Ralie and Kadio entered into a joint venture to buy and sell second-hand cars.
Profits and losses were to be shared: Ralie three-fifths, Kadio two-fifths. It was agreed that each party would record his own transactions only.
On 23 September 2008, Ralie purchased two cars for N322,000 and N420,000. He incurred expenditure of N98,000 on repairs and on 4 September 2008 sold one of the cars for N469,000. On 10 September 2008 the other car was sold for N525,000, paying the proceeds in each case into his own bank account.
On 14 September 2008, he purchased another car for N560,000 and sold it on 30 September 2008 for N546,000 the amount he paid over to Kadio who paid it into his bank account.
On 25 September 2008, Kadio purchased a car for N245,000 on which he incurred expenditure of N56,000 and which he sold on 10 October 2008 for N350,000; the amount he paid into his bank account. This car was returned by the purchaser on 20 October 2008 and Kadio paid him N322,000 for it. As this car was still unsold, on 30 November 2008, it was agreed that it should be taken over by Kadio at a valuation of N315,000.
Other expenditure was incurred by the parties as follows:
|
Ralie
|
Kadio
|
|
N
|
N
|
|
Insurance
|
17,500
|
3,500
|
|
Garage
|
14,000
|
7,000
|
On 30 November 2008, the sum required in full settlement as between Ralie and Kadio was paid by the party accountable.
(a) The Joint Venture account as it would appear in the books of Kadio recording his transactions for the joint venture.
(b) The memorandum account for the joint venture showing the net profit.