CMA Foundation · Fundamentals of Financial and Cost Accounting · Joint Venture
Arun and Balan run a joint venture with separate books. Arun contributes Rs 60,000 and Balan Rs 40,000 to the Joint Bank Account. Goods costing Rs 70,000 are bought and expenses of Rs 5,000 are paid, both from the bank. Sales of Rs 1,10,000 are deposited in the bank. Profit is shared equally. On closing the venture, how much is paid to Arun?
Arun is paid Rs 77,500. Profit is Rs 35,000 (sales 1,10,000 less purchases 70,000 and expenses 5,000), shared equally at Rs 17,500 each, and this is added to his Rs 60,000 contribution. Balan receives Rs 57,500, and the total equals the bank balance of Rs 1,35,000.
- ARs 77,500Correct
- BRs 81,000
- CRs 21,000
- DRs 95,000
Explanation
Profit = 1,10,000 - 70,000 - 5,000 = Rs 35,000, so each gets Rs 17,500 at equal sharing. Arun receives 60,000 + 17,500 = Rs 77,500. Balan gets 40,000 + 17,500 = 57,500. The total of 1,35,000 equals the bank balance (1,00,000 - 75,000 + 1,10,000). Rs 81,000 wrongly shares profit in 3:2 instead of equally.
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