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Interest on A’s capital is Rs 14,000 and interest on B’s capital is Rs 21,000. Available profit is only Rs 28,000. If interest is restricted proportionately, how much interest will B receive?

Answer and explanation

Correct answer: Rs 16,800 / ₹16,800

The governing concept is proportionate restriction when the total amount of allowable interest exceeds the profit available for appropriation. The total interest claims are Rs 14,000 + Rs 21,000 = Rs 35,000. B’s share of the total claim is Rs 21,000/Rs 35,000 = 3/5. Since only Rs 28,000 is available, B’s proportionate interest is 3/5 × Rs 28,000 = Rs 16,800. A would receive the remaining 2/5, or Rs 11,200, and both amounts together use the full available profit. Therefore option A is correct. Option B uses the original claim without restriction, while C gives A’s amount and D allocates the entire profit to B.

Related tags

Interest On CapitalProportionate RestrictionProfit AppropriationCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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