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?

Zero

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