L and M are partners sharing profits 3:2. Data at year-end:ItemL ()M ()Capital200,000150,000Interest on Capital (8%)--Drawings30,00020,000Interest on Drawings (5%)--Salaries22,00017,000If L's share of residual profit was 24,000, what was the total profit for the year before appropriation?

Home › MCQs › SSC Financial and Cost Accounting P-1 › Question #6086

SSC Financial and Cost Accounting P-1 QUESTION #6086

Question 1

L and M are partners sharing profits 3:2. Data at year-end:

Item	L ($)	M ($)
Capital	200,000	150,000
Interest on Capital (8%)	-	-
Drawings	30,000	20,000
Interest on Drawings (5%)	-	-
Salaries	22,000	17,000

If L's share of residual profit was $24,000, what was the total profit for the year before appropriation?

$48,500
$88,500
$104,500✔️
$109,500

Correct Answer Explanation

1. Total Residual Profit = $24,000 / 0.6 = $40,000.
2. Total Interest on Capital = ($200k + $150k) $\times$ 8% = $28,000.
3. Total Salaries = $22k + $17k = $39,000.
4. Total Interest on Drawings = ($30k + $20k) $\times$ 5% = $2,500.
Profit = Residual ($40,000) + Interest on Cap ($28,000) + Salaries ($39,000) - Interest on Drawings ($2,500) = $104,500.

More Options