Question

A & B enter into a joint venture sharing profit and losses in the ratio $3:2$. A will purchase goods and B will sell. A purchase goods costing Rs$2,00,000$. B sold it for Rs$3,00,000$. The venture is terminated after $3$ months. A is entitled to get $10\%$ interest on capital invested irrespective of utilization period. The amount of interest received by A will be:

• A. Rs$20,000$
• B. Rs$10,000$
• C. Rs$15,000$
• D. Rs$25,000$

Answer 1

Answer: (A)

Rs$20,000$

A is entitled to receive interest on capital invested irrespective of the utilization period, therefore, the amount of interest received by A = RS. 2,00,000 x 10% = Rs. 20,000.

Cost of goods is the amount invested by A in business. So, it will become his capital.