Dairo and Segun are in partnership sharing profits and losses in the ratio 2:3 respectively. The information below relates to their business for the year ended 31st December, 2018.
|
Drawings: |
₦ |
| Dairo | 12000 |
| Segun | 18000 |
| Capital | |
| Dairo | 120000 |
| Segun | 60000 |
– Interest on drawings 10%
– Interest on capital 5%
– Profit for the year ₦36,000
– Salary: Segun ₦10,000
The interest on Dairo’s drawings is
- ₦1,600
-
₦1,200
- ₦1,400
- ₦1,800
The correct answer is: B
Explanation
The interest on Dairo's drawings is calculated by multiplying the amount of his drawings (₦12,000) by the interest rate on drawings (10%). This gives us ₦1,200.