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Standard XII

Accountancy

Providing Interest on Capital

A and B share...

Question

A and B share profits in the ratio of 3 : 2 with capitals of ₹20,000 and ₹10,000 respectively. What shall be the amount of interest on capital for Mr. A, if profit for the year is ₹1,500 and the partnership deed provides for interest on capital at 6% p.a.?

[0.88 marks]

₹1,200

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₹1,000

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₹1,500

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₹500

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Solution

The correct option is B ₹1,000
Interest on Capital:
A = ₹ $20, 000 \times \frac{6}{100} \times \frac{1, 500}{1, 800}$
= ₹1,000

*A’s Interest + B’s Interest

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Similar questions

X & Y share profits in the ratio of 2:3 with capitals of Rs 20,000 & Rs 10,000 respectively. What shall be the amount of interest on capital for Mr. X, if profits of the year are Rs 2,100 & partnership deed provides for interest on capital @ 6% p.a..

X

and

Y

are partners sharing profits and losses in the ratio of

2 : 3

with capitals of

R s . 2, 00, 000

and

R s . 1, 00, 000

respectively. Pass the necessary Journal entry or entries for distribution of profit/loss for the year ended 31st March, 2018 in each of the alternative cases:
Case 1. If Partnership Deed is silent as to the interest on capital and the profit for the year is

R s . 20, 000

.
Case 2. If Partnership Deed provides for interest on capital @

6 %

p.a. and loss for the year is

R s . 15, 000

.
Case 3. If Partnership Deed provides for-interest on capital @

6 %

p.a. and the profit for the year is

R s . 21, 000

.
Case 4. If Partnership Deed provides for interest on capital @

6 %

p.a. as a charge on profit and the profit for the year is

R s . 20, 000

.
Case 5. If Partnership Deed provides for interest on capital @

6 %

p.a. as a charge on profit and the profit for the year is

R s . 2, 000

.
Case 6. If Partnership Deed provides for interest on capital @

6 %

p.a. as a charge on profit and the profit for the year is

R s . 18, 000

A and B entered into partnership with capitals of Rs 4,00,000 and Rs 2,00,000 respectively and agreed to share profits & losses in the ratio of 3:2. Their partnership deed provided that interest on capital shall be allowed at 6% p.a. and it is to be treated as a charge against profits. Prepare the relevant account to allocate the profit in the following alternative cases :

(i) If profit for the year is Rs 80,000;

(ii) If profit for the year is Rs 20,000;

(iii) If loss for the year is Rs 20,000.

Q. X and Y contribute Rs 20,000 and Rs.10,000 respectively towards capital. They decide to allow interest on capital @ 6% p.a. Their respective share of profits is 2:3 and the net profit for the year is Rs.1,500. Show distribution of profits:
(i) where there is no agreement except for interest on capitals and
(ii) where there is an agreement that the interest on capital as a charge.

Q. Moli and Bholi contribute ₹ 20,000 and ₹ 10,000 respectively towards capital. They decide to allow interest on capital @ 6% p.a. Their respective share of profits is 2 : 3 and the net profit for the year is ₹ 1,500. Show distribution of profits:
(i) where there is no agreement except for interest on capitals; and
(ii) where there is an agreement that the interest on capital as a charge.

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A and B share profits in the ratio of 3 : 2 with capitals of ₹20,000 and ₹10,000 respectively. What shall be the amount of interest on capital for Mr. A, if profit for the year is ₹1,500 and the partnership deed provides for interest on capital at 6% p.a.? [0.88 marks]

The correct option is B ₹1,000Interest on Capital: A = ₹20,000×6100×1,5001,800 = ₹1,000 *A’s Interest + B’s Interest

A and B share profits in the ratio of 3 : 2 with capitals of ₹20,000 and ₹10,000 respectively. What shall be the amount of interest on capital for Mr. A, if profit for the year is ₹1,500 and the partnership deed provides for interest on capital at 6% p.a.?

[0.88 marks]

The correct option is B ₹1,000
Interest on Capital:
A = ₹ $20, 000 \times \frac{6}{100} \times \frac{1, 500}{1, 800}$
= ₹1,000

*A’s Interest + B’s Interest