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Question

X and Y are partners with the capital of Rs 50,000 and Rs 30,000 respectively. Interest payable on capital is 10% p.a. Find the interest on capital for both the partners when the profits earned by the firm is Rs 4,800.


A

None of these

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B

No interest will be paid to the partners.

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C

5000 and 3000

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D

3000 and 1800

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Solution

The correct option is D

3000 and 1800


Interest on capital for X = 50,000 * 10% = 5,000
Interest on capital for Y = 30,000 * 10% = 3,000

Total interest on capital = 8,000.

Since the total interest is more than the profits available, interest is provided only to the extent of profits shared in their capital ratio of 5:3

For X = 4,800 * 5/8 = 3,000
For Y = 4,800 * 3/8 = 1,800


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