Question

Akhil and Ravi are partners sharing profits and losses in the ratio of 7:3 with capitals of 800,000 and 6,00,000 respectively. According to partnership deed interest on capital is to be provided @ 8% pa, and is to be treated as a charge. Profit for the year is 80.000. Choose the correct option: a) A will be credited by 64,000 and B will be credited by 48,000. b) A will be credited by 56,000 and B will be credited by 24,000. c) A will be credited by 22,400 and B will be credited by 9.600. d) A will be credited by 41.600 and B will be credited by 38.400.​

Answer 1

option c is correct

good learning

Answer 2

Given:

Profits and loss ratio of Akhil and Ravi= 7:3

The capital of Akhil and Ravi is 800000 and 600000 respectively.

Interest on capital is 8% and is treated as a charge.

Profit for the year = 80000

To find:

How will the profit be credited to the partners?

Solution:

Capital

Akhil - 800000

Ravi - 600000

Profit and Loss sharing ratio = 7:3

Interest on capital = 8%

Profit= 80000

Interest on capital

Akhil

$interest \: on \: capital = 8\% \times 800000$

$interest \: on \: capital = \frac{8}{100} \times 800000$

$interest \: on \: capital = 64000$

Ravi

$interest \: on \: capital = 8\% \times 600000$

$interest \: on \: capital = \frac{8}{100} \times 600000$

$interest \: on \: capital = 48000$

The interest of capital for Akhil is Rs. 64000 and Ravi is Rs. 48000.

Since interest on capital is treated as a charge the full amount of the interest will be credited to the respective partner's capital account.

Therefore, the correct answer from the options is an option (a)

A will be credited by Rs. 64000.

A will be credited by Rs. 64000. B will be credited by Rs. 48000.