If profit is insufficient and the deed states that salary is allowed first and interest on capital second, what order should be followed?

Correct answer: Salary first, then interest on capital from the remaining profit

The governing concept is that the partnership deed controls the order and conditions of appropriations when profit is insufficient. The deed expressly gives priority to salary and places interest on capital second. Therefore, available profit must first be used to satisfy the salary entitlement; only the balance, if any, can be applied toward interest on capital. Option A correctly states this sequence. Interest cannot be placed first merely because it relates to capital, so option B contradicts the agreement. Equal reduction is not an accounting rule unless specifically prescribed, making C incorrect. Option D ignores the valid contractual priority and is also incorrect.