Multiple choice

Directions: Question is based on the hypothetical situation given below. On 1st September, 2020, 20 students of Modern College started their partnership firm in the name of 'Be Safe' for selling sanitisers on digital mode. Since they were good friends, they did not have any explicit agreement in place. All of them agreed to invest Rs. 15,000 each as capital. The books were closed on 31st March, 2021, on which date the following information was provided by the firm. PARTICULARS AMOUNT (Rs.) Sale of sanitisers 1,20,000 Cost of goods sold 50,000 Total remuneration to partners 2,000 per month Rent to a partner 1,000 per month Manager's commission 5,000 Closing stock as on March 31, 2021 9,000 6% fixed deposit (made on 31.3.2021) 20,000 On 01st December, 2020, one of the partners of the firm introduced additional capital of Rs. 30,000 and also advanced a loan of Rs. 40,000 to the firm. Calculate the amount of interest that partner will receive for the current accounting period.

  1. Rs. 4,200

  2. Rs. 1,400

  3. Rs. 1,575

  4. Rs. 800
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The partner advanced a loan of 40,000. In the absence of an agreement, interest on a partner's loan is provided at 6% per annum. The loan was given on 1st December, and the books closed on 31st March (4 months). Interest = 40,000 * 6% * (4/12) = 40,000 * 0.06 * (1/3) = 800.

AI explanation

In the absence of an explicit agreement, the Indian Partnership Act allows interest on a partner's loan at 6 percent per annum, while no interest is provided on capital. The loan of 40000 was given on December 1, 2020, and the books closed on March 31, 2021, making the period exactly 4 months. The interest is calculated as 40000 * (6/100) * (4/12), which results in Rs. 800.

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