Question

Adams invested $40,000 and Cook invested $30,000 in their partnership business. They share profits and losses in proportion to their investments. What amount should each receive of the $16,800 profit earned last year?​

Answer 1

Adams invested $40,000, and Cook invested $30,000. The total investment in the business is $40,000 + $30,000 = $70,000.

The profit of $16,800 will be divided between them in proportion to their investments.

Adams' share of the profit = (Adams' investment / Total investment) * Profit

= ($40,000 / $70,000) * $16,800

= $9,600

Cook's share of the profit = (Cook's investment / Total investment) * Profit

= ($30,000 / $70,000) * $16,800

= $7,200

Therefore, Adams should receive $9,600 of the profit, and Cook should receive $7,200 of the profit.