A, B and C were partners with a capital of Rs. 50,000; Rs. 40,000 and Rs. 30,000, respectively, carrying on business in partnership. The firm’s reported profit for the year was Rs. 80,000. As per the provision of the Indian Partnership Act, 1932, find the share of each partner in the above amount, taking into consideration that interest has not been provided on an advance of Rs. 20,000 by A in addition to his capital contribution.

The correct answer is: C. Rs. 33,333 for partner A, Rs. 26,667 for partner B and Rs. 20,000 for partner C.

The Indian Partnership Act, 1932, does not provide for interest on capital. However, it does provide for interest on advances made by partners. In this case, A has made an advance of Rs. 20,000. As per the Act, interest on this advance will be payable at the rate of 6% per annum.

The profit of the firm for the year is Rs. 80,000. This amount will be divided among the partners in the ratio of their capitals, plus interest on advances. The capitals of the partners are:

• A: Rs. 50,000
• B: Rs. 40,000
• C: Rs. 30,000

The interest on A’s advance is:

• 20,000 * 6/100 * 1 = Rs. 1200

The total amount of capital and interest for each partner is:

• A: 50,000 + 1200 = Rs. 51,200
• B: 40,000 + 0 = Rs. 40,000
• C: 30,000 + 0 = Rs. 30,000

The share of each partner in the profit is:

• A: 80,000 * 51200/120000 = Rs. 33,333
• B: 80,000 * 40000/120000 = Rs. 26,667
• C: 80,000 * 30000/120000 = Rs. 20,000

Therefore, the share of each partner in the above amount is:

• A: Rs. 33,333
• B: Rs. 26,667
• C: Rs. 20,000