Question

Vidit and Seema were partners in a firm sharing profits and losses in the ratio of 3:2. Their capitals were 1,20,000 and 240,000 respectively. They were entitled to interest on capital @ 10%. The firm earned
profit of 18,000 during the year. The interest on Vidit's capital will be
(a) 12,000,
(b) 10,800.
(c) 77,200
(d) 6,000.


Please select Correct option and Give explanation of the question.I need explanation of the prblm.
The one who will give correct explanation, will mark you Brainliest​

Answer 1

Given data:

• Vidit and Seema were partners in a firm sharing profits and losses in the ratio 3:2.
• Their capitals were Rs 1,20,000 and Rs 2,40,000 respectively.
• Interest on capital was to be charged at 10% p.a.
• The profit for the year was Rs 18,000.

To find: The interest on Vidit's capital.

Answer:

Interest on capital = (Capital × Rate) ÷ 100

As per the question, we have:

• capital = Rs 1,20,000
• rate = 10

Substituting them in the formula,

Interest on Vidit's capital = (Rs 1,20,000 × 10) ÷ 100 = Rs 12,000

Therefore, the interest on Vidit's capital is (a) Rs 12,000.

While preparing a Profit & Loss Appropriation Account, interests on capitals are usually taken on its debit side, along with other items, and is used to determine profit/loss distribution between partners according to their ratio.