. The Capital Accounts of Alka And Archana showed credit balances of Rs 400000 and 300000 respectively , after taking into account drawings and net profit of 200000 . The drawings during the year 2018-19 werei) Alka withdrew 10000 at the end of each quarterii) Archana ‘s drawings were 31st May ,2018 8000 01st November ,2018 7000 1st February ,2019 5000Calculate Interest on Partner’s Capitals @10% p.a and Interest on Partner’s drawings @6% p.a. for the year ended 31 March ,2019
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Solution!!
Let's calculate opening capital and interest on capital.
For Alka,
Closing Capital + Drawings - Profits = Opening Capital
4,00,000 + (10,000 × 4) - 1,00,000 = Opening Capital
Opening Capital = 4,00,000 + 40,000 - 1,00,000
Opening Capital = Rs 3,40,000
Interest on Alka's capital @10% p.a. = Rs 34,000
For Archana,
Closing Capital + Drawings - Profits = Opening Capital
3,00,000 + (8,000 + 7,000 + 5,000) - 1,00,000 = Opening Capital
Opening Capital = 3,00,000 + 20,000 - 1,00,000
Opening Capital = Rs 2,20,000
Interest on Archana's capital @10% p.a. = Rs 22,000
Average period = (Months left after first drawing + months left after last drawing)/2
Average period = (9+0)/2
Average period = 4.5 months
Interest on Alka's drawings = 40,000 × (6/100) × (4.5/12)
Interest on Alka's drawings = Rs 900
Let's calculate interest on Archana's drawings.
→ Date = 1st May, 2018
Amount = 8,000
Number of months = 10
Product = 80,000
→ Date = 1st November, 2018
Amount = 7,000
Number of months = 5
Product = 35,000
→ Date = 1st February, 2019
Amount = 5,000
Number of months = 2
Product = 10,000
Total product = 80,000 + 35,000 + 10,000
Total product = Rs 1,25,000
Interest on Archana's drawings = 1,25,000 × (6/12) × 1/12
Interest on Archana's drawings = Rs 625