question_answer

As an accountant you are required to answer the following questions 29 to 33:

VK, GK and MK are partners sharing profits in the ratio of 5:3:2. Their capitals on 1st April, 2019 were Rs.2,00,000; Rs.2,00,000 and Rs.1,00,000 respectively. MK is an active partner and looking after the firm. The partnership deed provides that:

(i) Active partner is to be paid a salary of Rs.5,000 per month as a charge (irrespective of profit).

(ii) Rent is paid to VK Rs.4,000 per month (for the use of a portion of his building for the firm, starting from 1st October, 2019).

(iii) VK has advanced a loan of Rs.50,000 to the firm on 1st April 2019 on which he gets interest @ 8% p.a. Firm has advanced a loan to MK Rs.40,000 @ 10% p.a. on 1st October 2019.

(iv) Manager is entitled to a commission of 10% on the net profit after charging such commission.

(v) Interest on capital @ 5% p.a. (as an appropriation).

Trading profit of the firm on 31st March 2020 was Rs.99,750.

Interest on MK's Loan:

A) 1,000

B) 1,500 

C) 2,000

D) 2,500