Question

9. A, B and C enter into a business with capitals of Rs. 2500, Rs. 2000 and Rs. 10000
respectively. Interest is agreed to be allowed at 4%. A and B will receive Rs. 250
and Rs. 120 per month respectively as salaries and profits are to be divided in
the proportions 1:1:6. Distribute a profit of Rs. 6000 in the first year among
the partners.
(Ans. A: Rs. 3222.50 : B: Rs. 1642.50 :C: Rs. 1135)
C​

Answer 1

Answer:

Calculation of interest on capital.

Interest on X capital

20,000×

100

6

=Rs1200

Interest on Y's capital

10,000×

100

6

=Rs600

Total interest (1200+600)=Rs1800

Total profits available = Rs.1500

As total interest on capital is more than total profits, so profits of Rs 1500 to be distributed between X & Y as per their interest on capital ratio.

X:Y

Interest on capital = 1200:600 or 2:1

∴ X share = 1500×

3

2

=Rs1000

Y share = 1500×

3

1

=Rs500

Part (ii)

When interest on capital is charge, complete interest on capital will be charged.

Total interest = Rs. 1800

Total Profit = Rs. 1500

There is loss of Rs. 300. This loss of Rs. 300 will be distributed between X and Y in 2:3 ratio.

X share of loss = 300*2/5 = Rs. 120

Y share of loss = 300*3/5 = Rs. 180.