Adamu, Babaji and Chukwu are in a partnership and they share profit and losses on ratio 3:2:1. Their respective capitals are N20,000, N15,000, N5,000 on which they are entitled to interest at 5% per annum. The profit for the year before charging interest on capital amounts to N5,500. Calculate the profit for Adamu.
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Correct Answer: Option D
Explanation:
Given:
Partners: Adamu, Babaji, Chukwu
Profit-sharing ratio = 3:2:1
Capitals:
Adamu = ₦20,000
Babaji = ₦15,000
Chukwu = ₦5,000
Interest on capital = 5% per annum
Profit before interest on capital = ₦5,500
Step 1: Calculate interest on capital
Adamu: 5% of ₦20,000 = ₦1,000
Babaji: 5% of ₦15,000 = ₦750
Chukwu: 5% of ₦5,000 = ₦250
Total interest on capital = ₦1,000 + ₦750 + ₦250 = ₦2,000
Step 2: Deduct interest from profit
Remaining profit to be shared = ₦5,500 − ₦2,000 = ₦3,500
Step 3: Share remaining profit in ratio 3:2:1
Total parts = 3 + 2 + 1 = 6
Adamu: (3/6) × â‚¦3,500 = ₦1,750
Babaji: (2/6) × â‚¦3,500 = ₦1,167
Chukwu: (1/6) × â‚¦3,500 = ₦583
Adamu's share is N1,750
Given:
Partners: Adamu, Babaji, Chukwu
Profit-sharing ratio = 3:2:1
Capitals:
Adamu = ₦20,000
Babaji = ₦15,000
Chukwu = ₦5,000
Interest on capital = 5% per annum
Profit before interest on capital = ₦5,500
Step 1: Calculate interest on capital
Adamu: 5% of ₦20,000 = ₦1,000
Babaji: 5% of ₦15,000 = ₦750
Chukwu: 5% of ₦5,000 = ₦250
Total interest on capital = ₦1,000 + ₦750 + ₦250 = ₦2,000
Step 2: Deduct interest from profit
Remaining profit to be shared = ₦5,500 − ₦2,000 = ₦3,500
Step 3: Share remaining profit in ratio 3:2:1
Total parts = 3 + 2 + 1 = 6
Adamu: (3/6) × â‚¦3,500 = ₦1,750
Babaji: (2/6) × â‚¦3,500 = ₦1,167
Chukwu: (1/6) × â‚¦3,500 = ₦583
Adamu's share is N1,750