Question 28
Partnership AccountsJohn and Johnson are in partnership, sharing profit and losses in the ratio 3:2. Other information are as follows:
Capital: John ₦20,000; Johnson ₦10,000
Drawings: John ₦2,000; Johnson ₦3,000
Interest on capital: 5%
Interest on drawings: 10%
Profit: ₦6,000
What is John's share of the profit?
- A.₦5,000
- B.₦3,600
- C.₦3,000
- D.₦2,400
- E.₦2,000
Show the answer and explanation
Answer: C (₦3,000)
Explanation
6,000 + interest on drawings 500 − interest on capital 1,500 = 5,000; John gets 3/5 = ₦3,000.