Question 1b CLO 3 6 marks Using the stated ratio and capital

Question 1-b. (CLO 3, 6 marks) Using the stated ratio and capital balances method on allocating the profit and loss to the partners, how much is the profit and loss of Siddique and Mustafa. Assume the partnership has AED 219,180 income. In the partnership agreement, Siddique is to receive 2/3 and Mustafa 1/3 of partnership income and loss.

Solution

as per the capital balance method

the profit or loss of the partnership is allocated to the partners in the given ratio of 2:1

therefore siddique will get 219180*2/3 = 146120

mustafa will get 219180*1/3 = 73060