Question

R & M entered into a joint venture to purchase and sell new year gifts. They share the profit & losses equally. R purchased goods worth Rs$1,00,000$ and spent Rs $10,000$ in sending the goods to M. He also paid Rs $5,000$ for insurance. M spent Rs$10,000$ as selling expenses and sold goods for Rs$2,00,000$. Remaining goods were taken over by him at Rs$5,000$. What will be the amount to be remitted by M to R as final settlement?

• A. Rs$1,95,000$
• B. Rs$1,50,000$
• C. Rs$1,55,000$
• D. Rs$80,000$

Answer 1

The correct option is D Rs$80,000$

Cost of goods purchased by R = Rs. 1,00,000

Expenses incurred by R = freight + insurance = Rs.10,000 +Rs. 5,000 = Rs.15,000

Total Amount spent by R = Cost of goods + Expenses Incurred = Rs.1,00,000 + Rs.15,000 = Rs.1,15,000

Expenses Incurred by M = Selling Expenses =Rs. 10,000

Sale price of goods =Rs. 2,00,000

Amount of goods taken over by M = Rs.5,000

Amount to be remitted by M to R as final settlement = Total amount received from sale of goods + goods taken over - Expenses and cost = Rs.2,00,000 + Rs.5,000 -Rs.10,000 (selling expenses) -Rs. 1,15,000 =Rs. 80,000.