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Profit is forty eight thousand rupees and total partner salary is sixty thousand rupees. Deed says salary is payable proportionately up to available profit. A salary is forty thousand and B salary is twenty thousand. How much will A get?

Answer and explanation

Correct answer: Thirty two thousand rupees

The governing concept is proportionate distribution of a limited appropriation when the available profit is less than the total salary entitlement. The claimed salaries are Rs 40,000 for A and Rs 20,000 for B, giving a total claim of Rs 60,000. Available profit is only Rs 48,000, so it must be divided in the salary ratio 40,000:20,000, or 2:1. A’s share is therefore Rs 48,000 × 40,000/60,000 = Rs 32,000. Option A is correct. Option B is A’s full claim rather than the available proportion, while C and D use incorrect proportions.

Related tags

Partner SalaryInsufficient ProfitProportionate DistributionProfit DistributionPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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