Practicing Success
Read the following passage and answer the following question. Shivay and Nitya are partners sharing profits and losses in the ratio of 7: 3. Their Capital Accounts as on 1st April, 2021 stood at Shivay- 5,00,000, Nitya- 4,00,000. Both partners are allowed interest on capital @ 5% p.a. Drawings of Shivay and Nitya during the year ended 31st March, 2022 were ₹72,000 and ₹50,000 respectively. Profit for the year before allowing interest on capital and salary to Nitya @6000 per month amounted to ₹8,00,000. 10% of the divisible profit is to be set aside as General Reserve. |
How much profit is left with the partnership firm that will be transferred to partners in their profit-sharing ratio? |
₹6,83,000 ₹7,83,000 ₹7,14,700 ₹6,14,700 |
₹6,14,700 |
The correct answer is option 4- ₹6,14,700. Profit is ₹8,00,000 Salary to Nitya = 6,000 x 12 Profit after interest and salary = 8,00,000 - 45,000 - 72,000 10% is transferred to general reserve = 6,83,000 x 10/100 Profit distributed between partners = 6,83,000 - 68,300 |