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Each co-venture records his own transactions only, which is known as memorandum joint venture method.
Each co-venture will open two principal accounts under this method. Those are Joint venture account and personal accounts of the co-venture.
Joint Venture AccountThis account is prepared to ascertain the profit or loss on joint venture. Hence, it can be treated as nominal account. Goods purchased, goods supplied by the co-ventures, expenses incurred etc. are debited and sale proceeds, unsold stock, stock taken over by co-venture etc. are credited to joint venture account. The final balance of joint venture account shows profit or loss which is transferred to co-ventures' account according to their profit sharing ratio.
Personal Account Of Co-ventureThe co-venture's account is debited with goods and sales proceeds taken over, remittance share of profit. Similarly, the personal account is credited with cash, goods supplied by the co-ventures.
