Ritu & Nitu started business on 1st April, 2019 with capital of ` 3,00,000 and ` 2,00,000 respectively. On 1st Oct. they decided that their capital should be ` 2,50,000 each. The necessary adjustments in the capital were made by Introducing or withdrawing cash. Interest on capital is allowed at 9% p.a. Calculate Interest on capital as on 31st March, 2020
Answers
Given:
- Ritu and Nitu started a business on 1st April, 2019, with capitals of Rs 3,00,000 and Rs 2,00,000 respectively.
- On 1st October, 2019, they decided that their capitals should be Rs 2,50,000 each. This was done by way of withdrawals or introducing additional capitals.
- Interest on capital is to be charged at 9% p.a.
To find: The interest on capital as on 31st March, 2020, for both partners.
Answer:
Interest on capital = Capital × (Rate ÷ 100) × (Number of months ÷ 12)
For Ritu:
Interest on capital [1st April - 30th September] = Rs 3,00,000 × (9 ÷ 100) × (6 ÷ 12)
Interest on capital [1st April - 30th September] = Rs 13,500
Interest on capital [1st October - 31st March] = Rs 2,50,000 × (9 ÷ 100) × (6 ÷ 12)
Interest on capital [1st October - 31st March] = Rs 11,250
Total interest on capital = Rs 13,500 + Rs 11,250 = Rs 24,750
For Nitu:
Interest on capital [1st April - 30th September] = Rs 2,00,000 × (9 ÷ 100) × (6 ÷ 12)
Interest on capital [1st April - 30th September] = Rs 9,000
Interest on capital [1st October - 31st March] = Rs 2,50,000 × (9 ÷ 100) × (6 ÷ 12)
Interest on capital [1st October - 31st March] = Rs 11,250
Total interest on capital = Rs 9,000 + Rs 11,250 = Rs 20,250
Therefore, the interests on capitals of Ritu and Nitu are Rs 24,750 and Rs 20,250 respectively.