Use the following information to answer the question below
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.
Ogah Ajem
Capital Account 60,000 65,000
Current Account 40,000 50,000
Drawings 20,000 30,000
Salary 10,000 -
Netprofit was 100,000
Ogah's share of profit was
First, we need to calculate the interest on capital for both partners.
Interest on Ogah's capital = 5% of 60,000 = 3,000
Interest on Ajem's capital = 5% of 65,000 = 3,250
Next, we need to calculate the interest on their drawings.
Interest on Ogah's drawings = 3% of 20,000 = 600
Interest on Ajem's drawings = 3% of 30,000 = 900
Now, we can calculate the total amount of interest for each partner by adding the interest on their capital and the interest on their drawings.
Total interest for Ogah = 3,000 + 600 = 3,600
Total interest for Ajem = 3,250 + 900 = 4,150
We can now calculate the adjusted capital for each partner by adding their capital account, current account balance, and subtracting their drawings and the interest on their drawings.
Adjusted capital for Ogah = 60,000 + 40,000 - 20,000 - 600 = 79,400
Adjusted capital for Ajem = 65,000 + 50,000 - 30,000 - 900 = 84,100
The total adjusted capital for the partnership is the sum of the adjusted capital for both partners.
Total adjusted capital = 79,400 + 84,100 = 163,500
Now, we can calculate each partner's share of the profit.
Ogah's share of the profit = (2 / 5) x (100,000 - 10,000 - 3,600) = 51,150
Ajem's share of the profit = (3 / 5) x (100,000 - 10,000 - 4,150) = 48,850
Therefore, the answer is option A - 51,150.