Question

A, B and C are in partnership. On 1st April, 2023, their capitals were A ₹ 10,00,000 (Credit), B ₹ 6,00,000 (Credit) and C ₹ 1,00,000 (Debit). As per the partnership deed, interest on capital is to be allowed @ 8% p.a., and interest on drawings is to be charged @ 10% p.a. You find that: On 1st January, 2024, A withdrew ₹ 1,50,000 against Capital. B withdrew ₹ 10,000 p.m. during the year. C withdrew ₹ 1,20,000 during the year. The profit for the year ended 31st March, 2024, amounted to ₹ 5,63,000.

Each partner’s share of profit will be:

Options

• ₹ 1,50,000

• ₹ 1,51,250

• ₹ 1,49,000

• ₹ 1,54,000

Answer 1

₹ 1,50,000

Explanation:

A’s initial capital on April 1, 2023, was ₹ 10,00,000.

A withdrew ₹ 1,50,000 against capital on January 1, 2024.

Interest on A’s capital ₹ 10,00,000 @ 8% p.a. for 9 months

= `10,00,000 xx 8/100 xx 9/12`

= 60,000

A withdrew ₹ 1,50,000 against capital on January 1, 2024.

= 10,00,000 − 1,50,000

= 8,50,000

Interest on A’s capital ₹ 8,50,000 @ 8% p.a. for 3 months

= `8,50,000 xx 8/100 xx 3/12`

= 17,000

Total interest on A’s capital = 60,000 + 17,000

= 77,000

Interest on B’s capital = `6,00,000 xx 8/100`

= 48,000

Total B’s drawings = 10,000 × 12

= 1,20,000

C’s drawings = 1,20,000

Interest on partner’s drawings = `1,20,000 xx 10/100 xx 6/12`

= 6,000

Dr.	Profit and Loss Appropriation Account				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Interest on Capital:		1,25,000	By Profit and Loss A/c		5,63,000
A	77,000		By Interest on Drawings:		12,000
B	48,000		B	6,000
To Profit transferred to:		4,50,000	C	6,000
A’s Capital A/c	1,50,000
B’s Capital A/c	1,50,000
C’s Capital A/c	1,50,000
		5,75,000			5,75,000