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Partnership (Profit + Salary)
P and Q started a business with respective investments of Rs. 4 lakhs and Rs. 10 lakhs. As P runs the business, his salary is Rs. 5000 per month. If they earned a profit of Rs. 2 lakhs at the end of the year, then find the ratio of their earnings including P's salary.
Explanation and memory cue
P's annual salary is Rs. 5000 × 12 = Rs. 60,000. The total profit is Rs. 2,00,000. After paying P's salary, the remaining profit to be shared is Rs. 2,00,000 - Rs. 60,000 = Rs. 1,40,000. The profit is shared in the ratio of their investments, which is 4 lakhs : 10 lakhs = 2 : 5. So, P's share of the profit is (2/7) × 1,40,000 = Rs. 40,000 and Q's share is (5/7) × 1,40,000 = Rs. 1,00,000. Therefore, P's total earning = salary + profit share = 60,000 + 40,000 = Rs. 1,00,000 and Q's total earning = Rs. 1,00,000. Hence, the ratio of their earnings is 1,00,000 : 1,00,000 = 1 : 1. So, the correct answer is option D.