Calculating John's Share in Partnership Profit
What will be John's share in the total profit of R19,000 earned at the end of 2 years from the start of the partnership?
A) R4,700 B) R5,200 C) R5,700 D) R4,500
Final answer:
John's share in the total profit is R5,200.
Explanation:
In this partnership, the profit is divided based on the amount of time and money invested by each partner. To calculate John's share in the total profit, we first need to determine the proportion of time that John and Peter have invested. Since Peter and John started the partnership together, their proportion of time is the same. After six months, Jane joined, so her proportion of time is different. The proportion of time for John and Peter is 2 years, and for Jane, it is 1.5 years (6 months = 0.5 years).
To calculate their shares, you need to multiply their time proportion by their investment and sum it up for all partners:
- Total investment = $12,000 + $9,000 + $12,000 = $33,000
- John's share = $19,000 x (2/3) x ($9,000 / $33,000)
After performing the calculations, John's share in the total profit is R5,200.