Question

X and Y are partners in the ratio of 3 : 2. Their capitals are ₹ 2,00,000 and ₹ 1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ₹ 15,000 for the year ended 31st March 2024. As per the partnership agreement, interest on capital is treated as a charge on profits. Interest on capital will be ______.

Options

• X ₹ 16,000; Y ₹ 8,000

• X ₹ 9,000; Y ₹ 6,000

• X ₹ 10,000; Y ₹ 5,000

• No interest will be allowed.

Answer 1

X and Y are partners in the ratio of 3 : 2. Their capitals are ₹ 2,00,000 and ₹ 1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ₹ 15,000 for the year ended 31st March 2024. As per the partnership agreement, interest on capital is treated as a charge on profits. Interest on capital will be X ₹ 16,000 and Y ₹ 8,000.

Explanation:

Interset on X’s Capital = `2,00,000 xx 8/100`

= ₹ 16,000

Interset on Y’s Capital = `1,00,000 xx 8/100`

= ₹ 8,000

Interest on capital is an appropriation of profit and is allowed only out of available profits.