Pom and Sam form a joint venture for the sale of merchandise, they agree to the following :

a.Pom is to act a managing partner and shall be allowed a compensation of $800.

b.Members are to be allowed 12% a year on their original investments.

c.Partners shall receive a commission of 10% on their net sales made for the venture .

d.The balance of any profit or loss on the venture is to be divided equally.

Required:

Under perpetual inventory method, journalize the following transactions on the books of the venture and on the books of each member.Assume the use of "Separate set of books is kept" accounting method.

September 2Sam purchased inventory $10,000, paid cash $9,800, the reminder will be paid in 15 days.

September 5Sam invested all inventory of September 2 into the joint venture.

September 6Pom invested the following for the venture purposes :

Cash$50,000

Office supplies$300

September 7The venture paid creditors of September 2 out of the venture cash.

September 15Pom (The venture) purchased inventory on credit $5,000.

September 17Sam sold for cash 95% of inventory on September 5, gross $15,000 less 10% trade discount

September 18The venture returned inventory purchased on September 15 back to the suppliers $100.

September 19The venture received inventory $500 returned from sales which were made onSeptember 17 (cost of inventory $320).

September 20The venture paid in full for creditors of September 15.

September 21Pom sold 98% of inventory on September 15 on credit $6,000, 2/10, n/30.

September 25Collected cash from customers on account of September 21, $5,500.The remaining balance of receivables was directly written off as bad debts expense of the month.

September 26The venture paid operating expense $261

September 30Office supplies on hand amounted to $200.

September 30The members took over the following from the venture as part of their final settlements :

-Pom took over all unused office supplies at cost,

-Sam took over all unsold inventory at cost.

October1It was agreed to close down the venture, net profits entitle to each partner were accounted for, after the final settlement was made to partners, the joint venture was terminated and all accounts were closed.

The closing entries and entries to distribute profit or loss of the venture to all partners' capital accounts

The entry for cash distribution