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Interest on Capital Exceeds Profits

X & Y started...

Question

X & Y started business on 1st April 2017 with capitals of Rs 5,00,000 & Rs 3,00,000 respectively. There is no withdrawal or addition of capital during the year.

Calculate the interest on capital @ 12% p.a. if the books of accounts are closed on 31st Dec 2017.

A

Rs 2700 & Rs 4500

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B

Rs 45,000 & Rs 27000

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C

Rs 27000 & Rs 45000

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D

Rs 4500 & Rs 2700

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Solution

The correct option is B
Rs 45,000 & Rs 27000

"Int on capital (X) = Rs 5,00,000 * 12% * $\frac{9}{12}$ = Rs 45,000

Int on capital (Y) = Rs 3,00,000 12% $\frac{9}{12}$ = Rs 27,000"

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