CMA Foundation · Fundamentals of Financial and Cost Accounting · Joint Venture
A and B run a joint venture in separate books, sharing profits 3:2. The Joint Venture Account shows sales of ₹3,00,000, purchases of ₹1,80,000 and expenses of ₹20,000. Unsold goods worth ₹15,000 are taken over by A at cost. What is A's share of profit?
A's share is ₹69,000. Total profit is sales ₹3,00,000 plus stock taken over ₹15,000, less purchases ₹1,80,000 and expenses ₹20,000, which is ₹1,15,000. A receives three-fifths of this under the 3:2 ratio.
- A₹60,000
- B₹69,000Correct
- C₹51,000
- D₹46,000
Explanation
Credits are sales ₹3,00,000 plus stock taken over ₹15,000, totalling ₹3,15,000. Debits are ₹1,80,000 + ₹20,000 = ₹2,00,000. Profit is ₹1,15,000, and A's 3/5 share is ₹69,000. Ignoring the stock gives ₹60,000, which is wrong because stock taken over is a credit to the venture.
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