Question

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

Answer 1

Calculation of interest on capital:
(i) Interest on Ramesh's Capital: $Rs.$
From 1st April, 2017 to 30th June, 2017 $=Rs.1,50,000\times \frac{8}{100}\times \frac{3}{12}$ $3,000$
From 1st July, 2017 to 31st March, 2018 $=Rs.2,00,000\times \frac{8}{100}\times \frac{9}{12}$ $12,000$
$\underset{–}{\overline{15,000}}$
(ii) Interest on Naresh's Capital:
From 1st April, 2017 to 30th June, 2017 $=Rs.1,50,000\times \frac{8}{100}\times \frac{3}{12}$ $3,000$
From 1st July, 2017 to 31st March, 2018 $=Rs.2,00,000\times \frac{8}{100}\times \frac{9}{12}$ $12,000$
$\underset{–}{\overline{15,000}}$