Read the following passage and answer the question.
A & B are partners sharing profits and losses in a ratio of 2:3 with capitals of ₹2,00,000 and ₹1,00,000 respectively. Drawings are made by a partner of ₹5,000 per month. Interest on drawings is to be charged @ 10% p.a. A gives a guarantee to B for his share of profit of ₹10,000. If any deficiency arises, it will be borne by A. A gives a loan of ₹20,000 to the firm at which interest is to be provided @ 8% p.a.
If the partnership deed provides interest on capital @6% p.a. as a charge against the profit and profit for the year is ₹18,000 after all other adjustments. What will be the profit or loss after this adjustment?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Zero.
Total capital of both partners = 2,00,000 + 1,00,000
= ₹3,00,000
Interest on capital of both partners = 3,00,000 x 6/100
= ₹18,000
Profit after this adjustment = 18,000-18,000
= 0