Question

Barbs is a partner with an annual salary of P24,000, but actually draws P3,000 per month. The other partner has an annual salary of P35,000, but draws P2,000 per month. How much is the total annual salary that should be used to allocate profit between the partners?

a. P119,000
b. P 71,000
c. P 59,000
d. P 61,000

Answer 1

The total annual salary that should be used to allocate profit between the partners is P59,000.

Step-by-step explanation:

To determine the total annual salary that should be used to allocate profit between the partners, we need to consider the actual monthly draws of each partner.

For the first partner, although their annual salary is P24,000, they only draw P3,000 per month. So, their total annual draw is P3,000 x 12 = P36,000.

For the second partner, their annual salary is P35,000, but they draw P2,000 per month. So, their total annual draw is P2,000 x 12 = P24,000.

To find the total annual salary, we add the annual draws of both partners:

P36,000 + P24,000 = P60,000

Therefore, the correct answer is c. P59,000 as the total annual salary that should be used to allocate profit between the partners.