Ravi and Vimal entered in joint venture for purchase and sales of blankets. Ravi will purchase goods and Vimal undertook the sales. They decided to pay 5% interest p.a. to Ravi on his investment and also charge interest at same rate on amount received by him. Vimal will get 4% commission on sales. Profit and losses are shared equally.
Ravi purchased on 1 January 2017, 2000 blanket Rs 60 per blanket. He paid packing charges and other expenses Rs 4,000. Vimal paid freight Rs 6,000 and sold to blanket as follows :
On 1 February 2017, 300 blanket @ Rs 90 each, on 1 July, 2017, 1000 blanket @ Rs 100 each, on 1 October 2017, 500 blanket @ Rs 84 each.
Vimal sent to Ravi Rs 20,000 on 1 March, 2017 and Rs 56,000 on 1 August, 2017. Remaining blanket took by Vimal on cost plus 25% above. On 1 October 2017, final settlement was made.
Assume that each party record all transactions, prepare necessary accounts in the books of both parties.