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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.

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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
  Is there an error in this question or solution?
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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
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