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Question
Mickey, Tom, and Jerry were partners in the ratio of 5 : 3 : 2. On 31st March 2021, their books reflected a net profit of ₹ 2,10,000. As per the terms of the partnership deed, they were entitled to interest on capital which amounted to ₹ 80,000, ₹ 60,000 and ₹ 40,000, respectively. Besides this, a salary of ₹ 60,000 each was payable to Mickey and Tom.
Calculate the ratio in which the profits would be appropriated.
Options
1 : 1 : 1
5 : 3 : 2
7 : 6 : 2
4 : 3 : 2
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Solution
7 : 6 : 2
Explanation:
Calculate the total appropriation for each partner:
Mickey: Interest on Capital + Salary
= ₹ 80,000 + ₹ 60,000
= ₹ 1,40,000
Tom: Interest on Capital + Salary
= ₹ 60,000 + ₹ 60,000
= ₹ 1,20,000
Jerry: Interest on Capital = ₹ 40,000
Total appropriations = 1,40,000 + 1,20,000 + 40,000
= ₹ 3,00,000
Net Profit = ₹ 2,10,000
Since total appropriations (₹ 3,00,000) are more than the net profit (₹ 2,10,000), profit will be distributed in the ratio of their total appropriations.
Appropriation Ratio = ₹ 1,40,000 : ₹ 1,20,000 : ₹ 40,000
= 7 : 6 : 2
