Teteh’s share of interest on capital is?

Teteh and Kukuma are in partnership with capital balances of #300,000 and #200,000 respectively. They agreed to share profit on the basis of their capital. The profit for the year is #150,000 and the interest on capital is 5%.

A. #15,000
B. #25,000
C. #10,000
D. #75,000

Correct Answer:

Option A = #15,000

Explanation

Teteh’s share of interest on capital = 5% x 300,000 = 15,000