Use the information below to answer questions 40 and 41. Keme and Kemi are in partnership sharing profit and losses in the ratio 3:2. Capital - Keme...........
Question 1 Report
Use the information below to answer questions 40 and 41.
Keme and Kemi are in partnership sharing profit and losses in the ratio 3:2.
Capital - Keme.............₦20 000
........ - Kemi.............₦10 000
Drawings - Keme.............₦2 000
........ - Kemi.............₦3 000
Profit......................₦6 000
Interest on capital.........5%
Interest on drawings........10%
The interest on Kemi's capital is?
Answer Details
The interest on Kemi's capital can be calculated using the formula:
Interest on capital = Rate of interest x Capital x Time
Here, the rate of interest is 5%, Kemi's capital is ₦10 000, and time is not given. However, we can assume that the time period is one year as it is a common practice in such calculations.
So, the interest on Kemi's capital = 0.05 x ₦10 000 x 1 = ₦500
Therefore, the answer is ₦500.
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