CMA Intermediate · Financial Accounting · Joint Venture
Arun and Bhaskar enter into a joint venture to sell a consignment of goods and share profits and losses equally. Arun supplies goods costing ₹80,000 and incurs expenses of ₹4,000. Bhaskar sells the goods for ₹1,10,000 and incurs expenses of ₹6,000. Neither maintains separate JV books; each records only his own dealings with the venture. What is the total profit of the joint venture and each co-venturer's share?
The joint venture profit is ₹20,000, shared equally at ₹10,000 each. Sales of ₹1,10,000 less goods cost ₹80,000 and expenses of ₹4,000 and ₹6,000, totalling ₹90,000, give the profit.
- AProfit ₹20,000; share ₹10,000 eachCorrect
- BProfit ₹30,000; share ₹15,000 each
- CProfit ₹26,000; share ₹13,000 each
- DProfit ₹16,000; share ₹8,000 each
Explanation
Total expenses = 80,000 + 4,000 + 6,000 = 90,000. Profit = 1,10,000 - 90,000 = 20,000, shared equally = 10,000 each. Ignoring the expenses gives 30,000, which is wrong because the expenses reduce the profit.
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