Question

Zee and Vee are partners in a firm. Their capital accounts showed the balance on 1st April, 2017 as 20,000 and 15,000 respectively. During the year 2017-18, Zee introduced additional capital of

*10,000 on August 1, 2017 and Vee introduced ? 15,000 on 1st October, 2017. Interest on capital is allowed @ 6% p.a. on the capital. Calculate interest on capital of each partner.

Answer 1

ANSWER :

• ❖ The amount of Interest payble in capital of Zee @6% p.a. is Rs. 1,600 and amount of Interest payable on capital of Vee @6% p.a. is Rs. 1,350.

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SOLUTION :

❒ Given :-

• Capital of Zee as on 1st April, 2017 = Rs. 20,000

• Capital of Vee as on 1st April, 2017 = Rs. 15,000

• Capital introduced by Zee on 1st August, 2017 = Rs. 10,000

• Capital introduced by Vee on 1st October, 2017 = Rs. 15,000

• Interest on Capital allowed = 6% p.a.

❒ To Calculate :-

• Interest on Capital of Zee for the year 2017 - 2018 = ?

• Interest on Capital of Vee for the year 2017 - 2018 = ?

❒ Required Formula :-

• Interest on Capital in given rate of interest for a specific period of time is calculated under the following formula :

$\dag \: \: \underline{ \boxed{ \bold{ \: Interest \: \: on \: \: Capital = Amount\: \: of \: \: Capital \times Rate \: \: of \: \: Interest \times Time \: }}}$

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❒ Calculation of Interest payable on Capital to Zee during the year 2017 - 2018 :-

Here,

• Capital of Zee as on 1st April, 2017 = Rs. 20,000

• Rate of Interest = 6% p.a.

• Time = 4 months (From 1st April, 2017 to 31st July,2017)

Using the formula of Interest on Capital, we get,

• ★ Interest on Capital = Amount of Capital × Rate of Interest × Time

⇒ Interest on Capital = Rs. 20,000 × 6% × 4 months

⇒ Interest on Capital = Rs. 20,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{4}{12}}$

⇒ Interest on Capital = Rs. 400

Again,

• Capital introduced as additional capital by Zee on 1st August, 2017 = Rs. 10,000

∴ Total Capital = Rs. 20,000 + Rs. 10,000

➨ Total Capital = Rs. 30,000

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

• Time = 8 months ( From 1st August, 2017 to 31st March, 2018)

Using the formula of Interest on Capital, we get,

• ★ Interest on Capital = Amount of Capital × Rate of Interest × Time

⇒ Interest on Capital = Rs. 30,000 × 6% × 8 months

⇒ Interest on Capital = Rs. 30,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{8}{12}}$

⇒ Interest on Capital = Rs. 1,200

Now,

• ✪ Total Interest on Capital of Zee = Rs. 400 + Rs. 1,200

∴ Total Interest on Capital of Zee = Rs. 1,600

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❒ Calculation of Interest payable on Capital to Vee during the year 2015 - 2016 :-

Here,

• Capital of Vee as on 1st April, 2017 = Rs. 15,000

• Rate of Interest = 6% p.a.

• Time = 6 months (From 1st April, 2017 to 30th September, 2017)

Using the formula of Interest on Capital, we get,

• ★ Interest on Capital = Amount of Capital × Rate of Interest × Time

⇒ Interest on Capital = Rs. 15,000 × 6% × 6 months

⇒ Interest on Capital = Rs. 15,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{6}{12}}$

⇒ Interest on Capital = Rs. 450

Again,

• Capital introduced as additional capital by Vee on 1st October, 2017 = Rs. 15,000

∴ Total Capital = Rs. 15,000 + Rs. 15,000

➨ Total Capital = Rs. 30,000

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

• Time = 6 months ( From 1st October, 2017 to 31st March, 2018)

Using the formula of Interest on Capital, we get,

• ★ Interest on Capital = Amount of Capital × Rate of Interest × Time

⇒ Interest on Capital = Rs. 30,000 × 6% × 6 months

⇒ Interest on Capital = Rs. 30,000 × $\sf{\dfrac{6}{100}}$ × $\sf{\dfrac{6}{12}}$

⇒ Interest on Capital = Rs. 900

Now,

• ✪ Total Interest on Capital of Vee = Rs. 450 + Rs. 900

∴ Total Interest on Capital of Vee = Rs. 1,350