Shortcut Trick
Total Capital = 60,000 + 90,000 = 1,50,000
Total Interest = 10% of 1,50,000 = 15,000
Remaining Profit = 25,000 − 15,000 = 10,000
Profit Ratio = 60,000 : 90,000 = 2 : 3
A's Total Share = (10% of 60,000) + (2/5 × 10,000) = 6,000 + 4,000 = 10,000
∴ The correct answer is ₹10,000.
Alternate Method
₹60,000
Ratio: 2
A
₹90,000
Ratio: 3
B
Given:
A's investment = ₹60,000
B's investment = ₹90,000
Total profit including interest = ₹25,000
Rate of interest on capital = 10% per annum
Formula Used:
Total Interest = Interest on A's capital + Interest on B's capital
Profit Ratio = (A's Investment × Time) : (B's Investment × Time)
Calculation:
⇒ Total investment = 60,000 + 90,000 = ₹1,50,000
⇒ Total interest to be paid = 10% of 1,50,000 = ₹15,000
⇒ Remaining profit = 25,000 − 15,000 = ₹10,000
⇒ Ratio of investments A:B = 60,000 : 90,000 = 2 : 3
⇒ A's share in remaining profit = (2 ÷ 5) × 10,000 = ₹4,000
⇒ A's interest amount = 10% of 60,000 = ₹6,000
⇒ A's total share = A's interest + A's share in profit
⇒ A's total share = 6,000 + 4,000 = ₹10,000
∴ The correct answer is ₹10,000.
Additional Information
Partnership Profit Division
Profits in a partnership are divided in the ratio of the product of capital invested and the time period of investment. Ratio = (C1 × T1) : (C2 × T2).
Active vs Sleeping Partner
An active partner manages the business and usually receives a fixed salary or commission from the profit before the remaining profit is distributed. A sleeping partner only invests capital.
Interest on Capital in Partnership
If the partnership deed specifies interest on capital, it is paid out of the total profit first. The leftover profit is then distributed in the standard capital ratio.