Concept explainers
Rajan, Rashmi and Richa are partners. The
Rajan $50,000
Rashmi $40,000
Richa $40,000
Rajan, who manages the business, will receive a bonus of 25% of the profit in excess of $90 000 after partners’ interest and salary allowances have been deducted.
Residual profits will be divided:
Rajan ½ (half)
Rashmi 1/3 (one third)
Richa 1/6 (one sixth)
During the current year their average capital balances were as follows:
Rajan $250,000
Rashmi $150,000
Richa $90,000
Required
Prepare a schedule showing how profit will be divided among the three partners if the profit for the year before the adjustment is $320,000.
Partnership is a form of business in which two or more persons come together to form a common entity. Such entity is known as a partnership firm. Partnership can be of following types:
- Limited Liability Partnership
- Unlimited Partnership
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