Multiple choice

A & B enter a joint venture to prepare an advertisement for XYZ Ltd. The XYZ Ltd. agrees to pay Rs $10,00,000$. A & B contribute Rs$1,00,000$ & Rs $1,50,000$ respectively. These amounts are paid into a joint bank account. Payments made out of the joint bank account were: Particulars Rs Purchase of equipment $60,000$ Hire of equipment $50,000$ Wages $4,50,000$ Materials $1,00,000$ Office expenses $50,000$ A paid Rs$20,000$ as licensing fees. On completion, the film was found defective and XYZ Ltd. made a deduction of Rs$1,00,000$. The equipment was taken over by B at a valuation of Rs$20,000$. Separate books were maintained for the joint venture whose profits were divided in the ratio of $2:3$. B's share of profit on joint venture is -

  1. $1,90,000$
  2. $1,14,000$
  3. $76,000$
  4. $1,10,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
AI explanation

Total venture expenses from the joint bank account are 60000 plus 50000 plus 450000 plus 100000 plus 50000, equaling 710000. Adding the 20000 licensing fees paid by A brings total costs to 730000. The revenue from XYZ Ltd after the defect deduction is 900000, and adding the 20000 from the equipment taken over by B gives total inflows of 920000. The total profit is 920000 minus 730000, equaling 190000. B's share of the profit is calculated as 3/5 of 190000, resulting in Rs. 1,14,000.

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