Question

P and Q are partners with profit sharing ratio of 2 : 3 with fixed capitals of ₹ 5,00,000 and ₹ 8,00,000 respectively. On 1st June 2023, P and Q granted loans of ₹ 2,00,000 and ₹ 1,00,000 respectively to the firm. Books of the firm are closed on 31st March 2024.

You are required to answer the following question:

If the loss before interest on loan for the year amounted to ₹ 10,000, the interest allowed on loan by P will be ______.

Options

• ₹ Nil

• ₹ 6,000

• ₹ 10,000

• ₹ 12,000

Answer 1

If the loss before interest on loan for the year amounted to ₹ 10,000, the interest allowed on loan by P will be ₹ 10,000.

Explanation:

Even in the event that the business experiences a loss, interest on the partner's loan will be fully allowed.