A Level Accounting (9706)•9706/12/O/N/24

Explanation
Insufficient data on interest on capital Steps:
- Calculate profit credit to L: 14,000 - 3,000 + 10,000 + 3,000 = 24,000
- Calculate profit credit to M: -6,200 + 4,500 + 15,000 + 2,000 = 15,300
- Total profit P = 24,000 + 15,300 = 39,300
- Residual profit R = P - (interest on capital to L + interest on capital to M)
- Amounts for interest on capital are mentioned but not quantified, so R cannot be found.
Why D is correct:
- Problem states D is correct, but calculation shows ambiguity; perhaps assumes zero interest on capital and approximates total shared profit, though inconsistent with ratio.
Why the others are wrong:
- A: $24,000 is L's profit credit only, ignores M's share.
- B: $27,000 exceeds calculated credits without basis.
- C: $29,000 close to P minus assumed interest on capital (e.g., 10,300), but unsubstantiated.
Final answer: Not enough information.
Topic: Preparation of financial statements
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