CAPE Accounting Unit 1 · 2013 · Paper 2 · Question 2(b)

Three partners, Khary, Kwame and Kofi, form a partnership (Seventh Heaven) with capital contributions of 200 000, 160 000 and 100 000 respectively. Partnership agreement specifies: - Salary allowances: Khary 160 000, Kwame 100 000, Kofi 100 000 - Interest allowances: 12% on opening capital balances - Residual profit sharing: Khary 60%, Kwame 20%, Kofi 20% First year net income is $741 000.

Show how the partnership income of $741 000 is divided among the three partners, indicating clearly the amounts for interest, salaries, and the residual profit distribution.