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Hans, Lance, Arthur and Sidd own a publishing company that they operate as a partnership....

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Accounting

Hans, Lance, Arthur and Sidd own a publishing company that they operate as a partnership. Their agreement includes the following:

- Hans will receive a salary of P20,000 and a bonus of 3% of income after all the bonuses.

- Lance will receive a salary of P10,000 and a bonus of 2% of income after all the bonuses.

- All the partners are to receive the following: Hans P5,000, Lance P4,500, Arthur P2,000 and Sidd P4,700, representing 10% interest on their average capital balances.

- Any remaining profits are to be divided equally among the partners.

- Partnership reports a profit of P40,000.

How much is Lances share in the profit if profit is distributed in the following order of priority: Interest on capital, then bonuses, then salary, and then according to P/L ratio?

A. P12,560.00

B. P13,235.75

C. P12,433.00

D. P12,830.75

They said the answer is letter A. Can somebody show me the solution? Thank you so much!

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