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.

Interest on A’s capital will amount to:

Options

• ₹ 80,000

• ₹ 77,000

• ₹ 68,000

• ₹ 74,000

Answer 1

₹ 77,000

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