Reference no: EM132623834
Eddie and Nandy entered into joint venture to buy and sell a quantity briar pipes. It was agreed that Nandy should received a commission of 4% on all sales in consideration for which she was to bear all losses from bad debts. Subject to this arrangement, profits and losses were to be shared 3:2.
On January 2nd 2012, Eddie purchased goods for TAS 7,200,000 for which he paid TAS 5,000,000 in Cash and accepted bills of exchange for TAS 1,000,000 and TAS 1,200,000 On January 3rd, Eddie sent to Nandy goods which had cost TAS 3,000,000 and Nandy paid TAS 4,200,000 to Eddie. In addition, Eddie drew a cheque of 5,000,000 to Nandy for meeting some operational costs. On January 9th, Nandy sold goods to Joan for TAS 720,000 and to Sarah for TAS 380,000 and they accepted bills of exchange for the amounts respectively due from them. Nandy endorsed both these bills over to Eddie, who discounted them. (Ignore discounting charges). On February 3rd, Eddie sold goods for TAS 2,400,000. On delivery the customer rejected goods invoiced at TAS 150,000 and these goods were collected by Nandy, who sold them to another customer for TAS 180,000. On February 11th, Sarah met her bill, but Joan's bill was dis-honoured. Joan was insolvent with no assets. On March 5th, Nandy paid the bill for TAS 1,200,000 which had been accepted by Eddie, and Eddie paid the second bills, TAS 1,000,000 During March 2009, Nandy sold the remainder of the goods in her possession for TAS 3,200,000 and Eddie's sales amounted to TAS 4,400,000. Bad debts (apart from amount due from Joan) were TAS 90,000 of which TAS 50,000 was in respect of sales by Eddie and TAS 40,000 was in respect of sales by Nandy. On April 30th, 2009 the venture was closed. Eddie took over the stock in his possession at a valuation of TAS 850,000 and the sum required to settle accounts between the venturers was paid by the party accountable
You are required to prepare
Problem a) The accounts for the joint venture in the books of Eddie and Nandy
Problem b) Memorandum Joint Venture account, showing the net profit