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SSC Financial and Cost Accounting P-1 QUESTION #6144
Question 1

Lee and Mia share profits 4:3. Interest on drawings was omitted: Lee $90, Mia $50. By how much will Lee's current account balance decrease when corrected?

  • $10✔️
  • $30
  • $150
  • $170
Correct Answer Explanation

Option A ($10) is correct.

Total interest on drawings = $90 + $50 = $140 added to profit available.

Lee's extra profit share = $140 × 4/7 = $80

Net change to Lee's account = −$90 (interest charged) + $80 (extra profit) = −$10