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 Segun's share of profit is ____________
A. ₦12,000 B. ₦21,400 C. ₦14,600 D. ₦16,400
Correct Answer: A
Explanation
Interest on drawings = 10% - Dairo = 10% x 12,0000 = ₦1200 - Segun = 10% x 18,000 = ₦1800
Interest on capital = 5% - Dairo = 5% x 120,000 = ₦6,000 - Segun = 5% x 60,000 =₦3,000
Salary: segun = ₦10,000
Segun's share of profit = (Net profit + int on drawings) - ( int on capital + segun salary ) = (36000 + 1200 + 1800) - ( 6000 + 3000 + 10000) = 39000 - 19000 = 20,000
Total ratio = 2+ 3 = 5 Therefore, Segun share of profit = 3 /5 x 20000 = ₦12,000
