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
Capital Adjustment for both the partners :
Regards
| 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| Date | Amount Introduced / (Withdrawn) | No. of Months to 31-3-17 | Interest @ 12% |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| Date | Amount Introduced / (Withdrawn) | No. of Months to 31-3-17 | Interest @ 12% |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