Halidu and Hamed are business partners with ₦30,000 and ₦20,000 capital respectively. At the end of the financial year, a profit of ₦12,000, which included ...
Halidu and Hamed are business partners with ₦30,000 and ₦20,000 capital respectively. At the end of the financial year, a profit of ₦12,000, which included Halidu's salary of ₦3,000 was made.
Halidu's share of the profit is
Answer Details
Halidu and Hamed are business partners and the total capital they invested is ₦30,000 + ₦20,000 = ₦50,000.
Since no profit sharing ratio is given, we will assume that the profits will be shared in the ratio of their capital investment.
Halidu invested ₦30,000 which is 3/5 (60%) of the total capital, while Hamed invested ₦20,000 which is 2/5 (40%) of the total capital.
Halidu's salary of ₦3,000 is an expense to the partnership and it is first deducted from the profit before sharing.
Therefore, Profit available for sharing = Total Profit - Halidu's salary
= ₦12,000 - ₦3,000
= ₦9,000
Halidu's share of the profit = (60% of the total profit available) = (60/100) x ₦9,000 = ₦5,400
Therefore, the answer is option C: ₦5,400.