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A, B and C share profits in the ratio 2:2:1. The total profit is ₹1,25,000. After paying A a salary of ₹15,000 and B a commission of ₹10,000, what will be C’s share of the remaining profit?

Answer and explanation

Correct answer: ₹20,000

First deduct A’s salary and B’s commission from the total profit: ₹1,25,000 − ₹15,000 − ₹10,000 = ₹1,00,000. This remaining profit is divided in the ratio 2:2:1. Since the total of the ratio is 5, C receives \(1/5\) of the balance: ₹1,00,000 × \(1/5\) = ₹20,000. Therefore, option A is correct. Exam tip: Deduct appropriations such as salary and commission before distributing the remaining profit in the profit-sharing ratio.

Related tags

Partnership AccountsProfit SharingProfit AdjustmentsAppropriation Of ProfitRatio DistributionAdjustmentsPartnership Accounts Basic ConceptsAccountancy

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