Q.10 A and B are partners in a firm. Their capitals as on 1st April 2016 were Rs.2,10,000 and Rs.90,000 respectively. They share profits in the ratio of 2:1. On 1st August 2016 they decided that their capitals should be readjusted according to their PSR. The necessary adjustments in capital were made by withdrawing and introducing capital in cash. Interest on capital is allowed at 12% p.a. Compute interest on capital for the year ending 31st March 2017.

Dear Student
 
Calculation of Interest on Capital - A
       
Date  Amount Introduced / (Withdrawn)   No. of Months to 31-3-17   Interest @ 12% 
1-Apr-16            210,000                                                  12                    25,200
1-Aug-16            (10,000)                                                    8                        (800)
       
       
       
Total             200,000                      24,400
 
Calculation of Interest on Capital - B
       
Date  Amount Introduced / (Withdrawn)   No. of Months to 31-3-17   Interest @ 12% 
1-Apr-16               90,000                                                  12                    10,800
1-Aug-16               10,000                                                    8                          800
       
       
       
Total             100,000                      11,600


Capital Adjustment for both the partners :
Capital of A Before any adjustment                     210,000
Capital of B Before any adjustment                        90,000
Total Capital                      300,000
     
Capital of A as per PSR  (3,00,000 x 2/3)                    200,000
Cash A would withdraw  (2,10,000 - 2,00,000)                       10,000
     
Capital of B as per PSR  (3,00,000 x 1/3)                    100,000
Cash B would bring  (1,00,000 - 90,000)                       10,000


Regards

  • 4
What are you looking for?