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Interest on Capital and Drawings at the Time of Death

In case of de...

Question

In case of death of a partner, interest on capital is entitled to him up to ___________

A

31st Dec 20XX

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B

the time his balance is returned.

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C

31st March 20XX

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D

the end of the year

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Solution

The correct option is B
the time his balance is returned.

In case of death of a partner, Interest on capital is entitled to him up to the time his balance is returned.

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Q. Sunny, Honey and Rupesh were partners in a firm. On 31st March, 2014, their Balance Sheet was as follows:

Liabilities		₹	Assets	₹
Creditors		10,000	Plant and Machinery	40,000
General Reserve		30,000	Furniture	15,000
Capital A/cs:			Investments	20,000
Sunny	30,000		Debtors	20,000
Honey	30,000		Stock	20,000
Rupesh	20,000	80,000		25,000
		1,20,000		1,20,000

Honey died on 31st December, 2014. The Partnership Deed provided that the representatives of the deceased partner shall be entitled to:
(a) Balance in the Capital Account of the deceased partner.
(b) Interest on Capital @ 6% per annum up to the date of his death.
(c) His share in the undistributed profits or losses as per the Balance Sheet.
(d) His share in the profits of the firm till the date of his death, calculated on the basis of rate of net profit on sales of the previous year. The rate of net profit on sales of previous year was 20%. Sales of the firm during the year till 31st December, 2014 was ₹ 6,00,000.
Prepare Honey's Capital Account to be presented to his executors.

Q. 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.

Q. Following is the extract of the Balance Sheet of Neelkant and Mahadev as on 31st March, 2018.

Liabilities	Rs.	Assets	Rs.
Neelkant's Capital Mahadev's Capital Neelkan't Curent A/c Mahadev's Current A/c Profit and Loss Appropriation A/c (March 2018)	10,00,000 10,00,000 1,00,000 1,00,000 8,00,000	Sundry Assets	30,00,000
	30,00,000		30,00,000

During the year Mahadev's drawings were Rs. 30,000. profits during the year ended 31st march, 2018 is Rs. 10,00,000. calculate interest on capital @ 5% p.a. for the ending 31st march, 2018.

Q. 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.

A, B

C

are partners in a firm. According to the Partnership Deed, the partners are entitled to draw

R s . 7, 000

per month. On the 1st day of every month

A, B

C

R s . 7, 000; R s . 6, 000

R s . 5, 000

respectively. Interest on capitals and interest on drawings are fixed @

8 %

10 %

respectively. Profit for the year ended 31st March, 2018 was

R s . 7, 55, 000

R s . 2, 00, 000

are to be transferred to General Reserve.

B

C

are entitled to receive salary of

R s . 30, 000

R s . 45, 000

p.a. respectively and

A

is entitled to receive commission @

10 %

on net distributable profits after charging such commission. On 1st April, 2017, the balances of their Capital Accounts were

R s . 5, 00, 000; R s . 4, 00, 000

R s . 3, 50, 000

respectively. Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018 and Capital Accounts of Partners in the books of the firm.

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