Question

A & B entered in a joint venture sharing profits and losses in the ratio of 3:2. A supplies goods to the value of Rs.80,000 and incurs expenses Rs.6,000. B supplies goods to the value of Rs.14,000 and his expenses amount to Rs.2,000. B sells goods on behalf of the joint venture and realizes Rs.1,50,000. B entitled to a commission of 5% on sales. Find out A's share of profit on venture?

• A. Rs.24,300
• B. Rs.25,000
• C. Rs.26,000
• D. Rs.20,300

Answer 1

Answer: (A)

Rs.24,300

B's commission $=$ Sales $\times$ $\frac{5}{100}$

$=$ $1,50,000$ $\times$ $\frac{5}{100}$

$=$ $7,500$

Profit $=$ (Revenue $-$ Expenses)

$=$ (Goods sold by B)$-$ (Goods supplied by A $+$ A's expenses $+$ Goods supplied by B$+$ B's expenses$+$ B's commission)

$=$ $(1,50,000)$ $-$ $(80,000+14,000+6,000+2,000+7,500)$

$=$ $1,50,000-1,09,500)$

$=$ $40,500$

Therefore,

A's share in profit $=$Profit $\times$ $\frac{3}{5}$

$=$$40,500$ $\times$ $\frac{3}{5}$

$=$ $24,300$.