CMA Foundation · Fundamentals of Financial and Cost Accounting · Joint Venture
A and B are joint venturers sharing profits 2:1. A bought goods for ₹90,000 and paid expenses of ₹3,000. B sold goods for ₹85,000, paid expenses of ₹5,000, and is entitled to a commission of 2% on the sales he made. The unsold goods were taken over by A at ₹27,000. What is A's share of profit?
A's share of profit is ₹8,200. Venture revenue is ₹85,000 of sales plus ₹27,000 stock taken over, which is ₹1,12,000. Costs including B's ₹1,700 commission are ₹99,700. Profit of ₹12,300 is divided 2:1, giving A two-thirds.
- A₹4,100
- B₹8,200Correct
- C₹10,200
- D₹12,300
Explanation
Revenue = 85,000 + 27,000 = ₹1,12,000. Costs = 90,000 + 3,000 + 5,000 + commission 1,700 = ₹99,700. Profit = ₹12,300, so A's share is 12,300 × 2/3 = ₹8,200. ₹10,200 comes from taking the stock at its cost of ₹30,000 instead of the takeover value, and ₹4,100 is B's share.
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