Dairo and Segun are in partnership sharing profits and losses in the ratio 2:3 respectively. The information below relates to their business for the…

Dairo and Segun are in partnership sharing profits and losses in the ratio 2:3 respectively. The information below relates to their business for the year ended 31st December, 2018.

– Interest on drawings 10%
– Interest on capital 5%
– Profit for the year ₦36,000
– Salary: Segun ₦10,000
Segun’s share of profit is

Explanation

First adjust profit: ₦36,000 – Salary ₦10,000 + Interest on drawings (₦1,200 + ₦1,800) – Interest on capital (₦6,000 + ₦3,000) = ₦20,000 distributable profit.

Segun gets 3/5 of ₦20,000 = ₦12,000 as his share. His ratio is 3 out of total 5 parts (2+3). This is just his profit share, excluding salary and interest already calculated.

Remember: Adjust profit first for salary and interest, then split remaining amount by ratio.