Maxwell is trying to decide whether to accept a salary of ₱40,000 or a salary of ₱25,000 plus a bonus of 10% of profit after salaries and bonus, as a means of allocating profit among partners. Salaries traceable to the other partners are estimated to be ₱100,000. What amount of profit would be necessary so that Maxwell would consider the choices to be equal?
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Maxwell is trying to decide whether to accept a salary of ₱40,000 or a salary of ₱25,000 plus a bonus of 10% of profit after salaries and bonus, as a means of allocating profit among partners. Salaries traceable to the other partners are estimated to be ₱100,000. What amount of profit would be necessary so that Maxwell would consider the choices to be equal?
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