FRA June 2006 Section 2 Task 2.5 HELP!

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Layla
Layla Registered Posts: 40 Regular contributor ⭐
in AAT Level 3 (Level 6 in Scotland)
Please can someone help me with this task?

The part i cant work out is how to share out the profit,
i have downloaded the answers but i still cant work out how they come to those figures..


for those of you that dont have the exam paper, this is the information i have:

Profit for Distribution: £84600.00
to be shared out as follows-

Ade 40%
Jon 40%
Pat 20% please note that Pat joined 01/02/06 and the year end was 30/04/06.

the answers i have is-

Ade
01/05/05-31/01/06 £34650
01/02/06-30/04/06 £6120

Jon
01/05/05-31/01/06 £34650
01/02/06-30/04/06 £6120

Pat
01/02/06-30/04/06 £3060

How do they get to those figures?

Exam is tomorrow, please help!

Comments

  • LynB
    LynB Registered Posts: 8 New contributor 🐸
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    The profit share until January 31st 2006 is Ade 50% & Jon 50%, so if Pat joined on the st Feb, the first 9 mopnths of the partnership has to be shared 50/50 between Ade & Jon. Therefore you divide the profit of £84,600 by 12*9 which would give you £63,450 which is then divided equally between Ade & Jon. Therefore the remainder of the profit of £21,150 is the shared out for the remiander period of 3 months at Ade 40%, Jon 40% and Pat 20%. So Ade would get £8460,Jon £8460 and Pat £4230. Add the fist share of profit of Ade & Jon of 31725+8460=40185 each for Ade & jon and £4230 for Pat give you a total of £84,600. Hope this helps
  • LynB
    LynB Registered Posts: 8 New contributor 🐸
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    Sorry Layla, what you need to do first is take off salaries, interests paid on capital then share out using the same as above. First divide by 12 and multiply by 9 for the fist nine months.
  • Layla
    Layla Registered Posts: 40 Regular contributor ⭐
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    Thanks very much...
    think ive been revising too much and my brain is overloaded !

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