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Hello Jilly,
For the following question about the profit to the partners .Should we always assume that when we are asked for the profit it should include the salary and interest always?
and what else the profit should include?
Thanks,
Partnerships
Question
2. Xavier and Yolanda have traded in partnership for several years. Their profit-sharing arrangements are:Xavier Yolanda
Annual salaries £6,700 £4,400
4% interest on capital account balances of £33,000 £27,000
Profit-sharing ratio 2 :1
The tax-adjusted trading profits for the year ended 31 March 2024 were £42,300.What amount of profit will be allocated to Xavier for the year ended 31 March 2024?
A.£28,820
B.£27,500
C.£27,220
D.£28,200Have you watched the chapter on partnerships? It clearly gives you the answer there
Hi,
So by default the profit is total of everything allocated to the partner (like salary,interest,etc)
only otherwise if we are told specifically to calculate, like the profit after salary and interest.
is it right?
Thanks,
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