A and B are partners having capital of Rs. 50,000 and Rs. 60,000 respectively. Interest on capital is given @ 5% p.a. Profits for the year before appropriation is Rs. 4,600 provide interest on capital out of profits. Increase allocated to partners is :
  • a)
    Rs. 3,000 and Rs. 2,500
  • b)
    Rs. 2,090 and Rs. 2,509
  • c)
    Rs. 2,500 and Rs. 2,091
  • d)
    Rs. 600 and Rs. 300
Correct answer is option 'B'. Can you explain this answer?

CA Foundation Question

71 Answers
Priyanshu Tiwari answered Jan 14, 2020
Interest on capital =2500 And 3000but profit = 4600so 2500/ 3000= 5:6amount is divided into 5: 6A= 4600÷11×5=2091B=4600÷11×6=2509

Shriniwasan Iyar answered Feb 26, 2020
Interest on capital =2500 And 3000
but profit = 4600
so 50000/ 60000= 5:6
amount is divided into 5: 6
A= 4600÷11×5=2091
B=4600÷11×6=2509

Amit Sir answered Apr 18, 2020
The actual interest
= (50000 × 5%) + (60000 × 5%) = 2500 + 3000 = 5500

Since actual interest is more than profit available, the profits will be distributed as interest in the ratio of interest i.e. 4600 will be distributed in ratio 2500:3000 or 5:6

Thus profit for A = 4600 × 5/11 = 2090
profit for B = 4600 × 6/11 = 2510

So correct answer is Option B

Aman Yadav answered Apr 29, 2020
You are pass

Aman Singh answered Apr 24, 2020
Rs 2500and rs 2509

Freedom Institute answered Feb 27, 2020
Interest on capital =2500 And 3000
but profit = 4600
so 50000/ 60000= 5:6
amount is divided into 5: 6
A= 4600÷11×5=2091
B=4600÷11×6=2509

Kanwal Preet answered Mar 03, 2020
Interest on capital =2500 And 3000
but profit = 4600
so 50000/ 60000= 5:6
amount is divided into 5: 6
A= 4600÷11×5=2091
B=4600÷11×6=2509

Gautam Jain answered Sep 15, 2020
When expense is more than profit for appropriatiinon then profit is divide in expene ration like here int on capital is expense which is coming 5500(2500+3000) so we find ration 2500/3000 which is 5:6 so profit to A is 2090 and to B is 2509

Chandrika S answered May 20, 2020
Given, Capitals of A and B are 50000&60000 respectively and interest on capital is 5%
So, interest on capital of A =50000×(5÷100) =2500
interest on capital of B =60000×(5÷100) =30000
given profits before year of appropriation is 4600.To provide interest on capital out of profits the profits are shared in the ratio of interest of capital i.e, 2500/3000 =5:6
So interest on capital of A = 4600×5/11=2090
interest on capital of B=4600×6/11=2509

Nishu Jain answered Feb 09, 2020
Interest on capital of A & B is 2500 & 3000 respectively .
so total interest on Capital is greater than profit . that's why interest on capital is not given to A & B and the profit is divided in their capital ratio ( 5 :6 ) becaz profit ratio is not given .
A's profit is 4600*5 / 11 =2090
B's profit is 4600*6 / 11 = 2509
then option B is correct

Adithya Prahhu answered May 02, 2020
4600×5÷11=2909and 4600×6÷11=2509

Shraddha Patil answered Aug 09, 2020
Interest on capital is provided out of profit
profit is Rs4600
A=4600×[5]/11
=2090
B=4600×[6]/11
=2509

Anjli Thakur answered Jul 29, 2020
Interest on capital =2500 and 3000 but profit =4600 so 50000/60000=5:6. So, interest increases in profile of A is 5/6+5 × 4600 = 2090 .interest increases in profit of B is 6/6+5 ×4600 = 2509. So, answer b) is correct

ANKAN DIHINGIA answered Mar 07, 2020
Interest on capital =2500 And 3000
but profit = 4600
so 50000/ 60000= 5:6
amount is divided into 5: 6
A= 4600÷11×5=2091
B=4600÷11×6=2509

Khushboo Agarwal answered Aug 17, 2018
Interest on capital is capital*rate of interest which is 2500&3000. But this is greater than the existing profit. Hence the existing profit is distributed in the ratio of interest on capital

Meenal Soni answered Apr 17, 2020
Interest is 5% on capital i.e.2500 & 3000 as interest on capital is given out of profit and there is no sufficient profit to pay therefore IOC is given in the ratio of there capitals which is 5:6 4600×5/11=2090,4600×6/11=2509

Siddharth Goyal answered Apr 26, 2020
Yes..
if we simply calculate interest on capital ...likewise
50,000×5/100 ×12/12=2500
60,000×5/100 ×12/12 =3000
as we sum both these ...2500+3000=5500 >4600
I.e. more than profit
so it is the case when appropriations are more than profit ..
in this case we decrease the appropriations to profits ..in their ratio
2500 : 3000 » 5 : 6
if we distribute 4600 in this ratio it will be
2090 and 2510

Aarati Bardewa answered Jul 30, 2020
The ratio of partner is 5:6 .firm provide interest on capital out of profits...A is entitled 4600×5/11 and B is entitled 4600×6/11

Vivek डंख answered Apr 28, 2020
A int. on capital=4600×5/11=2090.90909
B int. on capital=4600×6/11=2509.09090

Becouse, profit is less than int. on capital so that profit is distributed as capital ratio

Somnath Khaneja answered May 02, 2020
Yes , option b) 2090 and 2509 is correct as interest on capital as calculated is 2500 and 3000 if we sum it up then it gives 5500 which is more than profit that's 4600 so we take ratio of 2500 and 3000 that's 5:6 and on distributing 4600 in 5:6 we get 2090 and 2509

Sakshi Tyagi answered Feb 21, 2020
Rate of int of capital is given as 5%p.a.
and 5% of Rs.50000=Rs.2500
5% of Rs.60000=Rs.3000
Total interest of capital=Rs.5500
and we have profit only of Rs.4600 i.e we are short of Rs. 900
in this types of question where profit is less then the required interest of capital we find the ratio between capitals of partners here it is 5:6 (50000/60000)
and the profit is divided in this ratio between partners as interested of capital .
Here , 5/11 of 4600 =Rs.2090
6/11 of 4600=Rs.2509.
Therefore the correct answer is option B.

Gaurav Khulbey answered Aug 26, 2020
Option b
since total profit is 4600
and total interest amount of both partners is 5500
so 4600 will be divided in capital ratio of both partners
i.e 5:6

then partner A will get 2090
partner B will get 2509

Pravin Lnv answered Mar 16, 2020
Interest rate = 5% p.a (on capital)
A's capital = Rs. 50,000
B's capital = Rs. 60,000
therefore interest 5% for partners:
A's interest =50,000×5% =Rs. 2500
B's interest =60,000×5% =Rs. 3000
2500:3000 = 5:6 (Ratio)
therefore profit sharing ratio is 5:6
Given profit appropriation amount=Rs.4,600
A's profit = 4600×5/11 = Rs.2090
B's profit = 4600×6/11 = Rs.2509
Ans: b) Rs.2090 and Rs.2509

Anushka Pradhan answered May 01, 2020
The interest on capital of Mr A is 2500and Mr. B is 3000 but the profit is not sufficient .In this way we divide the profit to each other in his interest on capital ratio which was 5:6 . and we gave Mr.A 2090 and Mr.B 2509.

Megha Rani answered Jun 16, 2020
After finding the interest on capital the results are;
A's capital=50000×5/100=2500
B's capital=60000×5/100=3000
profit before appropriation are divided in the capital ratio=4600×5/11=2090
4600×6/11=2509
it proves that option 'B' is correct

Sanjeev Gupta answered Jul 09, 2020
Profit=4600(after provide interest on capital)
so,the total profit is 4600+2500(A's interest on capital)+3000(B's interest on capital)=10100
and the ratio between A and B is 50,000:60,000 or 5:6.
so,
A's profit=2090 and B's profit=2509
Therefore,
B is a correct answer.

Swati Gupta answered Apr 11, 2020
Interest on capital of both partners=Rs2500(for A),Rs3000(for B)=Rs5500(total) which is less than the net profit available
So,the net profit will be distributed in the capital ratio which is 5:6(50000:60000)
Therefore,A's interest on capital=4600×5/11=Rs2091(round off for 2090.90)
B's interest on capital=4600×6/11=Rs2509(roundoff for 2509.08)
Answer-(B)

Vaishnavi Srivastava answered Apr 13, 2020
Interest on capital=2500 and 3000(A&B)
but interest on capital out of Profit =4600×5÷11=2090
and 4600*6÷11=2509( IOC will distribute in 50000/60000= 5:6).

H Roopareliya answered Apr 12, 2020
Profit = 4600
profit sharing ratio of A & B = 5:6
therefore by dividing 4600 in respective ratio we will get interest .
A = 4600×5÷11=2090
B=4600×6÷11=2509

Subham Saharan answered Apr 15, 2020
According to a concept if interest on capital is more than the profit than the interest on partners capital is will get converted into ratio in which profit is to be divided as interest on capital
In this case interest on capital of A is Rs. 2500 and of B is Rs. 3000 which is much more than the profit so this interest is to be converted into ratio which is 5 :6 and in such ratio profit Rs. 4600 is to be distributed as a part of interest on capital and at last Rs. 2090 and Rs. 2509 is to be distributed among A and B respectively .

Navneet Kaur answered Apr 13, 2020

Harshita Kalantri answered Mar 24, 2020
Profit sharing ratio =50000/60000=5:6
Profit=4600
A's profit =5/11×4600=2090
B's profit=6/11×4600=2509
Hence, option b is the correct option

Areeba Parveen answered Jun 15, 2020
Interest on capital will be 4600×(50000÷110000)i.e.2091and 4600×(60000÷110000) ie.2509

Satish Kesharwani answered Aug 31, 2020
Interest on Capital for A is 5% of 50000 = Rs 2500
Interest on Capital for B is 5% of 60000 = Rs 3000
But the Profit for the year is Rs 4600
Hence Rs 4600 divided between A & B in the ratio of 2500:3000 = 5:6 .
A get Interest of 4600 ×5÷11 = Rs 2091
B get Interest of 4600 ×6÷11 = Rs 2509.

Therefore Ans: 'Option b'

Mansi Pathak answered Oct 17, 2020
Correct answer is option B

Atul Vishwakarma answered Oct 18, 2020
A's capital = 50,000 and B's capital = 60,000 then ratio of the A and B capital is 5:6 . profits = 4,600 . interest on capital @ 5% p.a. A and B profits can be received in her own ratios . distribution of profits A = 4600×5/11( 5+6= 11) = 2090 and B = 4600× 6/11= 2509 .

Deepak Bisht answered Apr 15, 2020
The ratio of interest on capital is 2500 and 3000
so the ratio is 5:6
then 4600x5/11= 2090
then 4600x6/11 =2509

Sukant Dev answered Apr 23, 2020
Interest on capital will be
A=RS2500
B=RS3000
so total interest on capital is RS 5500 but the profit is only rs 4600 so this is the case of inadequate profit and interest on capital is appropriation item here and not the charged item, hence interest on capital is restricted maximum of rs 4600 ( volume of profit) hence RS 4600 is divided between both the partner in capital ratio that is 5:6 in the form of interest on capital.

Aniket Thorat answered May 21, 2020
Answer is Because Interest on A'S Capital is 2500 (5000 x 5/100) And B'S Capital is 3000(60000 x 5/100) =5500 But the profit is only 4600 according to the partnership act partner is entitled to intrest from profit only then here 900rs is shot then as per their capital ratio (5/6)less the amount of execs 900. A'S intrest=2500 - 409(900 x 5/11) and B =3000 - 490 ,(900 x6/11)

Aryan Gangwar answered Jun 10, 2020
Since amt of appropriation is less than interest to be provided. So amt. of appropriation is to be provided in the ratio of interest. A=4600×5/11=2090 & B=4600×6/11=2509.So , option B is correct.

Jahanvi Chandarana answered Apr 02, 2020
Here,
Interest on capital=
A:-50000Rs.×5%=2500Rs. and
B:-60000Rs.×5%=3000Rs.
but here profit 4600Rs. is given so,
Distribution of profit in the ratio of
50000:60000=5:6
So,the amount of profit divided into 5:6 :-
A:-4600Rs.× 5÷11= 2090Rs. or 2091Rs.
B:-4600Rs.× 6÷11= 2509Rs.

Shanmuga Priya answered Apr 06, 2020
Intrest on capital 2,500 & 3,000
profit =4,600 50000÷60000
=5/6
=5:6
=4,600÷11×5=2090
=4,600÷11×6=2509

Soham Mitkari answered Mar 28, 2020
B) Rs.2090 and Rs.2509

Sejal Bangad answered Apr 01, 2020
If profit is insufficient to provide interest on capital then we distribute profit into partners captial ratio.

so 4600 is divided into 5:6 ratio

Ganapati Patro answered Jun 30, 2020
A's capital = 50,000 and B's capital = 60,000 then ratio of the A and B capital is 5:6 . profits = 4,600 . interest on capital @ 5% p.a. A and B profits can be received in her own ratios . distribution of profits A = 4600×5/11( 5+6= 11) = 2090 and B = 4600× 6/11= 2509 .

Varunya Varunya answered Jun 29, 2020
50,000:60,000
=5:6
A=5/11
B=6/11

A. = 4,600*5/11
= 2090
B. = 4,600*6/11
=2509


( B) A=2090,B= 2509

Priyanshi Goyal answered Sep 20, 2020
Since if we will calcule the interest on capital of A and B at 5%p.a. it would be 2,500 and 3,000 respecively which makes 5,500 together which is more than the profits.
But according to the terms of partnership partners can accumulate their interest on capitals,salary etc from the profits only.
So that is why from their capital we will take out a ratio which would be 5:6.
Now we will calculate interest on capital in this ratio:
A = 4,600×5/11 = 2,090(round off value)
B = 4,600×6/11 = 2,509(round off value)

Therefore, interest on capital provided to A and B will be Rs.2,090 and Rs.2,509 respectively.

Pratham Sagar answered May 03, 2020
Capital out of profits

than based of ratio is capital we divide profits. in two parties.

Ashok Agrawal answered Jun 12, 2020
As the interest to partners a and b is 2500 and 3000 respectively whose total 5500 is more than the profit of 4600 so 4600 will be divided in the ratio of 5:6 which is 2090 and 2509.

Somesh Bharti answered Jun 07, 2020
Here, the profit is 4600, whereas the capitals are in ratio 5:6
and 5+6=11,4600/11=418
Hence, profit for A=418x5=2090,and for B=418x6=2509
Therefore, the answer is C.

Sheetal Saharan answered Jun 06, 2020
Interest on capital of A is 2500 and B's 3000.Total interest is 5500.It is more than the profit available so we have to calculate profit sharing ratio according to capital. Capital of A is 50,000 and B's 60,000.
50,000:60,000=5:6
calculation of share of profit
A's share 4600×5÷11=2090
B's share 4600×6÷11=2509

Soni Singh answered May 20, 2020
The answer is option B because when interest is more than profit then the interest is given out of the profit in their capital ratio. So, 4600÷5/11 and 4600÷6/11.

Ayush Singj answered May 18, 2020
Total of IOC is more than the profit so will provide it out of profit
ratio of IOC =2500/3000=5:6
profit of A= 4600(5/11)=2090(approx)
profit of b=4600(6/11)=2509(approx)

Asha Thomas answered Jul 30, 2020
A=50000 and B=60000.

so profit sharing ratio is 5/6.

A=4600*5/11=2090.

B=4600*6/11=2509,so "b" is correct

P.n.sravana Sandhya Redd answered Oct 13, 2020
Interest on capital for A& B partners= 2500&3000
profit before adjustment is 4600 then 50000/60000= 5:6 ratio of A&B then interest on capital out of profits=4600×5/11=2090.9 for A and For B = 4600×6/11=2509.0

Hira Lal answered Jul 24, 2020
Yes B is this correct because when int. are provide on capital then the int. will come 2500;3000 which new ratio come is 5:6 so the profit will given before appropriation.....
4600× 5÷11 the value come = 2090
4600×6÷11 the value come= 2509.09

Bijin Abraham Thomas answered Aug 08, 2020
Interest on Capital of A=50,000*5/100= ₹2,500
Interest on Capital of B=60,000*5/100 ₹3,000
Therefore,Total Interest on Capital
=2,500+3,000= ₹5,500
Net Profit = ₹4,600
Since, the items in Dr. side of P&L Appropriation A/c is greater than the those in the Cr. side, the Appropriation doesn't take place.
Instead, the Net Profit will be divided among the partners in the ratio of their capitals,i.e,5:6.
5+6=11.
A's share of profit=4,600*5/11= ₹2,091.
B's share of profit=4600*6/11 = ₹2509.
Hence, Option (B) is correct.

Prerna Singh answered Oct 27, 2020
Interest on capital A = 50000×5/100 = 2500
B = 60000×6/100 = 3000

2500/3000 = 5:6
profit is divided in 5:6 then,
4600×5/11 = 2090
4600×6/11 = 2509
SO, CORRECT ANSWER IS OPTION 'B'

Jayanthi Goud answered Oct 18, 2020
B is correct

Khushal Kapoor answered 3 days ago
Interest on capital 5%.
A=50000
B=60000
Profit=4600
A. interest=2500. share. 5
B.interest=3000. share.6
total.11
A=4600*5/11=2090
B=4600*6/11=2509

Surinder Kumar answered Aug 11, 2020
As profit is not enough to distribute capital
so, profit is distributed in ratio of int on capital.

A:B
2500:3000
5:6
Profit 4600 is distributed in 5:6
so correct and is (B)

Pravin Kumawat answered Sep 06, 2020
Capital of A and B is 50000 and 60000 and interest on capital @5% interest on capital for A is 2500 and for B is 3000 but interest on capital is provided out of profits ie 4600 so ratio of interest on capital was 5:6 for A it will increase 2090.9 ie 2091 with interest and for B it will increase 2509 with his interest

Venky Venkatesh answered May 15, 2020
Profit sharing between A and B is 5:6
so total share of capital is equal to =11

A's share of capital is = 5/11
B's share of capital is =6/11

total capital of the firm = capital of A + capital of B
1,10,000=50000+60000

total interest on capital of the firm =1, 10,000*5%
=5500.
A's share of interest on capital is = 5500*5/11
(or)
50000*5%
=2500.

B's share of interest on capital is= 5500*6/11
(or)
60000*5%
= 3000.

but total profit of the firm is =4600

So, A's share of profit is = 4600*5/11
= 2090

B's share of profit is = 4600*6/11
=2509.

Likhitha Reddy answered Jul 18, 2020
The correct option is b because, when the amount of interest on capital is more than the profits, when calculated, then we clculate interest on capital according to the partners capital contribution ratio. so we calculate, 4,600*5/11&4, 600*6/11

Laiba Khurshid answered Oct 29, 2020
This can be solved by the method appropriation out of profit. Here the actual interest is of A - 2500 amd of B - 3000 and the profit is only 4600 which is not enough for the distribution of interest.
So here we have to take the ratio of the interest i.e 5:6.
And then the profit will be distributed in the ratio of 5:6.
The answer is 2090 for A amd 2509 for B

Aditya Raj answered Oct 20, 2020
RATIO OF TWO PARTNER WILL BE 5:6=11
THEN, THE PROFIT CAPITAL OF EACH PARTNER IS-:
A= 4,600×5÷11=2,090
B=4,600×6÷11=2,509

This discussion on A and B are partners having capital of Rs. 50,000 and Rs. 60,000 respectively. Interest on capital is given @ 5% p.a. Profits for the year before appropriation is Rs. 4,600 provide interest on capital out of profits. Increase allocated to partners is :a)Rs. 3,000 and Rs. 2,500b)Rs. 2,090 and Rs. 2,509c)Rs. 2,500 and Rs. 2,091d)Rs. 600 and Rs. 300Correct answer is option 'B'. Can you explain this answer? is done on EduRev Study Group by CA Foundation Students. The Questions and Answers of A and B are partners having capital of Rs. 50,000 and Rs. 60,000 respectively. Interest on capital is given @ 5% p.a. Profits for the year before appropriation is Rs. 4,600 provide interest on capital out of profits. Increase allocated to partners is :a)Rs. 3,000 and Rs. 2,500b)Rs. 2,090 and Rs. 2,509c)Rs. 2,500 and Rs. 2,091d)Rs. 600 and Rs. 300Correct answer is option 'B'. Can you explain this answer? are solved by group of students and teacher of CA Foundation, which is also the largest student community of CA Foundation. If the answer is not available please wait for a while and a community member will probably answer this soon. You can study other questions, MCQs, videos and tests for CA Foundation on EduRev and even discuss your questions like A and B are partners having capital of Rs. 50,000 and Rs. 60,000 respectively. Interest on capital is given @ 5% p.a. Profits for the year before appropriation is Rs. 4,600 provide interest on capital out of profits. Increase allocated to partners is :a)Rs. 3,000 and Rs. 2,500b)Rs. 2,090 and Rs. 2,509c)Rs. 2,500 and Rs. 2,091d)Rs. 600 and Rs. 300Correct answer is option 'B'. Can you explain this answer? over here on EduRev! Apart from being the largest CA Foundation community, EduRev has the largest solved Question bank for CA Foundation.