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Question
Vidit and Seema were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their capitals were ₹ 1,20,000 and ₹ 2,40,000, respectively. They were entitled to interest on capitals @ 10% p.a. The firm earned a profit of ₹ 18,000 during the year. The interest on Vidit’s capital will be ______.
Options
₹ 12,000
₹ 10,800
₹ 7,200
₹ 6,000
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Solution
Vidit and Seema were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their capitals were ₹ 1,20,000 and ₹ 2,40,000, respectively. They were entitled to interest on capitals @ 10% p.a. The firm earned a profit of ₹ 18,000 during the year. The interest on Vidit’s capital will be ₹ 6,000.
Explanation:
Vidit’s Interest on Capital = `1,20,000 xx 10/100`
= ₹ 12,000
Seema’s Interest on Capital = `2,40,000 xx 10/100`
= ₹ 24,000
Total interest on capital = 12,000 + 24,000 = ₹ 36,000
Profit for the year = ₹ 18,000
Since the available profit (₹ 18,000) is less than the total interest on capital (₹ 36,000), interest on capital will be allowed only up to the available profit and in the ratio of their interest on capital, i.e., 12,000 : 24,000 = 1 : 2.
Vidit’s Interest on Capital = `18,000 xx 1/3`
= ₹ 6,000
