help on homework please

morning

i am stuck and i have got these questions wrong previously. please can some one point me in the right direction.

1) A partnership makes a net profit for the year of £100,000. Partner A is entitled to £20,000 salary and 40% of the residual profit. Partner B is entitled to a salary of £10,000 and the balance of the residual profit. Draw up their appropriation account and current accounts (ignore opening balances).

2) A partnership makes a net profit for the year of £45,000. The total capital contributed by all the partners is £80,000. This earns interest in the appropriate account of 5% per annum. Residual profits are shared in the ration A3: B3: C4. Calculate A’s share of the residual profit after interest on capital.

if someone could help i would really appreciate it. my head is fuzzled from studying DFS and i am past help no wi think :)

Thanks in advance

Tracy

Comments

  • taskey
    taskey Registered Posts: 1,800
    can anyone help me at all?

    Tracy
  • lisnic
    lisnic Registered Posts: 141 ? ? ?
    ok

    1) you allocate salaries before profits

    so firstly salaries

    partner a = 20,000
    partner b= 10,000

    this is 30,000 from the 100,000 profit

    so you have 70,000 profit left to apportion

    partner a = 70,000*40% = 28000
    partner b = 70000-28000=42000

    so for
    partners a total apportionment of profits = 48000
    partners b total apportionment of profits = 52000

    2) like above with salaries capital interest is deducted from total profits before final apportionment

    so 80000*5% = 4000 capital interest (it doesnt say how this is allocated to partners)

    so 45000-4000=41000 residual profits

    partner a = 41000 * 3/10 = 12,300 share of residual profits

    hth!
  • taskey
    taskey Registered Posts: 1,800
    fab, thanks for your help. I had the 1st one right, but i had added the interest, not deducted it.

    DUH!!!

    Tracy
Privacy Policy