Following is the Extract of the Balance Sheet of, Neelkant and Mahdev as On March 31, 2017:- Bzziii.com

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Following is the extract of the Balance Sheet of, Neelkant and Mahdev as on March 31, 2017:

Balance Sheet as at March 31, 2017

LiabilitiesAmount (Rs.)AssetsAmount (Rs.)
To Neelkant’s Capital10,00,000By Sundry Assets30,00,000
To Mahadev’s Capital10,00,000       
To Neelkant’s Current Account1,00,000 
To Mahadev’s Current Account1,00,000 
To Profit and Loss Appropriation
(March 2017)		8,00,000 
30,00,000 30,00,000

During the year Mahadev’s drawings were Rs 30,000. Profits during 2017 is Rs 10,00,000. Calculate interest on capital @ 5% p.a for the year ending March 31, 2017.




Calculation for Interest on Capital:

Neelkant = Capital `\times` Rate of Interest

= Rs. 10,00,000 `\times` `\frac{5}{100}`

= Rs. 10,00,000 `\times` `\frac{5}{100}`

= Rs. 50,000

Mahadev = Capital `\times` Rate of Interest

= Rs. 10,00,000 `\times` `\frac{5}{100}`

= Rs. 10,00,000 `\times` `\frac{5}{100}`

= Rs. 50,000

Note: In this question, as the balances of both Partner’s Capital Account and of Partner’s Current Account are mentioned, so it has been assumed that the capital of the partners is fixed.

Chapter-2 Partnership Basic: Accounts



Location: India

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