answer 1

(a) Joint Venture

Joint venture is a business arrangemnet in which two or more parties agree to pool their resources for a specific venture and sharing the profit or loss from it. Thus a new business is started by two or more persons and sharings the risks and return of it.

Advantages:

1. Sharing of Resources The resoources of the parties will be pooled together for the business, so more resources will be available for the business.

2.Sharing of costs and risk The expenses are shared by the parties and if there is loss which will be shared by them. That means the risk of loss can be reduced by sharing to all parties.

GHC 3500 2600 Memorandum Joint Venture Account GHC GHC To Dansoa (Cost of Goods and Expenses) By Dansoa (Sales) Purchases 1650 By Cecilia (Sales) Travelling expense 360 Advertising 90 Marker tools 70 Wage of Casual worker 50 Sundry Expenses 70 Total 2290 To Cecilia Purchases 1150 Travelling expense 450 Advertising 91 Marker tools 95 Wage of Casual worker 10 Sundry Expenses 30 Total 1826 To Dansoa (Share of profit) 3/5 1190.4 To Cecilla (Share of profit) 2/5 793.6 1984 Total 6100 Total 6100

GHC 3500 In the Books of Dansoa Joint Venture with Cecilia GHC To Cash (Cheque sent) 10000 By Cash (Sales) To Cash (Cost of Goods and Expenses) Purchases 1650 Travelling expense 360 Advertising 90 Marker tools 70 Wage of Casual worker 50 Sundry Expenses 70 2290 To Profit and Loss 3/5 1190.4 By Bank (settlement) Total 13480.4 Total 9980.4 13480.4

GHC 10000 2600 In the Books of Cecilia Joint Venture with Donsoa GHC To Cash (Cost of Goods and Expenses) Purchases 1150 By Bank (cheque received) Travelling expense 450 By Cash (Sales) Advertising 91 Marker tools 95 Wage of Casual worker 10 Sundry Expenses 30 Total 1826 To Profit and Loss 2/5 793.6 To Bank (settlement) 9980.4 Total 12600 Total 12600