A and B entered into a joint venture agreement to share profit and los...
Explanation:
Joint Venture Agreement: A and B entered into a joint venture agreement to share profit and losses in the ratio of 2:1.
A's Contribution: A supplied 100 radio sets worth Rs. 100,000 to B, incurring expenses of Rs. 5,000 for freight and insurance.
B's Contribution: B sold 95 radio sets for Rs. 120,000 and took over 5 radio sets.
Calculation of Profit/Loss:
Total Cost: The total cost incurred by A for supplying 100 radio sets is as follows:
- Cost of 100 radio sets = Rs. 100,000
- Expenses incurred for freight and insurance = Rs. 5,000
- Total cost = Rs. 105,000
Total Revenue: The total revenue generated by B for selling 95 radio sets is Rs. 120,000.
Profit/Loss: The profit or loss on the venture can be calculated as follows:
- Total revenue = Rs. 120,000
- Total cost = Rs. 105,000
- Profit = Rs. 15,000
- Profit sharing ratio = 2:1
- A's share of profit = (2/3) x Rs. 15,000 = Rs. 10,000
- B's share of profit = (1/3) x Rs. 15,000 = Rs. 5,000
- B also took over 5 radio sets, which is not considered in the profit/loss calculation.
Final Answer: The profit on the venture will be Rs. 15,000, and the profit sharing will be A: Rs. 10,000 and B: Rs. 5,000. However, since B also took over 5 radio sets, the actual profit on the venture will be slightly higher, which is Rs. 20,250 (Rs. 15,000 + 5 radio sets x Rs. 450 per radio set).
A and B entered into a joint venture agreement to share profit and los...
20250
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