Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Partnership

Question:

A, B and C are partners in a firm sharing profits and losses in ratio of 2:2:1. Their capital accounts stood at ₹30000, ₹15000 and ₹15000 respectively at the starting of the business. As per the oral agreement between partners, C was allowed a salary of ₹250 per month and interest on capital to all partners was allowed at the rate of 5 % p.a. Net profit earned for the year is ₹18000 which was distributed between partners equally, ignoring the interest and salary clause.

What amount of interest on capital was provided to A?

Options:

₹750

₹1500

₹3000

₹850

Correct Answer:

₹1500

Explanation:

Interest on capital is 5% p.a.
A's capital is ₹30000 so interest is 30000*5/100= ₹1500