Hans, Lance, Arthur and Sidd own a publishing company that they operate as a partnership....
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Accounting
Hans, Lance, Arthur and Sidd own a publishing company that they operate as a partnership. Their agreement includes the following:
- Hans will receive a salary of P20,000 and a bonus of 3% of income after all the bonuses.
- Lance will receive a salary of P10,000 and a bonus of 2% of income after all the bonuses.
- All the partners are to receive the following: Hans P5,000, Lance P4,500, Arthur P2,000 and Sidd P4,700, representing 10% interest on their average capital balances.
- Any remaining profits are to be divided equally among the partners.
- Partnership reports a profit of P40,000.
How much is Lances share in the profit if profit is distributed in the following order of priority: Interest on capital, then bonuses, then salary, and then according to P/L ratio?
A. P12,560.00
B. P13,235.75
C. P12,433.00
D. P12,830.75
They said the answer is letter A. Can somebody show me the solution? Thank you so much!
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