Question

PJ, Ian, and Lemuel are partners in an accounting firm. Their capital account balances at year-end were PJ, P180,000; Ian, P220,000; and Lemuel, P100,000. They share profits and losses on a 4:4:2 ratio, after the following special terms: (a) Partner Ian is to receive a bonus of 10% of net income after the bonus (b) Interests of 10% shall be paid on that portion of a partner’s capital in excess of P200,000 (c) Salaries of P20,000 and P24,000 shall be paid to partners PJ and Lemuel , respectively. Assuming a net income of P88,000 for the year, the total profit share of partner Lemuel was

Answer 1

The total profit share of partner Lemuel was:

Salaries paid to partners Lemuel	P 24,000
Lemuel's share of remaining profit after special terms	P 6,640
(P33,200 * 2/10)
Total profit share of partner Lemuel	P30,640

The total profit share of partner Lemuel was P30,640

Remaining Profit or Income is calculated as follows:

Net Income	P88,000
Less: Partner Ian is to receive a bonus of 10% of net income (P88,000 *10%)	(P8,800)
	P79,200
Less:Interests of 10% paid on partner’s capital in excess of P200,000 (P220,000 - P200,000)*10%	( P2,000)
	P77,200
Less: Salaries paid to partners PJ and Lemuel
($P20,000 +  P24,000 )	(P44,000)
Remaining Profit or Income	P33,200