Question

X and Y are in partnership with capital contributions of $50000 and $30000 respectively. The partnership agreement provides that profits are to be shared in proportion to capital contributions and each partner is entitled to 10% interest on capital. Profit for the year was $37000. What was the total amount credited to Y's current account at the end of the year? A $10875 B $13875 C $18125 D $23125

Answer 1

Answer: $13875

Explanation:

The interest in capital for X will be:

= 10% × $50000

= $5000

The interest in capital for Y will be:

= 10% × $30000

= $3000

The total amount credited to Y's current account will be:

= 3000/(3000 + 5000) × $37000

= 3/8 × $37000

= $13875

The total amount credited to Y's current account at the end of the year will be $13875