Question

A & B entered into a joint venture to purchase and sell crackers. Profits or losses were to be shared equally. A purchased cracker worth Rs.1,00,000 and incurred the following expenses in sending it to B: Forwarding charges Rs.6,000, Insurance charges Rs.5,000 and Rental Charges Rs.4,000. The whole crackers were disposed of by B for Rs.2,20,000. B incurred advertisement expenses Rs.20,000. What will be the profit on joint venture?

• A. Rs.2,20,000
• B. Rs.85,000
• C. Rs.1,00,000
• D. Rs.1,20,000

Answer 1

Answer: (B)

Rs.85,000

Dr Joint Ventures A/C Cr
	Particulars	Rs	Particulars	Rs
	To Purchase	100000	By sales	220000
	To Forwarding charges	6000
	To Insurance charges	5000
	To Rental Charges	4000
	To Advertisement exp	20000
	To Profit	85000
	Total	220000	Total	220000