Question

Mita and Mohan are partners sharing profits and losses in the ratio of 1 : 2 with capitals of ₹ 15,000 and ₹ 25,000, respectively. The partnership deed provides for interest on capital @ 6% per annum. The trading loss for the year ending 31st March, 2016, was ₹ 1,500. State, giving reason, the amount of interest on capital which will be allowed to the partners.

Answer 1

No interest on capital will be allowed to Mita and Mohan because the firm incurred a loss of ₹ 1,500, and as per the Partnership Act, interest on capital is allowed only out of profits.