Question

Raj and Neeraj are partners in a firm. Their capitals as on April 01, 2017 were Rs 2,50,000 and Rs 1,50,000, respectively. They share profits equally. On July 01, 2017, they decided that their capitals should be Rs 1,00,000 each. The necessary adjustment in the capitals were made by introducing or withdrawing cash by the partners’. Interest on capital is allowed @ 8% p.a. Compute interest on capital for both the partners for the year ending on March 31, 2018.

Answer 1

Interest on Capital

Raj

	Capital × Period	Product
1 April 2017 to 30 June 2017	2,50,000 × 3 =	7,50,000
1 July 2017 to 31 March 2018	1,00,000 × 9 =	9,00,000
	Sum of Product	16,50,000

Interest = Sum of Product ×

= 16,50,000 ×

= Rs 11,000

Neeraj

	Capital × Period	Product
1 April 2017 to 30 June 2017	1,50,000 × 3 =	4,50,000
1 July 2017 to 31 March 2018	1,00,000 × 9 =	9,00,000
	Sum of Product	13,50,000

Interest = 13,50,000 × = Rs 9,000