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Question
How will you settle the following dispute?
A and B are equal partners. A has provided a capital of ₹ 5,00,000, whereas B has provided only ₹ 1,00,000 as capital. B, however, has advanced ₹ 2,00,000 as a loan to the firm. What interest, if any, will be given to A and B?
Very Short Answer
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Solution
Interest on capital will not be allowed to any partner. Hence, A and B will not get interest on their capitals. Interest on loan is allowed at 6% p.a. Thus, B will get interest on the loan at 6% p.a.
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Chapter 1: Accounting for Partnership Firms - Fundamentals - SHORT ANSWER QUESTIONS [Page 1.132]
