X and Y 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 the net profit for the year is ₹ 1,500. Show distribution of profits:(i) where there is no agreement except for interest on capitals; and(ii) where there is an agreement that the interest on capital as a charge.

X and Y contribute ₹ 20,000 and ₹ 10,000 respectively towards cap

1.	X and Y 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 the net profit for the year is ₹ 1,500. Show distribution of profits:(i) where there is no agreement except for interest on capitals; and(ii) where there is an agreement that the interest on capital as a charge.
Answer» X and Y 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 the net profit for the year is ₹ 1,500. Show distribution of profits: (i) where there is no agreement except for interest on capitals; and (ii) where there is an agreement that the interest on capital as a charge.

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