If the opening capital is ₹70,000 and additional capital introduced ₹10,000 on Ist January. 

What will be the amount of interest on capital shown in profit and loss account at the end of accounting period if the Interest charge on capital 10% p.a.?

₹7,250

The correct answer is option 4- ₹7,250.

Opening capital = 70,000
Rate of interest = 10%
Interest = 70,000 x 10/100
             = 7,000

Additional capital = 10,000
Interest will be calculated for 3 months as financial year is upto 31st March.
Interest = 10,000 x 10/100 x 3/12
              = 250

Total interest = 7,000 + 250
                      = 7,250