The partnership agreement of partners A, B and C stipulates the following: • A shall receive a salary of P40,000. Interest of 10% shall be computed on the partners' capital contributions of P40,000, P100,000 and P200,000. • Balance is divided among the partners on a 2:3:5 ratio. However, C is guaranteed a minimum share of P40,000, inclusive of interest, if the partnership earns profit. How much is the minimum level of profit necessary so that A shall receive a total of P50,000, inclusive of salary, interest and share in remaining profit, and C shall also receive his guaranteed minimum share?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The partnership agreement of partners A, B and C stipulates the following:
A shall receive a salary of P40,000.
Interest of 10% shall be computed on the partners' capital contributions of P40,000, P100,000 and
P200,000.
• Balance is divided among the partners on a 2:3:5 ratio. However, C is guaranteed a minimum
share of P40,000, inclusive of interest, if the partnership earns profit.
How much is the minimum level of profit necessary so that A shall receive a total of P50,000,
inclusive of salary, interest and share in remaining profit, and C shall also receive his guaranteed
minimum share?
Transcribed Image Text:The partnership agreement of partners A, B and C stipulates the following: A shall receive a salary of P40,000. Interest of 10% shall be computed on the partners' capital contributions of P40,000, P100,000 and P200,000. • Balance is divided among the partners on a 2:3:5 ratio. However, C is guaranteed a minimum share of P40,000, inclusive of interest, if the partnership earns profit. How much is the minimum level of profit necessary so that A shall receive a total of P50,000, inclusive of salary, interest and share in remaining profit, and C shall also receive his guaranteed minimum share?
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