Question

A and B are partners in a firm.their capital accounts showed the balance on 1.1.2013 as A-rs 20000 and B-rs 15000.during the year 2013,A introduced additional capital of rs 10000 on 1.5.13 whereas is brought in further capital of rs 15000 on 1.7.13.interest on capital is allowed @6% pa.assuming that accounting year closes on December 31 every year.calculate interest on capital of A &B​

Answer 1

Explanation:

Calculation of Capital balance in the beginning:

Particulars Ram Mohan

Capitals at the end of the year 24000 18000

Less: Profit already credited (8000) (8000)

Add: Drawings already debited 4000 6000

Capital at the beginning of the year 20000 16000

Note: Interest on capital is always calculated on the opening balance of the partner's capital.

Ram's interest on capital= 20000 * 5/100

= 1000

Mohan's interest on capital= 16000 * 5/100

= 800