Question

5(B). (Interest on capital when capital at end is given) X and Y are partners
sharing profits equally. Their capitals for the year ended 31st March,
2019 were 3,00,000 and 2,00,000 respectively. During the year, X
withdrew 60,000 and Y withdrew 40,000. On 1st July, 2018, Y
introduced further capital 30,000 while X introduced 20,000 on 1st
January, 2019. The firm earned 50,000 during this period.
Later on, they decided to charge interest on capital @ 8% p.a. Compute
interest on capital. (Hint. First find opening capital. See Illustration 15)
As Onenin carital y​

Answer 1

Answer:

X and $Y$$ are partners in a firm sharing profits and losses in the ratio of 3 : 2.

On 31st March 2018 after closing the books of account, their Capital Accounts stood at Rs. 4,80,000 and Rs. 6,00,000 respectively .

On 1st May, 2017, X introduced an additional capital of Rs. 1,20,000 and Y withdrew Rs. 60,000 from his capital. On 1st October, 2017, X withdrew Rs. 2,40,000 from his capital and Y introduced Rs. 3,00,000. Interest on capital is allowed at 6% p.a. Subsequently, it was discovered that interest on capital @ 6% p.a. had been omitted. The profits for the year ended 31st March, 2018 amounted to Rs. 2,40,000 and the partners drawings had been: X- R. 1,20,000 and Y - Rs. 60,000. Compute the interest on capital if the capitals are

(a) fixed, and (b) fluctuating.

January 17, 2020

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Akshaya Prem

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ANSWER

1. When Capitals Are Fixed

Calculation of Opening Capital

X Y

Closing capital 4,80,000 6,00,000

Add:withdrawal 2,40,000 60,000

Less: Add capital (1,20,000) (3,00,000)

Opening capital 6,00,000 3,60,000

Calculation of Interest on capital

X Y

Interest on capital 36,000 21,600

Add: Int on add capital 6600 9000

(1,20,000*6%*11/12) (3,00,000*6%*6/12)

Less:Interest on capital ( 7200)