From the following information, calculate interest on Capital of C, a partner for the year ended 31st March, 2022.
C's Capital on 31/3/2022: ₹12,00,000
Profit credited to C for the year ended 31/3/2022: ₹3,00,000
Drawings made during the year: ₹1,00,000
Additional Capital introduced on 1/10/21: ₹5,00,000
Rate of Interest = 12 % p.a.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹90,000.
Opening capital = Closing capital + drawings - Profit - additional capital
= 12,00,000 + 1,00,000 - 3,00,000 - 5,00,000
= 5,00,000
Additional capital = 5,00,000
Interest on opening capital = 5,00,000 X 12/100
= ₹60,000
Interest on additional capital = 5,00,000 X 12/100 X 6/12
= 60,000 X 1/2
= 30,000
Total interest = 60,000 + 30,000
= ₹90,000