Based on following, answer the question.
Mr. A, Mr. B and Mrs. C are friends, graduated from JIM Calcutta with specialisation in finance. They started a financing business as a partnership firm. In a written Partnership Deed they specify that the profit sharing ratio amongst them would be 3 : 2 : 1 and interest on capital would be provided @ 5% p.a. However no specifications were made in partnership deed about the interest on drawings and loans. The capitals contributed by them were ₹3,00,000, ₹2,00,000 and ₹1,00,000 by A, B and C respectively. During the year Mrs. C withdrew ₹20,000 to meet her family expenses. Looking at insufficient capital Mr. B introduced another ₹1,00,000 as capital into the firm on 1st June 2021. The business was expanding and for the same purpose the firm took a loan from Mr. A of ₹3,00,000 on 1st October 2021. During the year ended 31 March, 2022 firm earned a profit of ₹4,00,000 before charging rent of ₹20,000 p.a. Looking at the competency of Mr. D being a C.A. Mr. B wanted to introduce him in the partnership firm as a partner. The firm started its operation on 1st April 2021.
How much interest on capital is B entitled to receive?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹14,166.67
Interest is allowed on the opening capital for the whole year and on additional capital from the date it was brought in.
On opening capital = ₹2,00,000 × 5/100 = ₹10,000
On additional capital (1st June 2021 to 31st March 2022 = 10 months) = ₹1,00,000 × 5/100 × 10/12 = ₹4,166.67
Total interest on capital to B = ₹10,000 + ₹4,166.67 = ₹14,166.67
NCERT (2026-27 edition):
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