P Partner Partnership Share L Net M N

V. 

In 2005, L, M, N, 0 and P formed a partnership. L, M and N were capitalist partners who contributed P500,000 each, while 0, a limited partner, contributed P1 ,000,000. P joined as an industrial partner, contributing only his services. The Articles of Partnership, registered with the Securities and Exchange Commission, designated L and 0 as managing partners; L was liable only to the extent of his capital contribution; and P was not liable for losses.

In 2006, the partnership earned a net profit of P800,000. In the same year, P engaged in a different business with the consent of all the partners.  However, in 2007, the partnership incurred a net loss of PSOO,OOO. In 2008, the partners dissolved the partnership. The proceeds of the sale of partnership assets were insufficient to settle its obligation. After liquidation, the partnership had an unpaid liability ofP300,000.

V.(l)  Assuming that the just and equitable share of the industrial partner, P, in the profit in 2006 amounted to P1 00,000, how much is the share of 0, a limited partner, in the P800,000 net profit? (1%)

(A)  P160,000.

(B)  P175,000.

(C)  P280,000.

(D)  P200,000.

(E)  None of the above.

SUGGESTED ANSWER:

(C)

First, deduct the share of P from the profits.  P800,000 less P100,00 is P700,000.  Next, get the share of O by following the proportion that the shares of L, M, N, O is 1:1:1:2 respectively.