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Sara, Zainab and Ameera established a partnership on January 1, 2019. They invested cash of AED...

Sara, Zainab and Ameera established a partnership on January 1, 2019. They invested cash of AED 300,000; AED400,000 and AED500,000 respectively. Zainab also invested her private car that had a cost of AED500,000 and accumulated depreciation of AED 120,000. The fair value of the furniture is AED 400,000.

The partnership agreement is as follows:

(i) The net income for 2019 was AED 800,000.

(ii) The wage per hour for each partner is AED 40. The working hours were 1,200; 1,200; and 1,000 hours for Sara, Zainab and Ameera respectively.

(iii) The annual interest is 10% on the beginning capital balance.

(iv) Sara, Zainab and Ameera withdrew AED7,000; AED6000 and AED5,000 per month during respectively during the year.

(v) The remainder is divided as 40%, 20% and 40% respectively for Sara, Zainab and Ameera

Required:

  1.    Determine the amount of net income allocated to each partner for 2019.
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Answer #1

Depreciation is ignored while calculating the net profit since the rates are not provided, if it charged the answer will change accordingly.

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