In its first year of operations, A and B's partnership business earned profit of P2,500,000. It was agreed that A is to have an annual salary allowance of P100,000 and a 20% bonus based on profit after deducting the salary and the bonus. However, there has been no stipulation on how the remaining profit is to be shared between A and B. A contributed P300,000, while B contributed P500,000. Which of the following statements is correct? A will receive a greater share in the partnership profit. b. B will receive a greater share in the partnership profit. C. A and B will receive the same amounts. a. С. d. The problem is vague and grossly erroneous.
In its first year of operations, A and B's partnership business earned profit of P2,500,000. It was agreed that A is to have an annual salary allowance of P100,000 and a 20% bonus based on profit after deducting the salary and the bonus. However, there has been no stipulation on how the remaining profit is to be shared between A and B. A contributed P300,000, while B contributed P500,000. Which of the following statements is correct? A will receive a greater share in the partnership profit. b. B will receive a greater share in the partnership profit. C. A and B will receive the same amounts. a. С. d. The problem is vague and grossly erroneous.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:4. In its first year of operations, A and B's partnership business
earned profit of P2,500,000. It was agreed that A is to have an
annual salary allowance of P100,000 and a 20% bonus based
on profit after deducting the salary and the bonus. However,
there has been no stipulation on how the remaining profit is to
be shared between A and B. A contributed P300,000, while B
contributed P500,000. Which of the following statements is
correct?
A will receive a greater share in the partnership profit.
b. B will receive a greater share in the partnership profit.
A and B will receive the same amounts.
a.
С.
d. The problem is vague and grossly erroneous.
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