Use the following information to answer questions below

Teteh and Kukuma are in partnership with capital balances of #300,000 and #200,000 respectively. They agreed to share profit on the basis of their capital. The profit for the year is #150,000 and the interest on capital is 5%.

Teteh's share of profit is

  • A #60,000
  • B #90,000
  • C #75,000
  • D #50,000
waec 2022accounting

The correct answer is C. #75,000

Ratio in their capital = 300,000/200,000 = 3/2 = 3: 2

Total ratio = 3+ 2 = 5

Interest on capital = 5%

Teteh = 5% x 300,000 = 15,000

Kukuma = 5% x 200,000 = 10,000

= 150,000 - ( 15,000 + 10,000)

= 150,000 - 25,000

= 125,000

Teteh's share of profit = 3/5 x 125,000

= 75,000

Previous question Next question