A and B are partners with a profit-sharing ratio of 2 : 1 and capitals of Rs. 3,00,000 and Rs. 2,00,000, respectively. They are allowed 6% per annum interest on their cap itals and are charged 10% per annum interest on their drawings. Their drawings during the year were Rs. 60,000 for A and Rs. 40,000 for B. B’s share of net profit as per profit and loss appropriation account amounted to Rs. 40,000. The net profit of the firm before any appropriation was

[amp_mcq option1=”Rs. 1,22,000″ option2=”B’s share of net profit as per profit and loss appropriation account amounted to Rs. 40,000. The net profit of the firm before any appropriation was A. Rs. 1,22,000 B. Rs. 1,13,000″ option3=”Rs. 1,17,000″ option4=”Rs. 1,45,000″ correct=”option1″]

The correct answer is A. Rs. 1,22,000.

Explanation:

Interest on capital for A = 6% * 3,00,000 = Rs. 18,000
Interest on capital for B = 6% * 2,00,000 = Rs. 12,000
Interest on drawings for A = 10% * 60,000 = Rs. 6,000
Interest on drawings for B = 10% * 40,000 = Rs. 4,000
A’s share of net profit = 2/3 * Net profit = 40,000
B’s share of net profit = 1/3 * Net profit = 40,000
Net profit = 40,000 + 18,000 + 12,000 + 6,000 + 4,000 = Rs. 1,22,000

The other options are incorrect because they do not take into account all of the relevant information. For example, option B does not take into account the interest on capital or drawings, while option C does not take into account the interest on drawings. Option D is incorrect because it is greater than the total of all of the other items listed.