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?

Related Test: Test: Introduction To Partnership Accounts - 1

By
Khushi Maheshwari
·
Jan 14, 2020 ·CA Foundation

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= 4600Ã·11Ã—5=2091B=4600Ã·11Ã—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

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 Ã— 5%) + (60000 Ã— 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 Ã— 5/11 = 2090

profit for B = 4600 Ã— 6/11 = 2510

So correct answer is Option B

= (50000 Ã— 5%) + (60000 Ã— 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 Ã— 5/11 = 2090

profit for B = 4600 Ã— 6/11 = 2510

So correct answer is Option B

Freedom Institute
answered
Feb 27, 2020

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

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 =50000Ã—(5Ã·100) =2500

interest on capital of B =60000Ã—(5Ã·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 = 4600Ã—5/11=2090

interest on capital of B=4600Ã—6/11=2509

So, interest on capital of A =50000Ã—(5Ã·100) =2500

interest on capital of B =60000Ã—(5Ã·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 = 4600Ã—5/11=2090

interest on capital of B=4600Ã—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

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

Shraddha Patil
answered
Aug 09, 2020

Interest on capital is provided out of profit

profit is Rs4600

A=4600Ã—[5]/11

=2090

B=4600Ã—[6]/11

=2509

profit is Rs4600

A=4600Ã—[5]/11

=2090

B=4600Ã—[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 Ã— 4600 = 2090 .interest increases in profit of B is 6/6+5 Ã—4600 = 2509. So, answer b) is correct

ANKAN DIHINGIA
answered
Mar 07, 2020

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 4600Ã—5/11=2090,4600Ã—6/11=2509

Siddharth Goyal
answered
Apr 26, 2020

Yes..

if we simply calculate interest on capital ...likewise

50,000Ã—5/100 Ã—12/12=2500

60,000Ã—5/100 Ã—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 Â» 5 : 6

if we distribute 4600 in this ratio it will be

2090 and 2510

if we simply calculate interest on capital ...likewise

50,000Ã—5/100 Ã—12/12=2500

60,000Ã—5/100 Ã—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 Â» 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 4600Ã—5/11 and B is entitled 4600Ã—6/11

Vivek à¤¡à¤‚à¤–
answered
Apr 28, 2020

A int. on capital=4600Ã—5/11=2090.90909

B int. on capital=4600Ã—6/11=2509.09090

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

B int. on capital=4600Ã—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.

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

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 =50,000Ã—5% =Rs. 2500

B's interest =60,000Ã—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 = 4600Ã—5/11 = Rs.2090

B's profit = 4600Ã—6/11 = Rs.2509

Ans: b) Rs.2090 and Rs.2509

A's capital = Rs. 50,000

B's capital = Rs. 60,000

therefore interest 5% for partners:

A's interest =50,000Ã—5% =Rs. 2500

B's interest =60,000Ã—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 = 4600Ã—5/11 = Rs.2090

B's profit = 4600Ã—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=50000Ã—5/100=2500

B's capital=60000Ã—5/100=3000

profit before appropriation are divided in the capital ratio=4600Ã—5/11=2090

4600Ã—6/11=2509

it proves that option 'B' is correct

A's capital=50000Ã—5/100=2500

B's capital=60000Ã—5/100=3000

profit before appropriation are divided in the capital ratio=4600Ã—5/11=2090

4600Ã—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.

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=4600Ã—5/11=Rs2091(round off for 2090.90)

B's interest on capital=4600Ã—6/11=Rs2509(roundoff for 2509.08)

Answer-(B)

So,the net profit will be distributed in the capital ratio which is 5:6(50000:60000)

Therefore,A's interest on capital=4600Ã—5/11=Rs2091(round off for 2090.90)

B's interest on capital=4600Ã—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 =4600Ã—5Ã·11=2090

and 4600*6Ã·11=2509( IOC will distribute in 50000/60000= 5:6).

but interest on capital out of Profit =4600Ã—5Ã·11=2090

and 4600*6Ã·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 = 4600Ã—5Ã·11=2090

B=4600Ã—6Ã·11=2509

profit sharing ratio of A & B = 5:6

therefore by dividing 4600 in respective ratio we will get interest .

A = 4600Ã—5Ã·11=2090

B=4600Ã—6Ã·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 .

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 .

Harshita Kalantri
answered
Mar 24, 2020

Profit sharing ratio =50000/60000=5:6

Profit=4600

A's profit =5/11Ã—4600=2090

B's profit=6/11Ã—4600=2509

Hence, option b is the correct option

Profit=4600

A's profit =5/11Ã—4600=2090

B's profit=6/11Ã—4600=2509

Hence, option b is the correct option

Areeba Parveen
answered
Jun 15, 2020

Interest on capital will be 4600Ã—(50000Ã·110000)i.e.2091and 4600Ã—(60000Ã·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 Ã—5Ã·11 = Rs 2091

B get Interest of 4600 Ã—6Ã·11 = Rs 2509.

Therefore Ans: 'Option b'

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 Ã—5Ã·11 = Rs 2091

B get Interest of 4600 Ã—6Ã·11 = Rs 2509.

Therefore Ans: 'Option b'

Atul Vishwakarma
answered
Oct 18, 2020

A'sÂ capitalÂ =Â 50,000Â andÂ B's capitalÂ =Â 60,000Â then ratio of theÂ A and B capitalÂ isÂ 5:6 .Â profitsÂ =Â 4,600Â .Â interest on capitalÂ @Â 5%Â p.a. A and B profitsÂ can be received in her own ratios . distribution ofÂ profitsÂ A =Â 4600Ã—5/11(Â 5+6= 11) = 2090 andÂ BÂ =Â 4600Ã— 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

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.

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=4600Ã—5/11=2090 & B=4600Ã—6/11=2509.So , option B is correct.

Jahanvi Chandarana
answered
Apr 02, 2020

Here,

Interest on capital=

A:-50000Rs.Ã—5%=2500Rs. and

B:-60000Rs.Ã—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.Ã— 5Ã·11= 2090Rs. or 2091Rs.

B:-4600Rs.Ã— 6Ã·11= 2509Rs.

Interest on capital=

A:-50000Rs.Ã—5%=2500Rs. and

B:-60000Rs.Ã—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.Ã— 5Ã·11= 2090Rs. or 2091Rs.

B:-4600Rs.Ã— 6Ã·11= 2509Rs.

Shanmuga Priya
answered
Apr 06, 2020

Intrest on capital 2,500 & 3,000

profit =4,600 50000Ã·60000

=5/6

=5:6

=4,600Ã·11Ã—5=2090

=4,600Ã·11Ã—6=2509

profit =4,600 50000Ã·60000

=5/6

=5:6

=4,600Ã·11Ã—5=2090

=4,600Ã·11Ã—6=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

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 = 4600Ã—5/11( 5+6= 11) = 2090 and B = 4600Ã— 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

=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 = 4,600Ã—5/11 = 2,090(round off value)

B = 4,600Ã—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.

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 = 4,600Ã—5/11 = 2,090(round off value)

B = 4,600Ã—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.

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 4600Ã—5Ã·11=2090

B's share 4600Ã—6Ã·11=2509

50,000:60,000=5:6

calculation of share of profit

A's share 4600Ã—5Ã·11=2090

B's share 4600Ã—6Ã·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, 4600Ã·5/11 and 4600Ã·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)

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

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=4600Ã—5/11=2090.9 for A and For B = 4600Ã—6/11=2509.0

profit before adjustment is 4600 then 50000/60000= 5:6 ratio of A&B then interest on capital out of profits=4600Ã—5/11=2090.9 for A and For B = 4600Ã—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.....

4600Ã— 5Ã·11 the value come = 2090

4600Ã—6Ã·11 the value come= 2509.09

4600Ã— 5Ã·11 the value come = 2090

4600Ã—6Ã·11 the value come= 2509.09

Bijin Abraham Thomas
answered
Aug 08, 2020

Interest on Capital of A=50,000*5/100= â‚¹2,500

Interest on Capital of B=60,000*5/100 â‚¹3,000

Therefore,Total Interest on Capital

=2,500+3,000= â‚¹5,500

Net Profit = â‚¹4,600

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= â‚¹2,091.

B's share of profit=4600*6/11 = â‚¹2509.

Hence, Option (B) is correct.

Interest on Capital of B=60,000*5/100 â‚¹3,000

Therefore,Total Interest on Capital

=2,500+3,000= â‚¹5,500

Net Profit = â‚¹4,600

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= â‚¹2,091.

B's share of profit=4600*6/11 = â‚¹2509.

Hence, Option (B) is correct.

Prerna Singh
answered
Oct 27, 2020

Interest on capital A = 50000Ã—5/100 = 2500

B = 60000Ã—6/100 = 3000

2500/3000 = 5:6

profit is divided in 5:6 then,

4600Ã—5/11 = 2090

4600Ã—6/11 = 2509

SO, CORRECT ANSWER IS OPTION 'B'

B = 60000Ã—6/100 = 3000

2500/3000 = 5:6

profit is divided in 5:6 then,

4600Ã—5/11 = 2090

4600Ã—6/11 = 2509

SO, CORRECT ANSWER IS OPTION 'B'

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

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)

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.

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

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= 4,600Ã—5Ã·11=2,090

B=4,600Ã—6Ã·11=2,509

THEN, THE PROFIT CAPITAL OF EACH PARTNER IS-:

A= 4,600Ã—5Ã·11=2,090

B=4,600Ã—6Ã·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
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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
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