Question

Q.5 : Karim and Rahim enter a joint venture sharing profits in 2:1. Karim purchases goods of Rs. 2,00,000 and Rahim sells goods of Rs. 2,50,000. Karim gets 1% commission on purhase and Rahim gets 5% commission on sales. Find profit on joint venture.
A) Rs. 35,500
B) Rs. 36,000
C) Rs. 34,000
D) Rs. 38,000

Q.6 : If separate set of books is maintained and discount is received at the time of purchase of goods then such a discount will be treated as :
A) Income of joint Venture hence credited venture account
B) Expense of Joint Venture hence debited to joint venture account
C) Will not be recorded in books of account
D) Credited to co venturers account

Answer 1

Q-5 Cost of goods purchased by Karim = Rs. 2,00,000

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

Profit on sale = Sale value of goods - Cost of goods

= Rs. 2,50,000 - Rs. 2,00,000

= Rs. 50,000

Commission on Karim = Cost price * rate of commission

= Rs. 2,00,000 * 0.01

= Rs. 2,000

Commission on Rahim = Sale value * rate of commission

= Rs. 2,50,000 * 0.05

= Rs. 12,500

Profit on venture = Total profit - (Commission of Karim + Commission of Rahim)

= Rs. 50,000 - (Rs.2,000 + Rs. 12,500)

= Rs. 50,000 - Rs. 14,500

= Rs. 35,500

Q-6 If seperate set of books is maintained and discount is received at the time of purchase of goods then such a discount is will be treated as Income of joint venture hence credited venture account. Discount received of purchase of goods treated as the income of joint venture and this discount is credited to the venture account.