Question

Anchalee, Bancha and Chamni form a joint venture for the sale of merchandise. Anchalee and
Bancha are to contribute the merchandise and Chamni is to act a managing partner as well as sales
manager and is to be allowed a commission of 2% of gross sales. Anchalee and Bancha are to be
allowed 12% a year on their original investments and the balance of any profit on the venture is to be
divided equally.
On January 1, Anchalee and Bancha contributed merchandise of $ 200,000 and $ 280,000
respectively. Between January 1 and March 31, Chamni sold venture merchandise on account for $ 720,000
of which he collected $ 708,000 allowing for cash discount of $ 9,000 and writing off $ 3,000 as bad
debts. Chamni paid joint venture expense of $ 125,000 out of joint venture cash. On April 1, the
venture was terminated and unsold merchandise on hand was returned to Anchalee at $ 18,000 and
Bancha $ 20,000. Cash settlement was completed by Chamni on this date.
Required :
1. Assuming that a separate set of books is kept, prepare the journal entries to record the foregoing
transactions on the venture books and the books of each member.
2. Assuming that a separate set of books is not kept, prepare the journal entries to record the foregoing
transactions on the books of each member.

Answer 1