Question

A partner introduced additional capital of ₹ 30,000 and advanced a loan of ₹ 40,000 to the firm at the beginning of the year. The partner will receive the year’s interest:

Options

• ₹ 4,200

• ₹ 2,400

• Nil

• ₹ 1,800

Answer 1

₹ 2,400

Explanation:

Interest on capital is payable only if provided in the partnership deed and only out of profits, while interest on a partner’s loan is always allowed @ 6% per annum, even if there is a loss.

Interest on loan = `40,000 xx 6/100`

= ₹ 2,400