Question

Elvis, Finch and Gordon entered into a partnership on 1st July, 2023 with capitals of \(₹~20,00,000\) each. The partnership deed provided for interest on capital @ 10% per annum. The firm earned a net profit of \(₹~13,50,000\) for the year ended 31st March, 2024. The amount of profit transferred to Elvis’s capital account was:

• A. ₹~2,50,000
• B. ₹~3,00,000
• C. ₹~4,00,000
• D. ₹~4,50,000

Hint:

When calculating interest on capital for less than a year, use the proportionate time. Profit is shared after deducting interest on capital.

Answer 1

The Correct Option is A

Step 1: Interest on capital for 9 months (from 1st July to 31st March): \[ = 20,00,000 \times \frac{10}{100} \times \frac{9}{12} = ₹~1,50,000 \]
Step 2: Remaining profit to be shared equally among 3 partners: \[ \text{Remaining Profit} = 13,50,000 - (1,50,000 \times 3) = 13,50,000 - 4,50,000 = ₹~9,00,000 \]
Elvis's share in remaining profit = \(\frac{9,00,000}{3} = ₹~3,00,000\)
Total amount transferred to Elvis's capital A/c:
\[ 1,50,000 (interest) + 3,00,000 (profit share) = ₹~4,50,000 \]
Final Answer: \(₹~4,50,000\)