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On December 31st 2018 after closing of account the capital of a, b, and c stood in the book of firm at 200000,150000,and100000. Subsequentely it was discovered that the interest on capital @ 10 % per annum had been omitted. The profit of the year amounted to 75000 and the partners drawings had been 10000,7500 and 5000 respectively Calculat interest on capital?
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On December 31st 2018 after closing of account the capital of a, b, an...
Calculation of Interest on Capital
Step 1: Calculate the Average Capital of Each Partner
To calculate the interest on capital, we need to first determine the average capital of each partner. This is calculated by adding the capital at the beginning and end of the year and dividing by 2.
Average capital of partner A = (200000 + 200000) / 2 = 200000
Average capital of partner B = (150000 + 150000) / 2 = 150000
Average capital of partner C = (100000 + 100000) / 2 = 100000
Step 2: Calculate the Interest on Capital
Once we have determined the average capital of each partner, we can calculate the interest on capital at 10% per annum.
Interest on partner A's capital = 200000 x 10% = 20000
Interest on partner B's capital = 150000 x 10% = 15000
Interest on partner C's capital = 100000 x 10% = 10000
Step 3: Allocate the Interest on Capital
The interest on capital is allocated to each partner based on their average capital.
Partner A's share of interest = (200000 / 450000) x 45000 = 20000
Partner B's share of interest = (150000 / 450000) x 45000 = 15000
Partner C's share of interest = (100000 / 450000) x 45000 = 10000
Step 4: Adjust the Profit and Loss Appropriation Account
The interest on capital is added to the Profit and Loss Appropriation Account and then distributed to the partners based on their profit sharing ratio.
Total interest on capital = 20000 + 15000 + 10000 = 45000
After adjusting for the interest on capital, the Profit and Loss Appropriation Account will show a balance of 12000 (75000 - 10000 - 7500 - 5000 - 45000). This balance is then distributed to the partners based on their profit sharing ratio.
Partner A's share of profit = (450000 / 900000) x 12000 = 6000
Partner B's share of profit = (300000 / 900000) x 12000 = 4000
Partner C's share of profit = (150000 / 900000) x 12000 = 2000
Step 5: Final Allocation
Finally, the total allocation to each partner is calculated by adding their share of interest on capital and their share of profit.
Partner A's total allocation = 20000 + 6000 = 26000
Partner B's total allocation = 15000 + 4000 = 19000
Partner C's total allocation = 10000 + 2000 = 12000
Therefore, the interest on capital for the year is 45000 and the final allocation of profit and interest on capital to each partner is as follows:
- Partner A: 26000
- Partner B: 19000
- Partner C: 12000
Step 1: Calculate the Average Capital of Each Partner
To calculate the interest on capital, we need to first determine the average capital of each partner. This is calculated by adding the capital at the beginning and end of the year and dividing by 2.
Average capital of partner A = (200000 + 200000) / 2 = 200000
Average capital of partner B = (150000 + 150000) / 2 = 150000
Average capital of partner C = (100000 + 100000) / 2 = 100000
Step 2: Calculate the Interest on Capital
Once we have determined the average capital of each partner, we can calculate the interest on capital at 10% per annum.
Interest on partner A's capital = 200000 x 10% = 20000
Interest on partner B's capital = 150000 x 10% = 15000
Interest on partner C's capital = 100000 x 10% = 10000
Step 3: Allocate the Interest on Capital
The interest on capital is allocated to each partner based on their average capital.
Partner A's share of interest = (200000 / 450000) x 45000 = 20000
Partner B's share of interest = (150000 / 450000) x 45000 = 15000
Partner C's share of interest = (100000 / 450000) x 45000 = 10000
Step 4: Adjust the Profit and Loss Appropriation Account
The interest on capital is added to the Profit and Loss Appropriation Account and then distributed to the partners based on their profit sharing ratio.
Total interest on capital = 20000 + 15000 + 10000 = 45000
After adjusting for the interest on capital, the Profit and Loss Appropriation Account will show a balance of 12000 (75000 - 10000 - 7500 - 5000 - 45000). This balance is then distributed to the partners based on their profit sharing ratio.
Partner A's share of profit = (450000 / 900000) x 12000 = 6000
Partner B's share of profit = (300000 / 900000) x 12000 = 4000
Partner C's share of profit = (150000 / 900000) x 12000 = 2000
Step 5: Final Allocation
Finally, the total allocation to each partner is calculated by adding their share of interest on capital and their share of profit.
Partner A's total allocation = 20000 + 6000 = 26000
Partner B's total allocation = 15000 + 4000 = 19000
Partner C's total allocation = 10000 + 2000 = 12000
Therefore, the interest on capital for the year is 45000 and the final allocation of profit and interest on capital to each partner is as follows:
- Partner A: 26000
- Partner B: 19000
- Partner C: 12000
Community Answer
On December 31st 2018 after closing of account the capital of a, b, an...
On December 31st 2018 after closing of account the capital of a, b, and c stood in the book of firm at 200000,150000,and100000. Subsequentely it was discovered that the interest on capital @ 10 % per annum had been omitted. The profit of the year amounted to 75000 and the partners drawings had been 10000,7500 and 5000 respectively
Calculat interest on capital
Calculat interest on capital
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On December 31st 2018 after closing of account the capital of a, b, and c stood in the book of firm at 200000,150000,and100000. Subsequentely it was discovered that the interest on capital @ 10 % per annum had been omitted. The profit of the year amounted to 75000 and the partners drawings had been 10000,7500 and 5000 respectively Calculat interest on capital?
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On December 31st 2018 after closing of account the capital of a, b, and c stood in the book of firm at 200000,150000,and100000. Subsequentely it was discovered that the interest on capital @ 10 % per annum had been omitted. The profit of the year amounted to 75000 and the partners drawings had been 10000,7500 and 5000 respectively Calculat interest on capital? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about On December 31st 2018 after closing of account the capital of a, b, and c stood in the book of firm at 200000,150000,and100000. Subsequentely it was discovered that the interest on capital @ 10 % per annum had been omitted. The profit of the year amounted to 75000 and the partners drawings had been 10000,7500 and 5000 respectively Calculat interest on capital? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On December 31st 2018 after closing of account the capital of a, b, and c stood in the book of firm at 200000,150000,and100000. Subsequentely it was discovered that the interest on capital @ 10 % per annum had been omitted. The profit of the year amounted to 75000 and the partners drawings had been 10000,7500 and 5000 respectively Calculat interest on capital?.
On December 31st 2018 after closing of account the capital of a, b, and c stood in the book of firm at 200000,150000,and100000. Subsequentely it was discovered that the interest on capital @ 10 % per annum had been omitted. The profit of the year amounted to 75000 and the partners drawings had been 10000,7500 and 5000 respectively Calculat interest on capital? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about On December 31st 2018 after closing of account the capital of a, b, and c stood in the book of firm at 200000,150000,and100000. Subsequentely it was discovered that the interest on capital @ 10 % per annum had been omitted. The profit of the year amounted to 75000 and the partners drawings had been 10000,7500 and 5000 respectively Calculat interest on capital? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On December 31st 2018 after closing of account the capital of a, b, and c stood in the book of firm at 200000,150000,and100000. Subsequentely it was discovered that the interest on capital @ 10 % per annum had been omitted. The profit of the year amounted to 75000 and the partners drawings had been 10000,7500 and 5000 respectively Calculat interest on capital?.
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