A and B are partners sharing profit in the ratio of 3:2. On 31st March, 2023, the Capital Account balance stood as A-₹1,29,000 and B- ₹86,000. The divisible profit of ₹50,000 has been distributed between A and B accordingly and Interest on capital @ 10% p.a. has also been credited. A has also obtained a salary @ ₹10,000 annually.
Calculate Interest on B's capital.
Answer & explanation
Correct answer: option 4
The correct answer is option 4- ₹6,000.
Closing Capital of B = ₹86,000
Less: Share of profit (50,000 x 2/5) = 20,000
Opening capital + Interest on capital = 66,000
This 66000 include interest on capital also. So,
Opening capital + Interest on capital = 66,000
Opening capital + opening capital x 10/100 = 66,000
Let opening capital is a
a + (a X 10/100) = 66,000
a + 10a/100 = 66,000
110a/100 = 66,000
a = 66,000 x 100/110
= 60,000
Thus opening capital = 60,000 and interest is calculated on opening capital.
So, interest on B's Capital = 60,000 x 10/100
= 6,000