If interest on capital is Rs 40,000 and available profit is Rs 30,000, while A and B have equal interest claims, how much will A receive?

Correct answer: Rs 15,000

The governing rule is that interest on partners' capital is an appropriation of profit, subject to the partnership agreement and the availability of profit. Here the total interest claim is Rs 40,000, but only Rs 30,000 of profit is available. Because A and B have equal interest claims, the available amount must be shared equally when it is insufficient to satisfy the full claims. Therefore A receives Rs 30,000 ÷ 2 = Rs 15,000, and B also receives Rs 15,000. Rs 20,000 would incorrectly divide the total claim rather than the available profit, while Rs 30,000 would give all available profit to A. Zero is also incorrect because some profit is available and both claims are equal.