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Anna and Bobby were partners sharing profits and losses in the ratio of 5: 3. 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 if the Partnership Deed provided for Interest on Capital @10% p.a. and the firm earned a profit of Rs. 45,000 for the year ended 31st March, 2015. (C.B.S.E. 2016, Comptt. Outside Delhi)

SOLUTION

Profit of Rs. 45,000 in not adequate to pay interest on capital. Hence, profit of Rs. 45,000 will be distributed in the ratio of interest on capital i.e., Rs. 30,000: Rs. 20,000 or 3: 2. Thus Anna will get Rs. 27,000 and Bobby will get Rs. 18,000.

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