ACCA FA2 PARTNERSHIP PROFIT 2
Luis and David are in partnership sharing profits and losses in the ratio 3:2. David is entitled to a salary of $14,000 and interest on capital is paid at a rate of 8% per annum. The partner's capital balances are :
| Luis | 10,000 |
| David | 40,000 |
The partneship statement of profit or loss for the year shows a profit of $70,000.
How much of the total profit is Luis entitled to?
Suggested Solution.
| Partnership Profit | 70,000 |
| less Interest on capital -Luis | (800) |
| less Interest on capital -David | (3,200) |
| less Salary -David | (14,000) |
| Residual profit for the partnership | 52,000 |
| Residual profit for the partnership | 52,000 |
| Lui's share in residual profit | 31,200 |
| add Interest on capital -Luis | 800 |
| Total profit Luis is entitled to | 32,000 |
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