Question

$A,B$ and $C$ are partners in a firm. $A$ and $B$ are to get annual salary of $Rs.1,20,000p.a.$ each as they are fully involved in the business. Net profit for the year is $Rs.4,80,000$. Determine the share of profit to be credited to each partner.

Answer 1

Net Profit for the year= 480000

Salary to A= 120000

Salary to B= 120000

Hence, total profit after providing salary to both partners= 480000-120000-120000 = 240000

Distribution of profit:

A's share= 240000 * 1/3= 80000

B's share= 240000 * 1/3= 80000

C's share= 240000 * 1/3= 80000