Zambian Open University Subject: Financial Information System (BBAC 241). Lectur

Question

Zambian Open University Subject: Financial Information System (BBAC 241). Lecturer: M. Chinyimba Assignment 2 Semester 2 2018 Question 1 Akapelwa, Bwalya, and Chirwa are in partnership sharing profits four-sevenths, two-sevenths, and one-seventh, respectively. It is provided that in no year should Chirwa’s share of profit ever be less than K1 500. However, should that happen, Akapelwa and Bwalya should contribute a portion of their own share of profit to make up for the shortfall in Chirwa’s share. To achieve the above, a ratio of 4:2, respectively, will have to be applied. You are required to prepare a statement showing the appropriation of the year’s profit amounting to K5 642 between the partners.

Explanation / Answer

Profit appropriation between partners Akapelwa Bwalya Chirwa Share in profits 0.571 0.285714286 0.142857143 Division of Profits of K 5642 3224 1612 806 Chirwa minimum profit 1500 Shortage of profit 694 Contribution by two partners in ratio of 4:2 of K694 462.6666667 231.3333333 694 Profits appropriation for partners 2761.33 1380.67 1500.00

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