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A Level Accounting (9706)•9706/13/M/J/22
Question 16 from 9706/13/M/J/22

Explanation

Partnership profit appropriation for Y

Steps:

  • Subtract Y's salary from gross profit: 140,000−140,000 - 140,000−16,000 = $124,000.
  • Compute Y's share of 124,000in2:10ratio:124,000 in 2:10 ratio: 124,000in2:10ratio:124,000 × (2/10) = $24,800.
  • Compute interest on Y's capital: 20,000×620,000 × 6% = 20,000×61,200.
  • Add components for Y's total: 16,000+16,000 + 16,000+24,800 + 1,200=1,200 = 1,200=42,000.

Why C is correct:

  • It applies the partnership formula for Y's total share (salary + interest on capital + ratio share of profit after salary deduction).

Why the others are wrong:

  • A ignores salary and interest, taking only ratio share of net profit after all appropriations.
  • B equals Y's starting capital balance, not profit share.
  • D overstates by taking salary plus ratio share of gross profit without deductions.

Final answer: C

Topic: Preparation of financial statements

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