On January 1, 20xx, A, B, C and D formed 5G Trading Co., a partnership with capital contributions as follows: A, P500,000; B, P250,000; C, P250,000; and D, P200,000. The partnership contract provided that each partner shall receive a 5% interest on contributed capital, and that A and B shall receive salaries of P50,000 and P30,000 respectively. The contract also provided that C shall receive a minimum of P2,500 per annum, and D a minimum of P60,000 per annum, which is inclusive of amounts representing interest and share of remaining profits. The balance of the profit shall be distributed to A, B ,C and D in a 3:3:2:2 ratio. What amount must be earned by the partnership, before any charge for interest and salaries, so that A may receive an aggregate of P125,000 including interest, salary and share of profit? P166667 P300,000 P323,333
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.
On January 1, 20xx, A, B, C and D formed 5G Trading Co., a partnership with capital contributions as follows: A, P500,000; B, P250,000; C, P250,000; and D, P200,000. The partnership contract provided that each partner shall receive a 5% interest on contributed capital, and that A and B shall receive salaries of P50,000 and P30,000 respectively. The contract also provided that C shall receive a minimum of P2,500 per annum, and D a minimum of P60,000 per annum, which is inclusive of amounts representing interest and share of remaining profits. The balance of the profit shall be distributed to A, B ,C and D in a 3:3:2:2 ratio.
What amount must be earned by the partnership, before any charge for interest and salaries, so that A may receive an aggregate of P125,000 including interest, salary and share of profit?
P166667
P300,000
P323,333
Step by step
Solved in 3 steps
