Question

ILLUSTRATION 2.
capitals on 1st April, 2015 were 4,80,000 and 35,40,000. On 1st October, 2015, they
Arun and Barun are partners in a firm sharing profits and losses equally. Their
decided that the total capital of the firm should be 10,00,000 to be contributed
allowed to the partners @6% p.a.
equally by both of them. According to the partnership deed, interest on
You are required to compute interest on capital for the year ending 31st March,2016.
(ISC Sample Paper 2017)
​

Answer 1

CORRECT QUESTION :

• ❖ Arun and Barun are Partners in a firm sharing profits and losses equally. Their capital on 1st April, 2015 were Rs.4,80,000 and Rs. 5,40,000. On 1st October, 2015, they decided that the total capital of the firm should be Rs. 10,00,000 to be contributed equally by both of them. According to the partnership deed, interest on capital is allowed to the partners @ 6% p.a. You are required to compute interest on capital for the year ending 31st March, 2016.

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ANSWER :

• ✎ Interest on Capital of Arun for the year ending 31st March, 2016 @6% p.a. is Rs. 29,400.

• ✎ Interest on Capital of Barun for the year ending 31st March, 2016 @6% p.a. is Rs. 31,200.

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SOLUTION :

❒ Given :-

• Capital of Arun on 1st April, 2015 = Rs. 4,80,000

• Capital of Barun on 1st April, 2015 = Rs. 5,40,000

• On 1st October, 2015, Arun and Barun decided that the total capital of the firm should be Rs. 10,00,000 was contributed equally by both of them.

• Rate of Interest on Capital = 6% p.a.

❒ To Calculate :-

• Interest on Capital of Arun for the year ending 31st March, 2016 = ?

• Interest on Capital of Barun for the year ending 31st March, 2016 = ?

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❒ Calculation Interest on Capital of Arun :-

Here,

• Capital of Arun on 1st April, 2015 = Rs. 4,80,000

• Capital of Arun on 1st October, 2015 = Rs. 5,00,000

• Rate of Interest = 6% p.a.

So,

Interest on Capital of Rs. 4,80,000 will be calculated from 1st April, 2015 to 30th September, 2015, i.e., for 6 months @6% p.a.

• ★ Interest on Capital = Rs. 4,80,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{6}{12}}$

➜ Interest on Capital = Rs. 4,80,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{1}{2}}$

➜ Interest on Capital = Rs. 14,400

And,

Interest on Capital of Rs. 5,00,000 will be calculated from 1st October, 2015 to 31st March, 2016, i.e., for 6 months @6% p.a.

• ★ Interest on Capital = Rs. 5,00,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{6}{12}}$

➜ Interest on Capital = Rs. 5,00,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{1}{2}}$

➜ Interest on Capital = Rs. 15,000

• ∴ Total Interest on Capital = Rs. 14,400 + Rs. 15,000

➨ Total Interest on Capital = Rs. 29,400.

• Hence, the total Interest on Capital of Arun is Rs. 29,400.

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❒ Calculation Interest on Capital of Barun :-

Here,

• Capital of Barun on 1st April, 2015 = Rs. 5,40,000

• Capital of Barun on 1st October, 2015 = Rs. 5,00,000

• Rate of Interest = 6% p.a.

So,

Interest on Capital of Rs. 5,40,000 will be calculated from 1st April, 2015 to 30th September, 2015, i.e., for 6 months @6% p.a.

• ★ Interest on Capital = Rs. 5,40,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{6}{12}}$

➜ Interest on Capital = Rs. 5,40,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{1}{2}}$

➜ Interest on Capital = Rs. 16,200

And,

Interest on Capital of Rs. 5,00,000 will be calculated from 1st October, 2015 to 31st March, 2016, i.e., for 6 months @6% p.a.

• ★ Interest on Capital = Rs. 5,00,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{6}{12}}$

➜ Interest on Capital = Rs. 5,00,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{1}{2}}$

➜ Interest on Capital = Rs. 15,000

• ∴ Total Interest on Capital = Rs. 16,200 + Rs. 15,000

➨ Total Interest on Capital = Rs. 31,200.

• Hence, the total Interest on Capital of Barun is Rs. 31,200.