Dairo and Segun are in partnership sharing profits and losses in the ratio 2:3 respectively. The information below relates to their business for the year ended 31st December, 2018.
Drawings:
₦
Dairo
12000
Segun
18000
Capital
Dairo
120000
Segun
60000
- Interest on drawings 10%
- Interest on capital 5%
- Profit for the year ₦36,000
- Salary: Segun ₦10,000
The interest on Dairo's drawings is ____________
A. ₦1,600 B. ₦1,200 C. ₦1,400 D. ₦1,800
Correct Answer: B
Explanation
The interest on Dairo's drawings is calculated by multiplying the amount of his drawings (₦12,000) by the interest rate on drawings (10%). This gives us ₦1,200.
