Question

A & B enter into a joint venture sharing profit & losses in the ratio of $2:1$. A purchased goods costing Rs$2,00,000$. B sold the goods for $Rs.2,50,000$. A is entitled to get $1\%$ commission on purchase and B is entitled to get $5\%$ commission on sales. The profit on venture will be :

• A. Rs$35,500$
• B. Rs$36,000$
• C. Rs$34,000$
• D. Rs$38,000$

Answer 1

The correct option is A Rs$35,500$

Cost of goods purchased by A = Rs. 2,00,000

Sale value of goods sold by B = Rs. 2,50,000

Profit on sale = Sale value - Cost price = Rs. 2,50,000 - Rs. 2,00,000 = Rs. 50,000

Commission to A = 1% on purchase = Rs. 2,00,000 x 1% = Rs. 2,000

Commison to B = 5% on sale = Rs. 2,50,000 x 5% = Rs. 12,500

Total commission payable = Rs. 2,000 + Rs. 12,500 = Rs. 14,500

Thus, Profit on venture = Total profit - Total commission payable = Rs. 50,000 - Rs 15,500 = Rs. 35,500.