Question

1. X and Y are partners and they had 40,000 and 3 60,000 in their respecte
as on 1st January, 2016. X paid in further 5,000 on 1st August, 2016 and
on 15th November, 2016. Compute the interest on Capital to be allowed to le
rate of interest to be 6% per annum.
Ans. 2,562.50.​

Answer 1

CORRECT QUESTION :

• ❍ X and Y are partners and they had Rs. 40,000 and Rs. 60,000 in their respective capital accounts as on 1st January, 2016. X paid in further Rs. 5,000 on 1st August, 2016 and another Rs. 5,000 on 15th November, 2016. Compute the interest on capital to be allowed to X assuming the rate of interest to be 6% per annum.

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ANSWER :

• ❖ Interest on Capital to be allowed to X assuming the rate of Interest to be @6% p.a. for the year ended 31st December, 2016 will be Rs. 2,562.50.

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SOLUTION :

❒ Given :-

• Capital of X as on 1st January, 2016 = Rs. 40,000

• Capital introduced by X on 1st August, 2016 = Rs. 5,000

• Capital introduced by X on 15th November, 2016 = Rs. 5,000

• Rate of Interest on Capital = 6% p.a.

❒ To Compute :-

• Interest on Capital to be allowed to X = ?

❒ Required Formula :-

• Interest on Capital in given rate of interest for a specific period of time is calculated under the following formula :

$\dag \: \: \underline{ \boxed{ \bold{ \: Interest \: \: on \: \: Capital = Amount\: \: of \: \: Capital \times Rate \: \: of \: \: Interest \times Time \: }}}$

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❒ Calculation :-

Here,

• Capital of X as on 1st January, 2016 = Rs. 40,000

• Rate of Interest on Capital = 6% p.a.

• Time = 7 months (From 1st January, 2016 to 31st July, 2016)

Using the formula of Interest on Capital, we get,

• ★ Interest on Capital = Amount of Capital × Rate of Interest × Time

⇒ Interest on Capital = Rs. 40,000 × 6% × 7 months

⇒ Interest on Capital = Rs. (40,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{7}{12}}$ )

⇒ Interest on Capital = Rs. 1,400

Again,

• Capital introduced by X on 1st August, 2016 = Rs. 5,000

∴ Total amount of Capital as on 1st August, 2016 = Rs. 40,000 + Rs. 5,000

➨ Total amount of Capital as on 1st August, 2016 = Rs. 45,000

• Rate of Interest on Capital = 6% p.a.

• Time = 3.5 months (From 1st August, 2016 to 15th November, 2016)

Using the formula of Interest on Capital, we get,

• ★ Interest on Capital = Amount of Capital × Rate of Interest × Time

⇒ Interest on Capital = Rs. 45,000 × 6% × 3.5 months

⇒ Interest on Capital = Rs. (45,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{3.5}{12}}$ )

⇒ Interest on Capital = Rs. 787.50

And,

• Capital introduced by X on 15th November, 2016 = Rs. 5,000

∴ Total amount of Capital as on 15th November, 2016 = Rs. 45,000 + Rs. 5,000

➨ Total amount of Capital as on 15th November, 2016 = Rs. 50,000

• Rate of Interest on Capital = 6% p.a.

• Time = 1.5 months (From 15th November, 2016 to 31st December, 2016)

Using the formula of Interest on Capital, we get,

• ★ Interest on Capital = Amount of Capital × Rate of Interest × Time

⇒ Interest on Capital = Rs. 50,000 × 6% × 1.5 months

⇒ Interest on Capital = Rs. (50,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{1.5}{12}}$ )

⇒ Interest on Capital = Rs. 375

Now,

• ✪ Total Interest on Capital = Rs. 1,400 + Rs. 787.50 + Rs. 375

∴ Total Interest on Capital = Rs. 2,562.50

• Hence, Rs. 2,562.50 is the amount of Interest on Capital to be allowed to X.