Question

Shruti and Vandna were partners. Their capitals as on 1st April 2023 were ₹ 3,00,000 and ₹ 2,00,000, respectively. Interest on capital is to be allowed @ 8% p.a. as a charge. On 1st November 2023, Shruti advanced ₹ 2,00,000 as a loan to the firm, and on the same date, the firm advanced a loan of ₹ 80,000 to Vandna. Both the loans were without an agreement. The loss for the year ending 31st March, 2024, before allowing and charging interest on the loan, was ₹ 35,000.

Based on the above information, choose the correct answer:

Interest on loan to Vandna ______.

Options

• Will be Charged @ 6% p.a. and credited to the profit and loss account.

• Will be charged @ 6% p.a. and credited to the profit and loss appropriation account.

• Will not be charged.

• Will be charged at the bank rate and credited to the profit and loss account.

Answer 1

Interest on loan to Vandna will not be charged.

Explanation:

Interest on the loan to Vandna will not be charged. In the absence of a partnership deed, the Partnership Act 1932 applies, which does not allow charging interest on loans to partners.