Rama and Shama are two partners sharing profits and losses in ratio of 3 : 5. Their capital accounts showed balances of ₹1,50,000 and ₹2,00,000 on 1 April 2021. Calculate interest on capital to be paid for the year ending 31 March 2022, if partnership deed provides for interest on capital @10% and the firm has earned a profit of ₹28,000 during the year.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹12,000 and ₹16,000
Interest on capital is an appropriation of profit. When the profit is less than the interest due, the whole profit is shared between the partners in the ratio of their interest on capital, and no more interest is allowed.
Interest due:
Rama = ₹1,50,000 × 10% = ₹15,000
Shama = ₹2,00,000 × 10% = ₹20,000
Total = ₹35,000, more than the profit of ₹28,000
Profit shared in 15,000 : 20,000 = 3 : 4
Rama = ₹28,000 × 3/7 = ₹12,000
Shama = ₹28,000 × 4/7 = ₹16,000
NCERT (2026-27 edition):
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