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Interest on Capital Exceeds Profits

A and B are p...

Question

A and B are partners in a firm sharing profits equally. They had advanced tot he firm a sum of ₹ 30,000 as a loan in their profit-sharing ratio on 1st October, 2017. The Partnership Deed is silent on the question of interest on the loan from partners. Compute the interest payable by the firm to the partners, assuming the firm closes its books on 31st March each year.

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Solution

Time Period (from October 01, 2017 to March 31, 2018) = 6 months

Interest rate = 6% p.a. (in the absence of partnership deed)

A and B will get Rs 450 individually as interest on loan for 6 months (from October 01, 2017 to March 31, 2018) at 6% p.a.

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