Question

A, B and C were in partnership sharing profits and losses in the proportions of 3 : 2 : 1. On 1st April, 2024, B retires from the firm and A and C decided to share future profits in the ratio of 3 : 2. On that date their capitals were as follows: A ₹ 1,77,000; B ₹ 1,70,000 and C ₹ 1,23,000. Loss on revaluation of assets amounted to ₹ 30,000. Amount due to B was paid on this date by giving him 40,000 over and above the amount due to him. As per partnership deed, partners are allowed 6% p.a. interest on their capitals. Profit for the year ending 31st March 2025 before allowing interest on capitals amounted to ₹ 10,000.

On the basis of above information, answer the following question:

Interest on Capital allowed to partner's will be:

विकल्प

• A ₹ 9,000 and C ₹ 5,400

• A ₹ 10,620 and C ₹ 7,380

• A ₹ 6,250 and C ₹ 3,750

• No interest will be allowed

Answer 1

A ₹ 6,250 and C ₹ 3,750

Explanation:

	A (₹)	C (₹)
Capitals	1,77,000	1,23,000
Less: Loss on Revaluation	(15,000)	(5,000)
Less: Goodwill	(12,000)	(28,000)
Adjusted Capitals on 1st April 2019	1,50,000	90,000

 

	₹
Interest on A's Capital 6% on 1,50,000	9,000
Interest on C's Capital 6% on 90,000	5,400
	14,400

The available profit is ₹ 10,000 whereas the interest due on capitals is ₹ 4,400. Since the profit is less than interest, the available profit will be distributed in the ratio of interest, i.e., 9,000 : 5,400 or 5 : 3.

Interest on Capital Allowed to A = `10,000xx5/8` = ₹ 6,250

Interest on Capital Allowed to C = `10,000xx3/8` = ₹ 3,750