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' share of profit?
Answer Details
To determine each partner's share of profit, we need to first calculate the interest on their capital contribution.
Williams contributed N60,000, so the interest on his capital is 10% of N60,000, which is N6,000.
Jacob contributed N40,000, so the interest on his capital is 10% of N40,000, which is N4,000.
The total interest on capital is N6,000 + N4,000 = N10,000.
To find Williams' share of the remaining profit, we need to subtract the interest on capital from the total profit:
N20,000 - N10,000 = N10,000
Now we can divide the remaining profit equally between Williams and Jacob since there is no partnership agreement.
Therefore, Williams' share of profit is N10,000 ÷ 2 = N5,000.
So the correct option is:
- N5,000
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