GCEFinancial AccountingPartnership Accounts2019

Chidi, Emeka, and Funke are partners with fixed capitals of ₦200,000, ₦150,000, and ₦100,000 respectively. The partnership agreement allows interest on capital at 10% per annum. What is the total interest on capital to be charged in the Profit and Loss Appropriation Account?

A₦35,000
B₦40,000
C₦45,000CORRECT
D₦50,000
AI
Toaster Teacher
Why the answer is C, and why the others tempt you.
Interest on capital: Chidi = 10% × ₦200,000 = ₦20,000; Emeka = 10% × ₦150,000 = ₦15,000; Funke = 10% × ₦100,000 = ₦10,000. Total = ₦20,000 + ₦15,000 + ₦10,000 = ₦45,000. This total is debited in the Profit and Loss Appropriation Account.
Want this in Pidgin, Yoruba, Igbo or Hausa? Sign up free →

Practice more Financial Accounting questions

GCE Financial Accounting has thousands more questions like this — with Worked answers on every one.

Start practicing free →See all Financial Accounting questions