Accounts | Ram and Ravan are carrying on a business as contractors

Ram and Ravan are carrying on a business as contractors. They jointly take up the work of constructing a building for Mr Bose at an agreed price of ~ 5,00,000 and ~ 3,00,000 payable in cash and ~ 2,00,000 payable in fully paid shares of a company. A bank account is opened in which Ram and Ravan paid ~ 3,00,000 and ~ 75,000 respectively. The following costs were incurred in completing the construction : a) Salary paid, ~ 1,00,000; b) Materials purchased, ~ 2,00,000; c) Materials supplied by Ram from the stock of his own business,~ 50,000; d) Engineer’s fees paid by Ravan, ~ 10,000. The contract price was duly received. The accounts of the venture were closed; Ram taking up all the shares at an agreed valuation of ~ 1,70,000 and Ravan taking up the unused stock of materials at ~ 15,000. Prepare necessary accounts in the Ledger of the venture assuming that a separate set of books are maintained for this purpose and that the net result of the same is shared by Ram and Ravan in the ratio of 3:2.

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