Question : P, Q and R were partners in a firm sharing profits in a 2:2:1 ratio. The Partnership Deed provided that on the death of a partner his executors will be entitled to the following:
(a) Interest on Capital @ 12% p.a.
(b) Interest on Drawings @ 18% p.a.
(c) Salary of Rs. 12,000 p.a.
(d) Share in the profit of the firm (up to the date of death) on the basis of the previous year's profit.
P died on 31st May 2020. His capital was Rs. 80,000. He had withdrawn Rs. 15,000 and interest on his drawings was calculated as Rs. 1,200. The profit of the firm for the previous year ended 31st March 2020 was Rs. 30,000.
Question:
The amount of interest on capital are
Option 1: Rs 9,600
Option 2: Rs 2,400
Option 3: Rs 1,600
Option 4: None of the above
Correct Answer: Rs 1,600
Solution :
Answer =
Rs 1600
Int on capital= 1600
| P's capital a/c | |||
| To Drawings | 15,000 | By Bal b/d | 80,000 |
| To Int on drawings | 1200 | By Profit & loss susp. a/c | 2,000 |
| To P's executor a/c (b/f) | 69,400 | ($30,000 \times \frac{2}{5} \times \frac{2}{12}$) | |
| By IOC | 1,600 | ||
| ($80000 \times \frac{12}{100} \times \frac{2}{12}$) | |||
| By Salary($12,000 \times \frac{2}{12}$) | 2,000 | ||
| 85,600 | 85,600 | ||
Hence, the correct option is 3.
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