Question

A and B are partners sharing Profit and Loss in the ratio 3 : 2 having Capital Account balances of ₹ 50,000 and ₹ 40,000 on 1st April, 2017. On 1st July, 2017, A introduced ₹ 10,000 as his additional capital whereas B introduced only ₹ 1,000. Interest on capital is allowed to partners @ 10% p.a. Calculate interest on capital for the financial year ended 31st March, 2018.

Answer 1

Interest on A's capital= Rs. 5,750

Interest on B's capital = Rs. 4075

Explanation:

Calculation of Interest on A's capital

Date                             Capital   x    Period  =  Product

1.04.17 to 30.6.17          50,000  x        3       =  1,50,000

1.07.17 to 31.03.18         60,000   x       9       =  5,40,000

∴                                 Sum of product         =  6,90,000

Interest on A's capital = 6,90,000 x 10 x   1 = Rs. 5,750

                                                           100   12

Calculation of Interest on B's capital

Date                              Capital  x    Period    =   Product

1.04.17  to 30.6.17         40,000  x    3             =   1,20,000

1.07.17 to 31.03.18         41,000   x    9             =   3,69,000

∴                        Sum of Product                    = 4,89,000

Interest on B's capital = 4,89,000 x 10 x  1

                                                          100    12

                                     = Rs. 4075