ICAEW AF · Chapter 12 · Question 4 of 11
Amir and Beth are in partnership. Their agreement provides for: a salary of £12,000 per year for Amir; interest on capital at 5% per year; and residual profits shared Amir:Beth 3:2. Capital balances are Amir £80,000 and Beth £60,000. Profit for the year is £96,000. What is Amir's total share of the profit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) £62,200
Explanation
Interest on capital: Amir £4,000, Beth £3,000. Residual profit = £96,000 - salary £12,000 - interest £7,000 = £77,000. Amir's share of the residual = 3/5 x £77,000 = £46,200. Amir's total = £12,000 + £4,000 + £46,200 = £62,200.
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