Calculate the amount that must be earned by the partnership

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Problem

M Co., a partnership was formed on January 1, 2016, with four partners, Joy, Ash, Elisha and Gabrielle. Capital contributions were as follows: Joy - P1,000,000; Ash - P500,000; Elisha - P500,000; and Gabrielle - P500,000. The partnership agreement provides that each partner shall receive 5% interest on the amount of her capital contribution. In addition, Joy and Ash are to receive salaries of P100,000 and P60,000, respectively, which are to be charged as expenses of the business. The agreement further provides that Elisha shall receive a minimum of P120,000 per annum from the partnership, including amounts allowed as interest on capital and their respective shares of profits. The balance of the profits to be shared in the following proportions: Joy - 30%; Ash - 30%; Elisha - 20%; Joy - 20%. Get the instant assignment help. Calculate the amount that must be earned by the partnership during 2016, before any charge for interest on capital or partners' salaries, in order that Joy may receive an aggregate of P250,000, including interest, salary and share of profits.

Reference no: EM133922715

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