Question

A and b start a business with an agreement to share profits as per the effective investment of capital. A puts in 6000 more than b invest his capital for 5 months where as a for 4 months. Their total profit is 5280 and a gets 480 more than b from it.Find their capital.

Answer 1

Interest on drawings is an income for the business, hence, it is added to the interest account of the firm thereby increasing the total income of the business. In common scenarios where interest on capital is charged by the owner, interest on drawings is also charged by the business.

Answer 2

Answer:

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