A and B are partners sharing Profit and Loss in the ratio 3 : 2 having Capital Account balances of ₹ 50,000 and ₹ 40,000 on 1st April, 2017. On 1st July, 2017, A introduced ₹ 10,000 as his additional capital whereas B introduced only ₹ 1,000. Interest on capital is allowed to partners @ 10% p.a.
Calculate interest on capital for the financial year ended 31st March, 2018.

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Solution

Calculation of Interest on A’s Capital

Date

Capital

×

Period

=

Product

April 01, 2016 to June 30, 2016

50,000

×

3

=

1,50,000

July 01, 2016 to March 31, 2017

60,000

×

9

=

5,40,000

Sum of Product

6,90,000

Calculation of Interest on B’s Capital

Date

Capital

×

Period

=

Product

April 01, 2016 to June 30, 2016

40,000

×

3

=

1,20,000

July 01, 2016 to March 31, 2017

41,000

×

9

=

3,69,000

Sum of Product

4,89,000

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Date	Capital	×	Period	=	Product
April 01, 2016 to June 30, 2016	50,000	×	3	=	1,50,000
July 01, 2016 to March 31, 2017	60,000	×	9	=	5,40,000
Sum of Product					6,90,000