Williams and Jacob are in partnership but there is no partnership agreement. The capital contributed are N60,000 and N40,000 respectively. Profit for the ye...
Question 1 Report
Williams and Jacob are in partnership but there is no partnership agreement. The capital contributed are N60,000 and N40,000 respectively. Profit for the year is N20,000. Interest on capital is 10%. What is Williams' interest on capital?
Answer Details
Interest on capital is the interest paid by the partnership to the partners on their capital contribution for the year. In this case, the total capital contributed by both Williams and Jacob is N60,000 + N40,000 = N100,000.
The interest rate on capital is 10%, which means that the partnership will pay an interest of 10% on the capital contribution of each partner.
For Williams, his capital contribution is N60,000. Therefore, his interest on capital for the year will be:
N60,000 x 10% = N6,000
Therefore, Williams' interest on capital is N6,000.
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