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Interest on capital claimed by A = Rs 10000, B = Rs 15000 and C = Rs 25000. If the available profit is Rs 40000, how much will C receive?

Answer and explanation

Correct answer: Rs 20000

First compute total claims: Rs 10000 + Rs 15000 + Rs 25000 = Rs 50000. Since available profit Rs 40000 is less than total claims, distribute the profit in the ratio of claims. C's share = \(\dfrac{25000}{50000}\times 40000 = \dfrac{1}{2}\times 40000 = 20000\) rupees. The distractor Rs 25000 is incorrect because that is C's full claim but the profit is insufficient to pay full claims. Exam tip: If profit < total interest claims, allocate profit proportionally to each partner's claim.

Related tags

Partnership AccountsProfit DistributionInterest On CapitalRatioPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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