Multiple choice

(i) X and Y enter into a joint venture sharing profit & loss in the ratio of 3 : 2. (ii) X is entitled to get 1% commission on purchase and Y is entitled to get 5% commission on sales. (iii) X purchased goods for Rs. 4, 00, 000 and sent the same to Y. Supplier allowed a cash discount of 5%. (iv) X drew a bill on Y for an amount equivalent to 80% of the original cost of goods. X got it discounted at Rs. 3, 00, 000. (v) Y sold 50% goods for Rs. 5, 00, 000 and paid Rs. 4, 000 towards selling & administration expenses and insurance and Rs. 1, 000 still outstanding. Y allowed a cash discount of 5% to a customer to whom goods were sold for Rs. 2, 00, 000. Bad debts amounted to Rs. 16, 000. (vi) 50% of balance goods are taken over by Y at 60% of cost. (vii) Remaining goods were destroyed by fire and insurance claim was received by Y to the extent of 60%.

The final remittance is

  1. Rs. 1, 90, 000 by X to Y

  2. Rs. 1, 90, 000 by Y to X

  3. Rs. 1, 80, 000 by Y to X

  4. Rs. 1, 80, 000 by X to Y
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This is a complex joint venture problem. X's effective cost: 4,00,000 - 20,000 (5% discount) + 4,000 (1% commission) = 3,84,000. Y receives: 5,00,000 (50% sales) - 25,000 (5% discount) - 4,000 (expenses paid) - 1,000 (expenses outstanding) - 16,000 (bad debts) - 25,000 (5% commission on sales) = 4,29,000. Y takes over 50% balance at 60% cost: 1,92,000 - 72,000 (40% discount) = 1,20,000. Fire loss on remaining 50%: 1,92,000 × 40% uninsured = 76,800. Final settlement: Y owes X the difference after all adjustments, resulting in Rs. 1,80,000 by Y to X.

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