Question 28
Partnership AccountsUse the following information to answer questions 26 to 28.
Ajem and Ogah were in partnership sharing profits and losses in the ratio 2:3. Interest on capital and drawings were 5% and 3% respectively. The following details relate to the partnership for the year 2017. (Ajem / Ogah)
Capital Account: GH¢60,000 / GH¢65,000
Current Account: GH¢40,000 / GH¢50,000
Drawings: GH¢20,000 / GH¢30,000
Salary: GH¢10,000 / ---
Net profit was GH¢100,000.
Interest on drawings amounted to
- A.GH¢6,000.
- B.GH¢1,500.
- C.GH¢900.
- D.GH¢600.
Show the answer and explanation
Answer: B (GH¢1,500.)
Explanation
3% × 20,000 = 600 plus 3% × 30,000 = 900: GH¢1,500.