Question

Aris, Ria and Amor have the following profit and loss agreement: Aris and Ria are allowed salaries of P40,000 each; Amor gets a bonus of 10% of profit after salaries and bonus; balance in the ratio of 3:4:3 to Aris, Ria and Amor, respectively. The partnership earned a profit of P91,000. How much is the profit share of Amor?

a. P 4,000
b. P 4,070
c. P 9,100
d. P27,300

Answer 1

Amor's profit share from the partnership agreement, after following the specified steps to deduct salaries and calculate the bonus, is found to be P 4,070. The correct answer is option (B).

Step-by-step explanation:

To answer this question, the following steps need to be taken: Calculate the total salaries for Aris and Ria. Compute Amor's 10% bonus based on the remaining profit after the salaries are accounted for. Distribute the balance of the profit according to the 3:4:3 ratio between Aris, Ria, and Amor.

To solve for the profit share of Amor, first deduct the total salaries of Aris and Ria from the profit: P91,000 - (P40,000 + P40,000) = P11,000. Next, Amor gets a bonus of 10% of the remaining profit: 10% of P11,000 = P1,100. The remaining profit to be distributed in the ratio of 3:4:3 is now P9,900.

Amor's share from this distribution will be 3/10 of P9,900 = P2,970. Therefore, Amor's total profit share is the bonus plus the profit ratio share: P1,100 + P2,970 = P4,070. Consequently, the correct answer is b. P 4,070.