Question

Tina and Simi were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their capitals were Rs. 2,40,000 and Rs. 4,80,000, respectively. They were entitled to interest on capitals @ 10% p.a. The firm earned a profit of Rs. 36,000 during the year. The interest on Tina’s capital will be :

Answer 1

Answer:

24,000

Explanation:

here only interest on capital is asked

so, 2,40,000 X 10/100 = 24,000

Answer 2

Interest on Tina’s capital is 21,840

Explanation:

Calculation of Opening Capital and Interest thereon:

                                       Tina                          Simi

Closing Capital            2,40,000                  4,80,000

Less: Profit earned      (21,600)                     (14,400)      

Opening Capital           2,18,400                  4,65,600

Interest on Capital      2,18,400 × 10%        4,65,600 × 10%

                                    = 21,840                    = 46,560

⇒  Interest on Tina’s capital is 21,840 .

Interest on Capital is allowed to compensate a partner for contributing capital to the firm in excess of the profit sharing ratio.

Note: Interest on capital is allowed on the opening balance of the partner's capital.