Unit 1: May 2013, Question #2 (b)

Workings:
Interest on Capital: Khary –   $200,000 x 12% = $24,000
                                    Kwame – $160,000 x 12% = $19,200
                                    Kofi –       $100,000 x 12% = $12,000
 
Residual Profit: $741,000 – (160,000+100,000+100,000) – (24,000+19,200+12,000) = $325,800.
 
Share of Residual Profit: Khary –   $325,800 x 60% = $195,480
                                             Kwame – $325,800 x 20% = $65,160
                                             Kofi –       $325,800 x 20% = $65,160

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