ACCA FA2 PARTNERSHIP PROFIT 1
Alex and Jose are in partnership. Under the terms of the partnership, alex is entitled to a salary of $14,000 per annum. In the year to 31 December 20X1, the net profit of the partnership was $70,000. Interest on capital and interest on drawings for the year have been calculated as:
| Alex | Jose | |
| Interest on capital | 8,000 | 4,000 |
| Interest on drawings | 4,000 | 2,500 |
What is the residual profit for the year to 31 December 20X1?
Suggested Solution.
| Partnership Profit | 70,000 |
| less Interest on capital -Alex | (8,000) |
| less Interest on capital -Jose | (4,000) |
| less Salary -Alex | (14,000) |
| Add Interest on drawings - Alex | 4,000 |
| Add Interest on drawings - Jose | 2,500 |
| Residual profit for the partnership | 50,500 |
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