A and B invest ₹60,000 and ₹90,000 respectively, in a business. After one year, the profit is distributed, including simple interest at 10% per annum on the capital. Total profit, including interest, is ₹25,000. What is A’s share?

Correct — C. First pay each partner 10% interest on capital.

A's interest = 10% × 60,000 = ₹6,000
B's interest = 10% × 90,000 = ₹9,000
Add them: total interest = ₹15,000

Profit left = 25,000 − 15,000 = ₹10,000
Capital ratio = 60,000 : 90,000 = 2 : 3
A's part of it = 2⁄5 × 10,000 = ₹4,000

A's share = 6,000 + 4,000 = ₹10,000 → option (c)

Why the others are wrong

• (a)
  ₹7,000 — ₹7,000 × 5⁄2 = ₹17,500, well short of the ₹25,000 total. Interest and leftover profit both go 2 : 3, so the whole total is 5⁄2 of A's share.
• (b)
  ₹10,500 — ₹10,500 × 5⁄2 = ₹26,250, more than the ₹25,000 there is to share. A's share must be exactly 2⁄5 of ₹25,000.
• (d)
  ₹8,500 — ₹8,500 × 5⁄2 = ₹21,250, not ₹25,000. It is also below A's ₹6,000 interest plus A's ₹4,000 of the leftover profit.

Some partnerships pay interest on capital before sharing profit. Each partner first receives the stated rate on their own capital, and only what is left is split between them.

Here the interest is one rate for one year, so it already comes in the capital ratio 2 : 3. The leftover is split 2 : 3 as well, so the whole ₹25,000 goes 2 : 3 and A gets 2⁄5 × 25,000 = ₹10,000 in one step.

Key facts

• Interest on capital = capital × rate × time, paid to each partner before the rest is shared.
• Interest at one rate for one period is itself in the capital ratio.
• 60,000 : 90,000 = 2 : 3, so A's fraction of each part is 2⁄5.

Common traps

• Stopping at ₹4,000, A's part of the leftover profit, and not adding back the ₹6,000 interest.
• Taking only A's ₹6,000 interest off the ₹25,000: both partners' interest, ₹15,000, comes out before the split.

No directly related past PYQ was found.