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

P and Q are co-venturers sharing profits 2:1. P buys goods for Rs 90,000. Q pays expenses of Rs 12,000 and sells part of the goods for Rs 84,000 in cash. P takes over the unsold goods at Rs 30,000. What amount does Q pay to P to settle the venture?

Q pays P Rs 68,000. P is entitled to his outlay of Rs 90,000 plus a profit share of Rs 8,000, which is Rs 98,000. He has already taken goods worth Rs 30,000, so the remaining Rs 68,000 comes from Q's cash.

  1. ARs 68,000Correct
  2. BRs 98,000
  3. CRs 38,000
  4. DRs 72,000

Explanation

Profit = 84,000 + 30,000 - 90,000 - 12,000 = Rs 12,000, so P's share is Rs 8,000 and Q's is Rs 4,000. Q's account in P's books is Dr 84,000, then Cr 12,000 and Cr 4,000, leaving Rs 68,000 Dr. The stock taken over by P does not touch Q's account. As a check, P is entitled to 90,000 + 8,000 = 98,000, less goods of 30,000 already taken, which is Rs 68,000 in cash. Rs 72,000 ignores Q's profit share.

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