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
• B. No interest will be paid to the partners.
• C. 5000 and 3000
• D. 3000 and 1800

Answer 1

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