Albert and David are in partnership, sharing profits and losses in the ratio 3:2. Under the terms of the partnership agreement, David is entitled to a salary of $8,000. The partnership statement of profit or loss for the year to 30 November 20X4 reported a profit of $16,000.
What is David's share of the profit?
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Partnership
5y ago#1So, salaries are awarded first. That's the case even if there isn't enough profit, in which case the resultant deficit would be split in the PSR.
Here, that isn't a problem. David is awarded 8000, leaving 16 - 8 ie 8000 profits to be split in the 3:2 ratio. David gets 2/5 x 8000 = 3200. In total he gets 8000 (sal) + 3200 = 11200.
Thank you sir.
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