Question : A and B are equal partners with capitals of Rs.2,00,000 and Rs.1,00,000 respectively. As per deed, they are allowed an interest @ 8% p.a. on capital. During the year, the firm earned a profit of Rs.12,000. Interest on capital allowed to A and B will be:
Option 1: Rs.16,000 and Rs.8.000 respectively
Option 2: Rs.8,000 and Rs.4,000 respectively
Option 3: Nil
Option 4: Rs.6,000 each
Correct Answer: Rs.8,000 and Rs.4,000 respectively
Solution : Interest on A's capital = Rs.2,00,000 X 8% = Rs.16,000 Interest on B's capital = Rs.1,00,000 X 8% = Rs.8,000 Total appropriation = Rs.16,000 + Rs.8,000 = Rs.24,000 which is more than profit Rs.12,000 Since profit available is only Rs.12,000 therefore, maximum interest can be distributed is12,000 in the ratio of interest calculated above i.e. 16,000 : 8,000 = 2:1
A's interest on capital = Rs.12,000 X 2/3 = Rs.8,000 B's interest on capital = Rs.12,000 X 1/3 = Rs.4,000 Hence, the correct option is 2.
Question : X and Y are Partners in a Ratio of 3:2. Their capitals are Rs. 2,00,000 and Rs. 1,00,000, respectively. Interest on capital is allowed @8% p.a. The firm earned a profit of Rs. 60,000 for the year ended March 31st, 2019. Interest on capital will be
Option 1: X Rs. 16,000, Y Rs. 8,000
Option 2: X Rs. 8,000, Y Rs. 4,000
Option 3: X Rs. 14,400, Y Rs. 9,600
Option 4: No interest will be allowed.
Question : A and T are equal partners with fixed Capitals of Rs. 2,00,000 and Rs. 1,00,000, respectively. After closing the accounts for the year ending 31st March 2019. It was discovered that interest on capital 8% p.a. was omitted to Be provided. In the adjustment Entry:
Option 1: A will be credited By Rs. 16,000 and T will be debited by Rs. 8,000
Option 2: A will be debited By Rs. 16,000 and T will be debited by Rs. 8,000
Option 3: A will be credited By Rs. 4,000 and T will be debited by Rs. 4,000
Option 4: A will be debited by Rs. 4,000 and T will Be credited by Rs. 4,000.
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