Question Partner Dy, Pai, and Kwa are in the process of finalizing their profit and loss sharing agreement. They have already agreed that Pai and Kwa are to receive annual salary of P45,000 each. Dy, the managing partner, has two options. Option 1: He will receive an annual salary of P110,000; or Option 2: He will receive an annual salary of P90,000 plus a bonus of 20% of the profit after subtracting their salaries and his bonus. What should be the amount of profit so that Dy would get the same share irrespective of his choice? a. P250,000 b. P300,000 c. P400,000 d. P450,000
Question Partner Dy, Pai, and Kwa are in the process of finalizing their profit and loss sharing agreement. They have already agreed that Pai and Kwa are to receive annual salary of P45,000 each. Dy, the managing partner, has two options. Option 1: He will receive an annual salary of P110,000; or Option 2: He will receive an annual salary of P90,000 plus a bonus of 20% of the profit after subtracting their salaries and his bonus. What should be the amount of profit so that Dy would get the same share irrespective of his choice? a. P250,000 b. P300,000 c. P400,000 d. P450,000
Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation
Section: Chapter Questions
Problem 43P
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Partner Dy, Pai, and Kwa are in the process of finalizing their
Option 1: He will receive an annual salary of P110,000; or
Option 2: He will receive an annual salary of P90,000 plus a bonus of 20% of the profit after subtracting their salaries and his bonus.
What should be the amount of profit so that Dy would get the same share irrespective of his choice?
a. P250,000
b. P300,000
c. P400,000
d. P450,000
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