# Calculate Interest on Capital as on March 31, 2017. - Accountancy

Ledger

Sunflower and Pink Rose started partnership business on April 01, 2016 with capitals of Rs 2,50,000 and Rs 1,50,000, respectively. On October 01, 2016, they decided that their capitals should be Rs 2,00,000 each. The necessary adjustments in the capitals are made by introducing or withdrawing cash. Interest on capital is to be allowed @ 10% p.a. Calculate interest on capital as on March 31, 2017.

#### Solution

Product Method
Sunflower

 01 April 2016 to 30 September 2016 2,50,000 × 6 = 15,00,000 01 October 2016 to 31 March 2017 2,00,000 × 6 = 12,00,000 Sum of Product 27,00,000

Pink Rose

 01 April 2016 to 30 September 2016 1,50,000 × 6 = 9,00,000 01 October 2016 to 31 March 2017 2,00,000 × 6 = 12,00,000 Sum of Product 21,00,000

Interest on Capital = Sum of Product x Rate/100 x 1/12

Interest on Sunflower's Capital = 27,00,000 x 10/100 x 1/12 = Rs. 22,500

Interest on Pink Rose's Capital = 21,00,000 x 10/100 x 1/12 = Rs. 17,500.
Alternative Method:
Simple Interest Method
Sunflower

 April 01, 2016 to September 30, 2016 2,50,000 x 10/100 x 6/12 =Rs.12,500 October 01, 2016 to March 31, 2017 2,00,000 x 10/100 x 6/12 =Rs.10,000 Interest on Sunflower’s Capital =Rs.22,500

Pink Rose

 April 01, 2016 to September 30, 2016 1,50,000 x 10/100 x 6/12 =Rs.7,500 October 01, 2016 to March 31, 2017 2,00,000 x 10/100 x 6/12 =Rs.10,000 Interest on Pink Rose’s Capital =Rs.12,500
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#### APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 2 Accounting for Partnership Firms-Fundamentals
Exercise | Q 14 | Page 102