Multiple choice

Shivam and Rytham are partners with their capital amounts Rs. 2,00,000 and Rs. 3,00,000 respectively. As per partnership deed, they are allowed interest on capital @ 6% p.a. The firm earned a profit of Rs. 18,000 at the end of year. What should be the interest on capital amounts of Shivam and Rytham?

  1. Rs. 9,000 each

  2. Rs. 12,000 and Rs. 18,000 respectively

  3. Rs. 7,200 and Rs. 10,800 respectively

  4. No interest on capital should be given as the profits are insufficient.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This is the correct answer. The profits are insufficient. Thus, the profit should be divided between them to the extent of Rs. 18,000 in their capital ratio (2 : 3), which becomes Rs. 7,200 and Rs. 10,800 respectively.

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