A and B are in partnership with fixed capital of ₹40,000 and ₹30,000 respectively. During the year 2021-22, A withdrew ₹5,000 and B ₹7,500. Profits before providing interest on Capital was ₹25,000. A and B shared profits in the ratio of 3:2. Calculate the amount of interest on capital payable to both the partners for the financial year 2021-2022, if it is allowed @12% p.a.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → A. ₹4,800 B. ₹3,600
Under the fixed capital method, drawings go to the current account, so the capitals stay unchanged for the whole year.
Interest on A’s capital = ₹40,000 × 12% = ₹4,800
Interest on B’s capital = ₹30,000 × 12% = ₹3,600
Total interest ₹8,400 is less than the profit of ₹25,000, so it is allowed in full.
NCERT (2026-27 edition):
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