LL, MM and PP are partners with capitals of P40,000; P25,000 and P15,000 respectively. The partnership agreement provides that each partner shall be allowed 5% interest on his capital, that LL shall be allowed an annual salary of P8,500, and that MM shall be entitled to a minimum of P14,000 per annum including amounts allowed as interest on capital and as share of profit. Profit after interest and salary allowances is to be divided between LL, MM and PP as 5:3:2 respectively. What amount
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.
LL, MM and PP are partners with capitals of P40,000; P25,000 and P15,000 respectively. The
shall be allowed an annual salary of P8,500, and that MM shall be entitled to a minimum of P14,000
per annum including amounts allowed as interest on capital and as share of profit. Profit after interest
and salary allowances is to be divided between LL, MM and PP as 5:3:2 respectively. What amount
must be earned by the partnership during 2021 before charges for interest or salary if LL is to receive
an aggregate of P20,000 to include interest, salary, and share of profit?
a. P38,000
b. P50,000
c. P38,550
d. P35,880
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