Mona and Roma contribute as capital ₹ 2,00,000 and ₹ 1,00,000 respectively.

They decide to allow interest on capital @ 6% p.a. Their profit sharing ratio is 2 : 3 and profit (before interest) for the year is ₹ 15,000.

Show the distribution of profits.

(i) Where there is no agreement except for interest on capital, and

(ii) Where an agreement exists that the interest on capital will be allowed whether the firm earns a profit or incur a loss.

Anurag Pathak Changed status to publish April 14, 2023