WAEC Accounting 2023 Paper

Concept:Interest on drawings is the amount charged to a partner when money is withdrawn from the partnership for personal use. It is calculated by multiplying the withdrawal amount by the agreed interest rate.Explanation:The rate is given as $8\%$ per annum, and no shorter period is mentioned. Therefore, each withdrawal is treated as being outstanding for the full year.Interest on Ant's drawings:$\text{GH⊄ }14{,}000 \times 8\% = 14{,}000 \times 0.08 = \text{GH⊄ }1{,}120$Interest on Bee's drawings:$\text{GH⊄ }10{,}000 \times 8\% = 10{,}000 \times 0.08 = \text{GH⊄ }800$Total interest on drawings:$\text{GH }1{,}120 + \text{GH }800 = \text{GH }1{,}920$This total is charged to the profit and loss appropriation account, reducing the profit available for distribution between the partners.Answer:The total interest on drawings to be charged to profit and loss appropriation account is $\text{GH}\not\subset 1{,}920$.This matches option B.