Multiple choice

Rs. 15,000 is given as loan by A in the firm in which he is partner too. On 31st March 2008, Calculate the amount of interest while the books are closed on 31st Dec. every year and there is no agreement regarding interest on loan.

  1. Rs. 675

  2. Rs. 750

  3. Rs. 1,500

  4. No interest
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A Correct answer
Explanation

According to the Indian Partnership Act, in the absence of an agreement, interest on a partner's loan is payable at 6% per annum. The loan was given on March 31st, and the books close on Dec 31st, meaning the loan was held for 9 months. Interest = 15000 * 0.06 * (9/12) = 15000 * 0.06 * 0.75 = 675.

AI explanation

In the absence of a specific agreement, the Indian Partnership Act mandates interest on a partner's loan at 6% per annum. The loan of Rs. 15,000 was given on 31st March 2008, meaning it was outstanding for 9 months until the books were closed on 31st December 2008. The interest is calculated as 15000 times 6 divided by 100 times 9 divided by 12, resulting in Rs. 675.

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