J and K are partners sharing profits and losses in the ratio of 3:1. Their capitals at the end of the financial year 2024-2025 were Rs. 1,50,000 and Rs. 75,000 respectively. During the year 2024-2025, J’s drawings were Rs. 20,000 and the drawings of K were Rs. 5,000, which had been duly debited to partner’s capital accounts. Profit before charging interest on capital for the year was Rs. 16,000. The same had also been credited in their profit sharing ratio. K had brought additional capital of Rs. 16,000 on October 1, 2024. Calculate interest on capital @ 12% p.a. for the year 2024-2025 for J.
J and K are partners sharing profits and losses in the ratio of 3:1. Their capitals at the end of the financial year 2024-2025 were Rs. 1,50,000 and Rs. 75,000 respectively. During the year 2024-2025, J’s drawings were Rs. 20,000 and the drawings of K were Rs. 5,000, which had been duly debited to partner’s capital accounts. Profit before charging interest on capital for the year was Rs. 16,000. The same had also been credited in their profit sharing ratio. K had brought additional capital of Rs. 16,000 on October 1, 2024. Calculate interest on capital @ 12% p.a. for the year 2024-2025 for J.
Solution
Calculation of Opening Capital of J
| Particulars | Amount (Rs.) |
|---|---|
| Capital at the end (31.03.2025) | 1,50,000 |
| Add: Drawings during the year | 20,000 |
| Less: Share of profit credited (16,000 x 3/4) | (12,000) |
| Opening Capital (01.04.2024) | 1,58,000 |
Interest on Capital of J
Interest on Capital = 1,58,000 x 12/100 x 12/12
Interest on Capital of J = Rs. 18,960
Working Note:
Since J did not introduce any additional capital during the year, interest is calculated on the opening capital for the full year at 12% p.a.
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