Question 39
Partnership AccountsUse the information below to answer questions 39 and 40.
Jumoke and Kunle have an original investment of ₦25,000 and ₦15,000 respectively in a partnership. The articles of partnership provide 3% interest on capital and salaries of ₦1,500 and ₦1,000 respectively for the partners. The profits and losses are to be shared in the ratio 3:2. Miscellaneous expenses of ₦2,500 were incurred with gross profit of ₦6,500 during the financial year.
The balance of profit and loss account will be
- A.₦4,000
- B.₦2,800
- C.₦1,500
- D.₦300
Show the answer and explanation
Answer: A (₦4,000)
Explanation
Net profit = gross profit 6,500 − expenses 2,500 = ₦4,000, which is carried to the appropriation account.