Statutory Rate for Partner's Loan Interest

Steps:

• Identify that the partnership agreement specifies interest only on capital (6%) and drawings (6%), omitting loans.
• Recall that loans from partners are treated separately from capital contributions.
• Apply the relevant partnership law: if unspecified, interest on partner's loan defaults to the statutory rate.
• Determine the statutory rate as 5% per annum for such advances.

Why B is correct:

• Under applicable partnership acts (e.g., UK 1890 Act), interest on a partner's loan to the firm is 5% if the agreement is silent on it.

Why the others are wrong:

• A: Incorrect, as statutory provision mandates interest on loans, not zero.
• C: Wrong, as 6% applies to capital/drawings, not loans.
• D: Incorrect, as no basis for 8% without explicit agreement.

Final answer: B