Multiple choice

There are three partners in a firm P, Q and R. X is admitted into the firm with 1/4th share of profit with a guaranteed profit of Rs.25,000 p.a. The firm's total profit is Rs.80,000 . What amount would be given to X as his share of profit by the firm.

  1. Rs.25,000

  2. Rs. 20,000

  3. Rs. 15,000

  4. Rs. 22,500
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A Correct answer
Explanation

X's calculated share of the profit is 1/4 of Rs. 80,000, which equals Rs. 20,000. However, since X is guaranteed a minimum profit of Rs. 25,000, the firm must pay him the guaranteed amount of Rs. 25,000.

AI explanation

X is admitted with a guaranteed profit of Rs. 25,000 per year. A guaranteed profit ensures the partner receives at least the specified amount regardless of the actual profit sharing calculation. Therefore, the firm will give X the full guaranteed amount of Rs. 25,000.

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