Personal Account of Co-venture
The co-venturers account is debited with goods and sales proceeds were taken over, remittance share of profit. Similarly, the personal account is credited with cash, goods supplied by the co-ventures. Co-venture is a business project or enterprise undertaken jointly by two or more companies, each sharing in the capitalization and in any profits or losses. Co-Venturers’ Account is credited with the investment made by each Co-Venturer and is debited with the drawings (if any) made by them.
If the Joint Venture earns profit, Co-venturers A/c Capital Account is credited. While if the Joint Venture suffers a loss, Co-venturers’ Capital Account is debited. Each co-venturer debits a joint venture account and credits personal accounts of other co-venturer on the account of either good purchased or expensed by other co-venturers. This is the capital account of the venturer relating to venture. A joint venture account is credited and personal account of other co-venturer accounts is debited in case of a sale made by other co-venturers. This account is credited by the capital contributed by the venturers, goods supplied by them from their own stock, expenses made personally by them, etc. whereas this account is debited for any withdrawals or any asset taken from the venture. Transactions done by co-venturers among themselves including cash received or paid by one co-venturer to others will be ignored at the time of preparation of a memorandum account.
A joint venture account is debited and the commission account is credited if, a commission is receivable, but if a commission is receivable by other co-venturer, then the concerned co-venturer account will be credited instead of the commission account. The profit or loss so made on the venture is transferred to this account in profit sharing ratio and this account is closed by cash payment from joint bank and vice versa in the opposite case. The profit or loss so made on the venture is transferred to this account in the agreed profit sharing ratio. Balance in the joint venture accounts represents profit or loss and later that amount of profit or loss will be transferred to the personal accounts of co-venturers. This account is also closed on completion of the venture. Co-venturers’ Capital Account is closed by making cash payments from Joint Bank Account.