Commerce Exam  >  Commerce Questions  >  A and b are partners in a firm. their capital... Start Learning for Free
A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021?
Most Upvoted Answer
A and b are partners in a firm. their capital account showed the balan...
Calculation of interest on capitals for the year ending March 31, 2021

Given data:
Partner A's capital on April 1, 2020 = Rs. 500,000
Partner B's capital on April 1, 2020 = Rs. 400,000
Further capital introduced by A on August 1, 2020 = Rs. 100,000
Further capital introduced by B on August 1, 2020 = Rs. 50,000
Interest on capital allowed @ 8% p.a.

Step 1: Calculate the weighted average capital for the year

- Weighted average capital = (Capital at the beginning of the year x Number of months) + (Capital introduced during the year x Number of months)
- Partner A's weighted average capital = (500,000 x 12) + (100,000 x 8) = 7,600,000
- Partner B's weighted average capital = (400,000 x 12) + (50,000 x 8) = 4,900,000

Step 2: Calculate the interest on capitals for the year

- Interest on capital = Weighted average capital x Rate of interest
- Interest on Partner A's capital = 7,600,000 x 0.08 = 608,000
- Interest on Partner B's capital = 4,900,000 x 0.08 = 392,000

Step 3: Allocate the interest on capitals between the partners

- Interest on capitals should be allocated in the ratio of their capital balances at the beginning of the year
- Partner A's share of interest = (500,000 / 900,000) x 1,000,000 = 555,556
- Partner B's share of interest = (400,000 / 900,000) x 1,000,000 = 444,444

Therefore, the interest on capitals for the year ending March 31, 2021 is Rs. 555,556 for Partner A and Rs. 444,444 for Partner B.
Community Answer
A and b are partners in a firm. their capital account showed the balan...
A's IOC = 5,00,000 x 8/100 x 4/12 + 6,00,00 x 8/100 x 8/12 = 40,000/3 + 32,000 = 13,333.33 + 32,000 = 45,333.33
B's IOC = 4,00,000 x 8/100 x 4/12 + 4,50,000 x 8/100 x 8/12 = 32,000/3 + 24,000 = 10,666.67 + 24,000 =  34,666.67
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
Explore Courses for Commerce exam

Similar Commerce Doubts

Top Courses for Commerce

A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021?
Question Description
A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021?.
Solutions for A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021? in English & in Hindi are available as part of our courses for Commerce. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021? defined & explained in the simplest way possible. Besides giving the explanation of A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021?, a detailed solution for A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021? has been provided alongside types of A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021? theory, EduRev gives you an ample number of questions to practice A and b are partners in a firm. their capital account showed the balance on april 1st 2020 is rs 500000 and rs 400000 respectively. on august 1 2020 they introduced further capital of rs 100000 and rs 50000 respectively. interest on capital is allowed @ 8% pa compute interest on capitals for the year ending march 31 2021? tests, examples and also practice Commerce tests.
Explore Courses for Commerce exam

Top Courses for Commerce

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev