What is joint venture ? Explain various methods of recording the joint venture transaction. Give entries in each case

Joint Venture is a temporary form of business, where two or more persons join together to meet the short term objectives. It is quiet similar to Partnership firm, but established without name or registration separately under any law.


There are three methods of recording the joint venture transactions.

Method 1: When separate set of books are maintained

  • Joint venture account
  • Co-venture ‘s account
  • Joint bank account

Method 2: When separate set of books are not maintained.

There can be two cases as given below:

CASE 1: When each co-ventures keep record of all transactions

  • Joint venture account
  • Co-venture’s account

CASE 2 : When each co-venture keep record of own transaction only

  • Memorandum joint venture account
  • Joint venture with co-venture account

Method 3: When each co-venturer keeps record of own transaction only

Journal Entries

Method 1: When separate set of books are maintained

1. When the contribution made by the coventure’s

Joint bank account Dr.

To co-ventures’ account

When the expenses paid through joint bank account

Joint venture account Dr.

To joint bank account

When the expenses paid or materials supplied by the co-ventures from private account

Joint venture account Dr.

To co-venture account

When the sales proceeds or collections

Joint bank account Dr.

To joint venture account

When the collections received by coventures

Co-ventures account Dr.

To joint venture account

When the assets taken over by the coventure’s

Co-ventures account Dr.

To joint venture account

When the liabilities taken over by the co-venturer

Joint venture account Dr

To co-venture account

When there is profit on joint venture

Joint venture account Dr.

To co-venture account

When there is loss on joint venture

Co-venture account Dr.

To joint venture account

When the final settlement made to coventure’s

Co-venture account Dr.

To joint bank account

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