ICAEW AF · Chapter 12 · Question 5 of 11
Paula and Quentin share residual profits in the ratio 2:1. Quentin receives a salary of £9,000 per year, and interest is charged on drawings: Paula £900 and Quentin £600. The partnership profit for the year is £54,000. What is Quentin's total share of the profit for the year, after deducting his interest on drawings?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) £23,900
Explanation
Interest on drawings is charged to the partners and added to the profit available for appropriation. Residual profit = £54,000 + £900 + £600 - salary £9,000 = £46,500. Quentin's residual share = 1/3 x £46,500 = £15,500. Quentin's total = £9,000 + £15,500 - £600 = £23,900.
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