Vision 2020 Ltd is a China-based company that manufactures Samsung flat screens of all sizes. In January 2019 it consigned 2,000 television sets (49 inch) to its agent Best electronics ltd in Uganda at a cost of Shs 1,500,000 each. Vision 2020 Ltd incurred the following expenditure on sending the consignment: Freight Shs. 12,500,000 and Insurance Shs. 4,600,000. Best electronics Ltd received the delivery of 1800 flat screens. An account sale dated 30th Match 2019 showed that 1700 television sets were sold for Shs. 1,700,000 each and Best electronics Ltd incurred Shs 15,000,000 on carriage. Best electronics Ltd was entitled to commission of 8% on the sales effected by her. Best electronics Ltd incurred expenses amounting to Shs 2,000,000 for repairing the damaged television sets that were remaining in the stock. Vision 2020 Ltd lodged a claim with the insurance company but the insurance company refused to pay due to a default in the policy. Required:Show the Consignment Account and the consignees Account in the books of Vision 2020 ltd QUESTION TWO What is a joint venture Outline five advantages of a joint venture V and W entered into a joint venture for purchase and sale of cotton. Their profit ratio being 2:1 and are also entitled to an interest of 12% per annum (on monthly basis) on money received as well as invested. Following transactions took place:• On 1.1.2010, V purchased 1000 bales of cotton at Shs500/bale, brokerage being Shs10/bale• On 28.2.2010,W purchased 500 bales of cotton at Shs520/bale, brokerage being Shs10/bale• On 28.2.2010, V sold 800 bales at Shs672/bale, brokerage being Shs12/bale and took proceeds to himself.• On 1.4.2010, W sold 600 bales at Shs580/bale, brokerage being Shs10/bale and took proceeds to himself.It was also agreed that each co- venture will at first sell from his own purchases and then, if need be, from the goods purchased by the other co-venture. The balance stock left unsold was taken by V at cost on 30.4.2010 when the accounts were settled between the co-ventures.RequiredYou are required to show the accounts of both co-ventures’ using the Memorandum Joint Venture Account Method.
Vision 2020 Ltd is a China-based company that manufactures Samsung flat screens of all sizes. In January 2019 it consigned 2,000 television sets (49 inch) to its agent Best electronics ltd in Uganda at a cost of Shs 1,500,000 each. Vision 2020 Ltd incurred the following expenditure on sending the consignment: Freight Shs. 12,500,000 and Insurance Shs. 4,600,000. Best electronics Ltd received the delivery of 1800 flat screens. An account sale dated 30th Match 2019 showed that 1700 television sets were sold for Shs. 1,700,000 each and Best electronics Ltd incurred Shs 15,000,000 on carriage. Best electronics Ltd was entitled to commission of 8% on the sales effected by her. Best electronics Ltd incurred expenses amounting to Shs 2,000,000 for repairing the damaged television sets that were remaining in the stock. Vision 2020 Ltd lodged a claim with the insurance company but the insurance company refused to pay due to a default in the policy.
Required:
Show the Consignment Account and the consignees Account in the books of Vision 2020 ltd
QUESTION TWO
What is a joint venture
Outline five advantages of a joint venture
V and W entered into a joint venture for purchase and sale of cotton. Their profit ratio being 2:1 and are also entitled to an interest of 12% per annum (on monthly basis) on money received as well as invested. Following transactions took place:
• On 1.1.2010, V purchased 1000 bales of cotton at Shs500/bale, brokerage being Shs10/bale
• On 28.2.2010,W purchased 500 bales of cotton at Shs520/bale, brokerage being Shs10/bale
• On 28.2.2010, V sold 800 bales at Shs672/bale, brokerage being Shs12/bale and took proceeds to himself.
• On 1.4.2010, W sold 600 bales at Shs580/bale, brokerage being Shs10/bale and took proceeds to himself.
It was also agreed that each co- venture will at first sell from his own purchases and then, if need be, from the goods purchased by the other co-venture. The balance stock left unsold was taken by V at cost on 30.4.2010 when the accounts were settled between the co-ventures.
Required
You are required to show the accounts of both co-ventures’ using the Memorandum Joint Venture Account Method.
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