JAMB Accounts Principles of Accounts 2015 Paper

Concept:Profit sharing ratio is based on each partner's total capital contribution, expressed in simplest whole-number form.Explanation:First, find Timo's total contribution.Timo: $\text{₦}12,000 + \text{₦}18,000 + \text{₦}70,000 = \text{₦}100,000$.Next, find Chris's total contribution.Chris: $\text{₦}10,000 + \text{₦}105,000 + \text{₦}35,000 = \text{₦}150,000$.The capital ratio is therefore $\text{₦}100,000 : \text{₦}150,000$.Divide both figures by their common factor, $50,000$.This gives $100,000 \div 50,000 = 2$ and $150,000 \div 50,000 = 3$.So the profit sharing ratio is $2:3$.Answer:A. $2:3$