WAEC - Accounts Principles Of Accounts (2024 - No. 31)

Use the following information to answer this question.

Taiyelolu and Ejire are partners sharing profits or losses equally. Extracts from their books showed:  
 
 Taiyelolu  Ejire
 #  #  
Capital accounts (1/1/2023)  200,000 100,000  
Current accounts (1/1/2023) 40,000 80,000  
Drawings within the year 20,000 30,000  
Annual salaries  28,000 24,000  

 

Interest on capital is agreed at 10% and the net profit for the year is # 120,000.  

The interest on Taiyelolu's capital is 

#20,000.
#12,000.
# 4,000.
#2,000.

Explanation

Int. on Taiyelolu's Capital  
= 10% × #200,000  
= #20,000

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