Question

Ansh and Abhi are partners sharing profits and losses in the ratio of 3 : 2. Their capital accounts showed balances of Rs. 3,00,000 and Rs. 4,00,000 respectively on April 01, 2024. Calculate interest on Ansh's Capital for the year ending March 31, 2025, if the partnership deed provides for interest on capital @ 8% p.a. and the firm earned a profit of Rs. 14,000 during the year.

• A. Rs. 24,000
• B. Rs. 16,000
• C. Rs. 6,000
• D. Rs. 3,000

Hint:

Profit is only Rs 14,000, so share it between the partners in the ratio of interest due (24,000 : 32,000).

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Interest on capital is an appropriation of profit. It can be paid only out of profit. If the profit is smaller than the total interest due, the profit is shared among the partners in the ratio of the interest due to each. Here the profit is Rs 14,000.

Step 2: Interest due on capital:
Ansh: \[ 300000 \times \frac{8}{100} = 24000 \] Abhi: \[ 400000 \times \frac{8}{100} = 32000 \] Total due = Rs 56,000.

Step 3: Compare with profit:
Profit is Rs 14,000, which is less than Rs 56,000. So the full interest cannot be paid. The profit is shared in the ratio 24,000 : 32,000, which is 3 : 4.

Step 4: Ansh's share:
\[ 14000 \times \frac{3}{7} = 6000 \] So Ansh gets Rs 6,000 as interest on capital, and Abhi gets Rs 8,000.

Step 5: Check the options:
Rs 24,000 is the full interest, which cannot be paid from a small profit. Rs 16,000 and Rs 3,000 come from wrong ratios or wrong bases. Only Rs 6,000 fits the rule.

Final Answer:
Interest on Ansh's capital is Rs 6,000. Option (3). \[ \boxed{\text{Rs } 6{,}000} \]