Question

P and Q are partners sharing profits in a 5:3 ratio. They allow interest on capital at 6% p.a. If P’s capital is ₹1,20,000, what is the interest credited to his capital account?

• A. ₹7,000
• B. ₹7,200
• C. ₹7,500
• D. ₹8,000

Hint:

Interest on capital is calculated at the agreed rate on the partner’s capital. This interest is credited to the partner’s capital account.

Answer 1

The Correct Option is B

Interest on capital is calculated as a percentage of the partner's capital. \[ \text{Interest on P’s Capital} = \frac{6}{100} \times 1,20,000 = ₹7,200 \] Thus, the interest credited to P’s capital account is ₹7,200.