WAEC Financial Accounting 1993 Question 30

Question 30

Partnership Accounts

John 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

The balance on John's current account is

  1. A.₦4,000 DR
  2. B.₦3,800 CR
  3. C.₦3,300 DR
  4. D.₦2,000 CR
  5. E.₦1,800 CR.
Show the answer and explanation

Answer: E (₦1,800 CR.)

Explanation

Interest 1,000 + share 3,000 − drawings 2,000 − interest on drawings 200 = ₦1,800 credit.