Abha and Bharat were partners. They shared profits and losses equally. On 1st April, 2014 their Capital Accounts showed balances of Rs. 3,00,000 and Rs. 2,00,000 respectively. Calculate the amount of Profit to be distributed Between the partners in the partnership deed provide for Interest on Capital @10% p.a. and the firm earned a profit of Rs. 50,000 for the year ended 31st March, 2015. (C.B.S.E. 2016, Comptt.)

SOLUTION

No amount of profit is left for distribution because profit earned during the Year Rs. 50,000 is equal to Interest on Capital.