Question

A and B started business on 1st April, 2017 with capitals of ₹ 15,00,000 and ₹ 9,00,000 respectively. On 1st October, 2017, they decided that their capitals should be ₹ 12,00,000 each. The necessary adjustments in capitals were made by introducing or withdrawing by cheque. Interest on capital is allowed @ 8% p.a. Compute interest on capital for the year ended 31st March, 2018.

Answer 1

Explanation:

Interest on Capital = sum of product $\times \frac{\text { Rate }}{100} \times \frac{1}{12}$

$\qquad \begin{array}{l}=1,62,00,000 \times \frac{8}{100} \times \frac{1}{12} \\= 1,08,000\end{array}\end{array}$

Interest on B's Capital = $= Sum of Product \times \frac{\text { Rate }}{100} \times \frac{1}{12}$

$=1,26,00,000 \times \frac{8}{100} \times \frac{1}{12}=84,000$