P and Q are partners sharing profits in a 5:3 ratio. They allow interest on capital at 6% p.a. If P’s capital is ₹1,20,000, what is the interest credited to his capital account?
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Interest on capital is calculated at the agreed rate on the partner’s capital. This interest is credited to the partner’s capital account.
Interest on capital is computed as a percentage of the partner's capital.
\[
\text{Interest on P’s Capital} = \frac{6}{100} \times 1,20,000 = ₹7,200
\]
Therefore, ₹7,200 is credited to P’s capital account.