Business Accounting Project Joint Venture Fion Fong Ching

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

Introduction n n 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. n Our leased stall is located in Maritime Square n

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

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

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

March 1 The bill payable was honoured by Fion March 4 The 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 30 Betty sold the remaining stock for $33400 on credit April 1 Some of the goods sold on 30 March were returned and a credit note of $1000 was sent to the customer April 4 The bill receivable was honoured on maturity April 20 Fion agreed to take over the returned goods at a value of $800

May 6 Betty sent a cheque for $10, 000 to Irene to provide her with funds. May 16 Irene paid traveling expenses of $3000 May 30 $1600 of the unsettled debts in Betty’s books was written off May 31 Fion , 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 $ 2002 Jan 1 Bank: Purchases Jan 1 Bills payable Purchases Jan 2 Bank: Delivery Charges May 31 Profit and Loss: Profit on venture $ 7, 000 Feb 10 Profit and Loss: Stock stolen 6, 800 Feb 15 Bank: Return Outwards 1, 300 Apr 20 Stock taken over 10, 645 May 31 25, 745 Bank: settlement 3, 500 700 800 745 25745 19,

In the books of Betty Joint Venture with Fion and Irene 2002 $ 2002 Apr 1 Debtor : returns inwards May 6 Bank: Irene May 30 Debtors: Bad debts May 31 Profit and Loss: Profit on venture May 31 Bank: Settlement $ 1, 000 Jan 25 Bank: Sales 10, 000 Feb 22 Bank: Sales by Irene 1, 600 Mar 30 Debtors: Credit Sales 28, 00 0 9, 000 33, 400 10, 6 45 47, 155 70, 400

In the books of Irene Joint Venture with Betty and Fion 2002 $ Jan 18 Bank: Rent 40, 000 Feb 4 Debtors: Sales Feb 4 Bank: Discounting charges 440 Feb 4 Bills Receivables Sales 6, 000 Feb 16 Bank: Purchases Feb 22 Bank: Sales 9, 000 Apr 1 Debtors: Returns Inwards May 16 Bank: Traveling expenses 3, 000 May 6 Bank: Betty 10, 000 May 31 Profit and Loss: Commission 2, 075 May 1 Bank: Settlement 27, 410 May 31 Profit and Loss: Profit on venture 12, 800 0 1, 00 Mar 4 Bills Receivables Interests 17, 500 50 10, 6 45 69, 960

Fion , Betty and Irene(FBI Shop) Memorandum Joint Venture Account $ Purchases Less: Returns Outwards Rent 26, 600 700 $ Cash: Sales 25, 900 Debtors: Sales 40, 000 Traveling expenses 3, 000 Less: Return Inwards Delivery charges 1, 300 Stock taken by Fion Discounting charges 440 Stock stolen borne by Fion Bad debt 1, 600 Interest on bill Commission 2, 075 Share of profit 46, 000 56, 900 102, 900 1, 000 101, 900 800 3500 50 31, 935 106, 250

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

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

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

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

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

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

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

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

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

Question 5 the answer is. . . n. B. No