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1. M and N enter into a joint venture where M supplies goods worth Rs.6000 and spends Rs.300 on expenses. N sells the entire lot for Rs.7,800 meeting selling expenses amounting to Rs.300. Profit sharing ratio equal. N remits to M the amount due. The amount of remittance will be:
Total Profit = 7800 – (6000 + 300 +300) = 7800- 6600 = 1200. So, M & N will share profit of Rs 600 each. So, N will remit Rs 7800 – 300 (exp incurred by him) – 600 (his share of profit) = 6900
So, option (a) is correct
2. When unsold stock is taken away by a co-venturer, then account is debited:
(a) Joint Stock
(b) Joint Venture
(c) Joint e Bank Account
(d) Co – venturers capital account
When unsold stock is taken away by a co-venturer, then Co – venturer’s capital account is debited. So, option (d) is correct
3. A bought goods costing 2,00,000. B sold 4/5th of goods for Rs.2,50,000. Balance goods were taken over by B at cost less 20%. Find out profit on venture:
Cost of goods sold = 2,00,000 x 4/5 = 1,60,000. So, profit on goods sold = 2,50,000 – 1,60,000 = 90000. Loss on goods taken by B= (2,00,000 – 1,60,000) x 20% = 8000. Hence net profit = 90000 – 8000 = 82000. Hence option (a) is correct.
4. Joint venture account is a
(a) Personal account
(b) Real account
(c) Nominal account
Joint venture account contains all entries of Income and Expenses related to the Joint Venture. So it is a Nominal Account. Hence option (c) is correct.
5. A in joint venture with B, purchased goods costing Rs.2,00,000. B sold most of the goods for Rs.2,80,000. Unsold material costing Rs.10,000 was taken over by A at Rs.8,000. A is entitled to get 1% commission on purchases. B is entitled to get 2 % commission on sales, Profit on venture will be :
Cost of goods sold = 200000-10000=190000. Sale value of goods sold – 2,80,000. So Gross Profit=280000-19000=90,000. Expenses: Commission on Purchase: 1% of 200000=2000. Commission on Sale 2% of 280000=5600. Loss on materials taken over 10000-8000 =2000. So, net profit = 90000 – (2000+5600+2000) = 90000-9600=80400. Hence option (d) is correct.
6. The parties to joint venture are called
(c) Principal and agent
The parties to joint venture are called Co-venturers. Hence option (a) is correct.
7. When co-ventures initially contribute for a joint venture which account should be debited in case when separate set of books are maintained:
(a) Purchases A/c
(b) Joint ventures A/c
(c) Venture’s Capital A/c
(d) Joint Bank A/c
When separate set of books are maintained for Joint Venture, Joint Bank Account is debited when co-ventures initially contribute for a joint venture.
8. A and B enter into a joint venture to underwrite the shares of K Ltd. K Ltd. make an issue of 1,00,000 equity shares of Rs.10 each. 80% of issues are subscribed by the party. The profit sharing ratio between A and B is 3 : 2. The balance unsubscribed shares are purchased by A and B in profit sharing ratio. How many shares are purchased by A ?
(a) 80,000 shares
(b) 72,000 shares
(c) 12,000 shares
(d) 8,000 shares
80 % subscribed. So, 20% of 100000 shares = 20000 shares remain unsubscribed. So, A takes up 20000 x (3/5) = 12000 shares. Hence option (c) is correct.
9. 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 to joint 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
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 Income of Joint Venture hence credited to joint venture account.
10. X and Y enter into a joint venture. X supplied goods to Y worth Rs.70,000. X incurred expenses amounting to Rs.6,000 on joint venture. The venture resulted in a total profit of Rs.15,000 of which their ratio of distribution is 2 : 1. The entire sale proceeds were received by Y. Amount received by X from Y in final settlement will be:
X will be entitled to 70000( Cost of goods supplied) + 6000 (expenses incurred) + 10000 (2/3rd of Profit of 15000) = 86000. Hence option (b) is correct.
10. Memorandum joint venture account is prepared:
(a) When separate set of books is maintained
(b) When each co-venturer keeps record of all the transactions himself .
(c) When each co-venturer keeps records of their own joint venture transaction
(d) None of these
Memorandum joint venture account is prepared When each co-venturer keeps records of their own joint venture transaction. Hence option (c) is correct.
11. X maintains all records in his books. X spends Rs.10000 in Cash on account of joint venture. Which account would be credited in the Books of X.
(a) Memorandum Venture
(b) Joint Venture
(c) Co – Venturers
In the books of X, Cash Account would be credited. Hence option (d) is correct.
12. A and B enter into a joint venture sharing profits and losses equally. A bought 5000 Kg of rice @ Rs.25/Kg. B bought 1000 Kg of wheat @ Rs.30/Kg. A sold 1000 Kg of wheat @ Rs.35/Kg and B sold 5000 Kg of rice @ Rs.30/ Kg.
The profit on Joint venture will be:
Profit on sale of rice = 5000 x 5=25000. Profit on sale of wheat = 1000 x 5=5000. So Profit on Joint Venture is 25000+5000=30000. Hence option (d) is correct.
13. Karim and Rahim enter a joint venture sharing profits in 2: I. Karim purchases goods of Rs.2,00,000 and Rahim sells goods of Rs.2,50,000. Karim gets 1% commission on purchase and Rahim gets 5% commission on sales. Find profit on joint venture.
Commission Expenses = 1% of 20000 = 2000 + 5% of 250000=12500 = 14500
Profit = 50000-14500=35500. So Hence option (a) is correct.