From the following Balance Sheet of Long and Short, calculate interst on capital @ 8% p.a. for the year ended 31st March, 2018.
During the year, Long withdrew ₹ 40,000 and Short withdrew ₹ 50,000. Profit for the year was ₹ 1,50,000 out of which ₹ 1,00,000 was transferred to General Reserve.
Answers
Answer:
Interest on long term is Rs. 10,800 and on short term is Rs. 13,200
Explanation:
Calculation of capital at the beginning as on 1.04.17
Particulars Long(Rs) Short(Rs)
Capital at the end of the year 1,20,000 1,40,000
Less: Adjusted Profit (25,000) (25,000)
(1,50,000-1,00,000) in 1:1 ratio
Add: Adjusted Drawings 40,000 50,000
∴ Capital at the beginning 1,35,000 1,65,000
Interest on Long term borrowing= 1,35,000 x 8 = 10,800
100
Interest on Short term borrowings = 1,65,000 x 8 = 13,200
100
Answer:
given below in the attachment
