X and Y are partners sharing profits in the ratio 3:2. Capital introduced by X and Y is 1,00,000 and 5,00,000 respectively. Interest on capital is allowed to partners @ 10%p.a. Profit of the firm for the year ending March 31st, 2025 is 30,000. Calculate Interest on Capital to be allowed to the partners.

5,000; 25,000

The correct answer is option 3- 5,000; 25,000.

Capital introduced by X and Y is 1,00,000 and 5,00,000 respectively.
Interest on capital is allowed to partners @ 10%p.a.

Interest on X's capital = 1,00,000 x 10/100
                                 = 10,000

Interest on Y's capital = 5,00,000 x 10/100
                                = 50,000

Total interest = 10,000 + 50,000
                    = 60,000

Profit available = 30,000

So, interest on capital is provided according to profit. Appropriation of interest is done.
Appropriation ratio = 10,000 : 50,000
                            = 1:5

X's interest = 30,000 x 1/6
                 = 5,000

Y's interest = 30,000 x 5/6
                 = 25,000

Thus, X will get 5,000 and Y will get 25,000 as interest on capital.