Multiple choice

Capital of A, B and C in the beginning was Rs. $80,000$, Rs. $60,000$ and Rs. $40,000$. Profit sharing ratio being $2:2:1$. Interest on Capital @$10$% p.a to be provided. Net Profit before allowing interest to partners was Rs. $38,000$. What will be capital of A at the end of year?

  1. Rs. $90,000$
  2. Rs. $74,000$
  3. Rs. $96,000$
  4. Rs. $95,000$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Interest on capital: A=8000, B=6000, C=4000. Total interest = 18000. Remaining profit = 38000 - 18000 = 20000. Profit share for A (ratio 2:2:1) = 2/5 * 20000 = 8000. A's final capital = 80000 + 8000 (interest) + 8000 (profit) = 96000.

AI explanation

Using the simple interest formula, A's interest on capital is 10 percent of 80000, which equals 8000. A's share of the remaining profit is calculated by deducting the total interest of 18000 from the net profit of 38000, leaving 20000, and taking A's 2/5th share to get 8000. Adding the beginning capital of 80000 to the interest of 8000 and the profit share of 8000 yields 96000. The capital of A at the end of the year is Rs. 96,000.

Keep practicing — related questions