Question

Sunflower and Pink Rose started partnership business on April 01, 2016 with capitals of Rs 2,50,000 and Rs 1,50,000, respectively. On October 01, 2016, they decided that their capitals should be Rs 2,00,000 each. The necessary adjustments in the capitals are made by introducing or withdrawing cash. Interest on capital is to be allowed @ 10% p.a. Calculate interest on capital as on March 31, 2017.

Answer 1

Product Method

Sunflower

01 April 2016 to 30 September 2016	2,50,000 × 6 =	15,00,000
01 October 2016 to 31 March 2017	2,00,000 × 6 =	12,00,000
	Sum of Product	27,00,000

Pink Rose

01 April 2016 to 30 September 2016	1,50,000 × 6 =	9,00,000
01 October 2016 to 31 March 2017	2,00,000 × 6 =	12,00,000
	Sum of Product	21,00,000

Interest on Capital =	Sum of Product ×	Rate	×	1
		100		12

Interest on Sunflower's Capital =	27,00,000 ×	10	×	1	Rs 22,500
		100		12

Interest on Pink Rose's Capital =	21,00,000 ×	10	×	1	Rs 17,500
		100		12

Alternative Method:

Simple Interest Method

Sunflower

April 01, 2016 to September 30, 2016	2,50,000 ×	10	×	6	=	Rs 12,500
		100		12
October 01, 2016 to March 31, 2017	2,00,000 ×	10	×	6	=	Rs 10,000
		100		12
	Interest on Sunflower’s Capital					Rs 22,500

Pink Rose

April 01, 2016 to September 30, 2016	1,50,000 ×	10	×	6	=	Rs 7,500
		100		12
October 01, 2016 to March 31, 2017	2,00,000 ×	10	×	6	=	Rs 10,000
		100		12
	Interest on Pink Rose’s Capital					Rs 17,500