mohan salary increased from Rs. 45,000 to Rs. 60,000 this year.
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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
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