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Co-Venturers' Books Method 📖

Scenario:

  • A and B are in a JV. They don't open a new bank account.
  • A spends from his pocket. B spends from his pocket.
  • A collects some sales. B collects some sales.
  • Problem: How do they know the total profit?

Solution: Each partner records ONLY HIS OWN transactions in his books. He opens a "Joint Venture with B A/c".

Journal Entries (In Books of A) 📝

1. Expenses paid by A (Self):

Joint Venture with B A/c ...Dr.
    To Cash / Bank A/c

2. Expenses paid by B (Other): NO ENTRY (Usually). Or sometimes recorded if full record is kept. Note: In this specific method, we often use Memorandum Method (Lesson 28) to consolidate.

3. Sales received by A (Self):

Cash / Bank A/c ...Dr.
    To Joint Venture with B A/c

4. Profit Share:

Joint Venture with B A/c ...Dr.
    To P&L A/c (Own Share)
Confusion Alert

This method is rarely used in isolation because A doesn't know what B spent. That's why we use the Memorandum Joint Venture method (Lesson 28) which is the standard way to handle "No Separate Books".

Quiz Time! 🎯

Test Your Knowledge

Question 1 of 5

1. In this method, A records:

All transactions
Only his own transactions
Only B's transactions
None

💡 Final Wisdom: "It's like splitting a dinner bill. I paid for pizza, you paid for drinks. We need to sit down and calculate who owes whom." 🧾

Next up: Memorandum Joint Venture - The best way to solve this! 📝

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