Multiple choice

a purchased goods costing 4,00,000. B sold the goods for 5,60,000. Unused material costing 20,000 taken over by A at 16,000. A is entitled to get 1% commission on purchase. B is entitled to get 2% commission on sales. Profit sharing ratio equal. A's share of profit on venture will be ___________.

  1. 80,400.

  2. 80,800.

  3. 81,200.

  4. None.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The total credit of the joint venture includes sales of 5,60,000 and the material taken over by A at 16,000, summing to 5,76,000. The total debit includes purchases of 4,00,000, A's commission of 4,000 (1% of purchases), and B's commission of 11,200 (2% of sales), summing to 4,15,200. The net profit is the difference of 1,60,800, which is shared equally, giving A a share of 80,400.

AI explanation

The net profit is calculated as sales of 5,60,000 minus the purchase cost of 4,00,000, yielding a gross profit of 1,60,000. We then adjust for A's 1% commission on purchases of 4,000, B's 2% commission on sales of 11,200, and the 4,000 loss on the unused material taken over by A, resulting in a net profit of 1,40,800. A's equal share of this profit is 1,40,800 divided by 2, which equals 70,400. Adding A's 4,000 commission and the 6,000 loss from the materials to his 70,400 profit share gives A a total share of 80,400.

Keep practicing — related questions