Dan and Baker are in partnership with capitals of ₦50,000 and ₦30,000 each. The partnership agreement provides that: (i) profits be shared in the ratio of c...
Question 1 Report
Dan and Baker are in partnership with capitals of ₦50,000 and ₦30,000 each. The partnership agreement provides that: (i) profits be shared in the ratio of capital (ii) both partners earn interest on capital at 6% p.a (iv) both parents pay interest on drawings at 6% p.a. At the end of the year, Dan drew ₦15,000 while baker drew ₦14,000 in four installments on 31/3, 30\6, 30\9 and 30\12. The net profit for the year was ₦48,000. ₦5000 is to be written off the goodwill account.
Determine the total interest on capital due to the partners?
Determine the total interest on capital due to the partners?
Answer Details
Dan's capital = ₦50,000
Baker's capital = ₦30,000
Total capital = ₦80,000
Interest on Dan's capital = 6% of ₦50,000 = ₦3,000
Interest on Baker's capital = 6% of ₦30,000 = ₦1,800
Total interest on capital due to the partners = ₦3,000 + ₦1,800 = ₦4,800
Therefore, the answer is ₦4800.
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