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CMA Foundation · Fundamentals of Financial and Cost Accounting · Joint Venture

Kiran and Lata share venture profits equally and each keeps all venture records. Kiran bought goods for Rs 50,000 and incurred expenses of Rs 2,000. Lata sold part of the goods for Rs 40,000 and incurred expenses of Rs 3,000. Kiran took over the unsold goods at Rs 18,000. What is Kiran's share of profit from the venture?

Kiran's share is Rs 1,500. Venture credits are sales of Rs 40,000 plus unsold stock of Rs 18,000 taken over, or Rs 58,000. Costs are Rs 55,000, so profit is Rs 3,000, shared equally. Stock taken over counts as a realisation of the venture.

  1. ARs 1,500Correct
  2. BRs 2,500
  3. CRs 4,000
  4. DLoss of Rs 7,500

Explanation

Credits to the venture are 40,000 sales plus 18,000 stock taken over, totalling 58,000. Debits are 50,000 + 2,000 + 3,000 = 55,000. Profit is 3,000, so Kiran's half is 1,500. Rs 4,000 comes from ignoring both venturers' expenses, and the loss of 7,500 comes from leaving out the stock taken over.

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