Business Accounting Project Joint Venture Fion- Fong Ching Shuen (6) Betty- Leung Ka Yan(15) Irene- Pai Chi Ling(20)

Introduction A special type of partnership which two or more people joined together to form a business venture for a short period Small joint ventures – no separate set of books or separate bank account are kept.

Background As we know, women like bracelets and others decorations. Thus we choose to form a small joint venture to sell the above goods. Our leased stall is located in Maritime Square

Features of our joint venture Our target customers are female All the venturers are female, so we can understand the taste of women Our products are hand-made and diversified, so we can attract different kinds of customers We hire the leased stall, so we need not pay water and electricity bills

Details of our joint venture Fion,Betty and Irene entered into a joint venture(FBI Shop) to buy and sell bracelets and others decorations. It was agreed that Irene would be entitled to a commission of 5% on all gross sales made by her, and that the joint venture profits and losses be shared equally.

The following transactions took place in 2002 January 1Fion purchased decorations at a cost of $13800, paying $7000 in cash and accepting a bill of exchange for two months for the balance. January 2Fion sent to Betty decorations which had cost $8800 and paid delivery charges of $1300 January 18Irene paid $40000 for rent for the five months ending 31 May 2002 January 25Sales proceeds of $28000 were kept by Betty

February 4Credit sales of $23500 were made by Irene. A bill of $6000 was accepted by a debtor and was then discounted at $5560 February 10Goods costing $3500 were stolen in the shop. The loss was to be borne by Fion. February 15Fion returned decorations costing $700 to the supplier and full allowance on the returned goods was given. February 16Irene purchased decorations at a cost of $12800 February 22Cash sales of $18000 were made by Irene and half of the sales proceeds were collected by Betty

March 1The bill payable was honoured by Fion March 4The bill receivable was dishonoured and was renewed with an extended maturity of one month. Interest at 10% per annum was charged on the renewed bill. March 30Betty sold the remaining stock for $33400 on credit April 1Some of the goods sold on 30 March were returned and a credit note of $1000 was sent to the customer April 4The bill receivable was honoured on maturity April 20Fion agreed to take over the returned goods at a value of $800

May 6Betty sent a cheque for $10,000 to Irene to provide her with funds. May 16Irene paid traveling expenses of $3000 May 30$1600 of the unsettled debts in Betty’s books was written off May 31Fion, Betty and Irene decided to terminate the joint venture and settle their accounts

In the books of Fion Joint Venture with Betty and Irene 2002 $ $ Jan 1Bank: Purchases 7,000Feb 10Profit and Loss: Stock stolen 3,500 Jan 1Bills payable Purchases 6,800Feb 15Bank: Return Outwards 700 Jan 2Bank: Delivery Charges 1,300Apr 20Stock taken over 800 May31Profit and Loss: Profit on venture 10,645May31Bank: settlement 19,745 25,

In the books of Betty Joint Venture with Fion and Irene 2002 $ $ Apr 1Debtor : returns inwards 1,000Jan 25Bank: Sales 28,000 May 6Bank: Irene10,000Feb 22Bank: Sales by Irene 9,000 May30Debtors: Bad debts 1,600Mar30Debtors: Credit Sales 33,400 May31Profit and Loss: Profit on venture 10,645 May31Bank: Settlement 47,155 70,400

In the books of Irene Joint Venture with Betty and Fion 2002 $ $ Jan 18Bank: Rent 40,000Feb 4Debtors: Sales 17,500 Feb 4Bank: Discounting charges 440Feb 4Bills Receivables - Sales 6,000 Feb 16Bank: Purchases 12,800Feb 22Bank: Sales 9,000 Apr 1Debtors: Returns Inwards 1,000 Mar 4Bills Receivables - Interests 50 May 16Bank: Traveling expenses 3,000May 6Bank: Betty10,000 May 31Profit and Loss: Commission 2,075May 1Bank: Settlement27,410 May 31Profit and Loss: Profit on venture 10,645 69,960

Fion, Betty and Irene(FBI Shop) Memorandum Joint Venture Account $ $ Purchases 26,600Cash: Sales 46,000 Less:Returns Outwards ,900Debtors:Sales 56,900 Rent 40,000102,900 Traveling expenses 3,000Less: Return Inwards 1, ,900 Delivery charges 1,300Stock taken by Fion 800 Discounting charges440Stock stolen borne by Fion 3500 Bad debt1,600Interest on bill50 Commission2,075 Share of profit31, ,250

Question 1 Which of the following are expenses? 1. Delivery Charges 2. Commission 3. Sales Answer. A. 1 B. 1, 2 &3 C. 1 & 2 The answer is

Question 1 the answer is... C Delivery charges and Commission

Question 2 What is the amount of net profit in FBI Company? A $31,935 B $39,135 C $31,539 The answer is

Question 2 the answer is... A $31,935

Question 3 What are the sources of goods? A. Man-made B. Finished Goods C. Both of them The answer is

Question 3 the answer is... C Both of them

Question 4 Which of the following transaction should not be recorded in the joint venture account? A. Venturers sent goods to each other B. Venturers sent cheques to each other C. Venturers sell goods in cash The answer is

Question 4 the answer is… A. Venturers sent goods to each other

Question 5 Do you think that memorandum joint venture account is a double entry? A. Yes B. No C. I don’t know The answer is

Question 5 the answer is... B. No