A & B are partners and sharing profits and losses in ratio of 3:2. Their capitals are ₹1,50,000 and ₹2,00,000 respectively on 1st April,2021. Calculate interest on partners' capital if rate of interest is 8% p.a. and firm earned profit of ₹21,000 during the year?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- A = ₹9,000 B = ₹12,000.
Interest on A capital = 1,50,000*8/100
= ₹12,000
Interest on B capital = 2,00,000*8/100
= ₹16,000
Since the total of both partner's interests is more than the profit of the firm (28,000 -21,000).
Interest will be paid to the extent of available profit i.e., ₹21,000 in ratio of interest on capital 12,000: 16,000 means 3:4
So, A will be credited with ₹9,000, and B will be credited with ₹12,000.