A and B are partners in a firm sharing profits in the ratio of 3: 2. They had advanced to the firm a sum of Rs. 30,000 as a loan in their profit-sharing ratio on 1st October, 2017. The Partnership Deed is silent on interest on loans from partners. Compute interest payable by the firm to the partners, assuming the firm closes its books every year on 31st March.


Amount advanced by the Partners = Rs 30,000
Profit sharing ratio = 3: 2
Advanced by A =30,000×3/5=18,000
Advanced by B =30,000×2/5=12,000
Time Period (from October 01, 2017 to March 31, 2018) = 6 months
Interest rate = 6% p.a.

Calculation of Interest on Advances
Interest on A’s advance=18,000×6/100×6/12=540
Interest on A’s advance=12,000×6/100×6/12=360

Note: In the absence of a partnership agreement regarding rate of interest on loans and advances, interest is provided at 6% p.a.

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