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Q.17
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Q.17
Calculation | ||
Profit before Interest on Capital | 45,000 | |
Less : Interest on Capital | ||
X | 10,00,000 x 8% | 80,000 |
Y | 5,00,000 x 8% | 40,000 |
Total Interest on Capital | 120,000 | |
Since Total interest on Capital is more than profit available i.e Inadequate Profit, Interest shall be allowed only to the actual profit in the ratio of the calculated interest on capital to each partner. | ||
Proportionate Interest on Capital to be credited to each partner | ||
X | 45,000 x 80,000 / 1,20,000 | 30,000 |
Y | 45,000 x 40,000 / 1,20,000 | 15,000 |
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