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WAEC Financial Accounting 2014 Question 33

Question 33

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.
Aye's share of profit is

  1. A.Le 6,000.
  2. B.Le 4,800.
  3. C.Le 4,000.
  4. D.Le 3,200.
Show the answer and explanation

Answer: D (Le 3,200.)

Explanation

Capital ratio 20,000 : 30,000 = 2 : 3. Aye gets 2/5 × 8,000 = Le 3,200.