Moli and Bholi contribute ₹ 20,000 and ₹ 10,000 respectively towards capital. They decide to allow interest on capital @ 6% p.a

Moli and Bholi contribute ₹ 20,000 and ₹ 10,000 respectively towards capital. They decide to allow interest on capital @ 6% p.a. Their respective share of profits is 2 : 3 and profit for the year is ₹ 1,500. Show distribution of profits.

(i) When there is no agreement except for interest on capitals; and

(ii) When there is an agreement that the interest on capital is a charge.

[Ans: (i) Interest on Capital: Moli – ₹ 1,000; Bholi – ₹ 500; (ii) Loss: Moli – ₹ 120; Bholi – ₹ 180]