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WAEC Financial Accounting 2014 Question 32

Question 32

Partnership Accounts

Use the following information to answer questions 32 to 34.
Capital: Aye Le 20,000; Bee Le 30,000
Drawings: Aye Le 8,000; Bee Le 2,000
Profit for the year: Le 10,000
Interest on capital – 6%
Interest on drawings – 10%
Profit sharing is in the ratio of capital.
The divisible profit is

  1. A.Le 14,000.
  2. B.Le 12,000.
  3. C.Le 10,000.
  4. D.Le 8,000.
Show the answer and explanation

Answer: D (Le 8,000.)

Explanation

Interest on capital = 6% × 50,000 = 3,000 (deducted). Interest on drawings = 10% × 10,000 = 1,000 (added). Divisible profit = 10,000 − 3,000 + 1,000 = Le 8,000.