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Hi, I have a question in F3 partnership can you help me to settle it?
X,Y and Z are in partnership, sharing profits in the ratio 2:2:1. X is allowed an annual salary of $10000. Y has made a loan to the partnership on which the partnership pays interest of $5000 each year. Profit fo the year before appropriations is $150000.
What is Z’s total appropriaion of profit for the year?
My answer is $27000 but the exact answer is $28000 can you explain it to me?
TQThe figure of “Profit for the year” is after expenses. The loan interest is an expense so has already been deducted in arriving at the figure of 150,000.
The salary for X comes off the 150,000 as a preferential share of the profit.
That leaves 140,000 available for appropriation
Z is entitled to 1/5 of that 140,000 = $28,000
But why have you posted this on the F7 “Ask the tutor”?
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