Question

74. A and B contribute 1,00,000 and 60,000 respectively in a partnership firm by way of capital on which they agree to allow interest @ 8% p.a. Their profit or loss sharing ratio is 3:2. The profit at the end of the year was 2,800 before allowing interest on capital. If there is a clear agreement that interest on capital will be paid even in case of loss, then B's share will be: (A) Profit 6,000 (B) Profit 4,000 (C) Loss 6,000 (D) Loss 4,000
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Answer 1

The correct answer is (D) Loss Rs. 4,000.  

                           Profit and loss a/c

Particulars                  Rs.              Particulars                     Rs.      

To Interest on                           By profit of the year        2,800

capital                                       By loss transferred to:

A= 8% of 1,00,000    8,000      A's capital= 3/5×10000

B= 8% of 60,000      4,800       B's capital= 2/5×10000  10,000  

                                1,28,000                                             1,28,000