CMA Intermediate · Financial Accounting · Joint Venture
In a joint venture with separate books, the venture made sales of Rs 90,000, purchased goods for Rs 80,000 and incurred expenses of Rs 4,000. Unsold goods were taken over by venturer Meera at an agreed value of Rs 9,000. What is the profit of the joint venture?
The profit is Rs 15,000. Goods taken over by Meera at Rs 9,000 count as realisation along with sales of Rs 90,000, giving Rs 99,000. Deducting purchases of Rs 80,000 and expenses of Rs 4,000 leaves Rs 15,000. Leaving out the stock would show only Rs 6,000.
- ARs 6,000
- BRs 15,000Correct
- CRs 19,000
- DRs 24,000
Explanation
Stock taken over by a venturer is treated as a realisation, credited to the Joint Venture A/c and debited to Meera's A/c. Profit = (90,000 + 9,000) - (80,000 + 4,000) = 15,000. Ignoring the stock gives 6,000. Ignoring expenses gives 19,000.
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