David, Anthonoy and Rich are partners sharing residual profits in the ratio of 3:2:1. The partnership agreement provides for 8% interest on capital and a salary for Anthony of 80,000 per annum. Profit for 2016 was 840,000 and the year-end balances on partner's capital account are as follows: David, 200,000; Anthony, 150,000 and Rich, 120,000. What was Rich's share of residual profit for 2016? a.) 120,400 b.) 126,670 c.)130,000 d.)140,000
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
David, Anthonoy and Rich are partners sharing residual profits in the ratio of 3:2:1. The partnership agreement provides for 8% interest on capital and a salary for Anthony of 80,000 per annum. Profit for 2016 was 840,000 and the year-end balances on partner's capital account are as follows: David, 200,000; Anthony, 150,000 and Rich, 120,000. What was Rich's share of residual profit for 2016?
a.) 120,400
b.) 126,670
c.)130,000
d.)140,000
Step by step
Solved in 2 steps with 2 images
