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 calculation for Emily:
Capital: ₹ 10,00,000, Rate: 10% per annum, Period: 6 months (October–March)
Interest = \( 10,00,000 \times 10% \times \frac{6}{12} = ₹ 50,000 \)
Profit after deducting interest for all three partners (₹ 1,50,000) = ₹ 7,50,000 – ₹ 1,50,000 = ₹ 6,00,000
Emily's share of remaining profit (equal sharing) = \( \frac{6,00,000}{3} = ₹ 2,00,000 \)
Emily's total entitlement = ₹ 50,000 (interest) + ₹ 2,00,000 (profit share) = ₹ 2,50,000

Final Answer: ₹ 2,50,000