A and B are partners sharing Profit and Loss in the ratio of 3 : 2 having Capital Account balances of Rs. 50,000 and Rs. 40,000 on 1st April, 2017. On 1st July, 2017, A introduced Rs. 10,000 as his additional capital whereas B introduced only Rs. 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 Capital
A= Interest on 50,000@10% = 5,000
Interest on 10,000@10% for
9 months i.e 10000 * 10% * (9/12) = 750
Total Interest on A's Capital = 5750

B= Interest on 40,000@10% = 4000
Interest on 1000@10%for
9 months = 75
Total Interest on capital = 4075

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