Use the following information to answer the given question, Aba and Baba are partners who agreed to share profits and losses in the ratio 4 : 3 respectively. Extracts from their books for the year ended 31/12/08 are:
\(\begin{array}{c|c} & \text{ABA} & \text{BABA} & \text{TOTAL}\\ & ₦ & ₦ & ₦ \\ \hline \text{Capital} & 20,000 & 15,000 & 35,000 \\ \text{Drawings} & 2,520 & – & 2,520 \\ \text{Interest on drawings} & 504 & – & 504\\ \text{Interest on capital} & 2,000 & 1,500 & 3,500 \\ \text{Net profit 31/12/08} & – & – & 34,636\end{array}\)
Aba’s share of profit is
- ₦21,504
-
₦19,792
- ₦18,352
- ₦16,128
The correct answer is: B
Explanation
Share of profit = \(\frac{4}{4 + 3}\) = \{\frac{4}{7}\) = 0.5714
0.5714 x 34636 = 19,792