CMA Intermediate · Financial Accounting · Joint Venture
Ravi and Sunil run a joint venture sharing profits 3:2 without separate books. Ravi bought goods for ₹1,20,000 and spent ₹5,000 on expenses. Sunil sold all goods for ₹1,60,000 and spent ₹3,000 on expenses. Sunil is entitled to a commission of 5% on sales, which is in addition to his profit share. Net profit to be shared between the two venturers is ₹x. What is Sunil's total gain from the venture (profit share plus commission)?
Sunil's total gain is ₹17,600 on the given data: commission of ₹8,000 plus a two-fifths share of the ₹24,000 profit after commission, which is ₹9,600. None of the listed options matches this figure.
- A₹17,200Correct
- B₹14,400
- C₹9,200
- D₹12,800
Explanation
Commission = 5% of 1,60,000 = 8,000. Profit before commission = 1,60,000 - 1,20,000 - 5,000 - 3,000 = 32,000. Profit after commission = 24,000. Sunil's 2/5 share = 9,600. Total gain = 9,600 + 8,000 = 17,600. Rechecking against options: 17,600 is not listed, so the commission and share must be recomputed with this data; the intended key is the one closest to correct working only if data match, hence this item is flawed.
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