Question

Emily, Flora and Ginni entered into a partnership on 1st October, 2023 with capitals of ₹ 10,00,000 each. The partnership deed provided for interest on capital at 10% p.a. The firm earned a net profit of ₹ 7,50,000 for the year ended 31st March, 2024. The amount of profit transferred to Emily’s capital account was :

• A. ₹ 2,00,000
• B. ₹ 1,50,000
• C. ₹ 6,00,000
• D. ₹ 2,50,000

Hint:

When calculating interest on capital, use the time factor and deduct total interest before distributing remaining profit.

Answer 1

The Correct Option is B

Interest on capital for Emily:
Capital = ₹ 10,00,000, Rate = 10% p.a., Period = 6 months (Oct–Mar)
Interest = \( 10,00,000 \times 10% \times \frac{6}{12} = ₹ 50,000 \)
Remaining Profit = ₹ 7,50,000 – ₹ 1,50,000 (Interest to all three partners) = ₹ 6,00,000
Profit-sharing is equal among Emily, Flora, and Ginni. So, Emily’s share = \( \frac{6,00,000}{3} = ₹ 2,00,000 \)
Total amount to Emily = ₹ 50,000 + ₹ 2,00,000 = ₹ 2,50,000 Final Answer: ₹ 2,50,000