Sunflower and Pink Rose started a partnership business on April 1, 2014, with capitals of ₹2,59,000 and ₹1,50,000 respectively. On October 1, 2014, they decided that their capitals should be ₹2,00,000 each. The necessary adjustments in the capitals were made by introducing or withdrawing cash. Interest on capital is to be allowed at 10% per annum. Calculate the interest on capital as of March 31, 2015.
Answer (1)
To calculate the interest on capital for Sunflower and Pink Rose's partnership as of March 31, 2015, we will follow these steps:
Determine the capital employed by each partner before adjustments:
Sunflower: Initial capital was ₹2,59,000 and it stayed the same until October 1, 2014.
Pink Rose: Initial capital was ₹1,50,000 and it stayed the same until October 1, 2014.
Adjust capital as per the decision taken on October 1, 2014:
Sunflower: Capital is reduced to ₹2,00,000 from ₹2,59,000.
Pink Rose: Capital is increased to ₹2,00,000 from ₹1,50,000.
Compute the interest on capital from April 1, 2014, to March 31, 2015:
Interest rate is 10% per annum.
Calculate for Sunflower:
For the first 6 months (April to September): Interest = 100 × 12 2 , 59 , 000 × 10 × 6 = 100 2 , 59 , 000 × 5 = ₹12 , 950
For the next 6 months (October to March): Interest = 100 × 12 2 , 00 , 000 × 10 × 6 = 100 2 , 00 , 000 × 5 = ₹10 , 000
Total interest for Sunflower: ₹12 , 950 + ₹10 , 000 = ₹22 , 950
Calculate for Pink Rose:
For the first 6 months (April to September): Interest = 100 × 12 1 , 50 , 000 × 10 × 6 = 100 1 , 50 , 000 × 5 = ₹7 , 500
For the next 6 months (October to March): Interest = 100 × 12 2 , 00 , 000 × 10 × 6 = 100 2 , 00 , 000 × 5 = ₹10 , 000
Total interest for Pink Rose: ₹7 , 500 + ₹10 , 000 = ₹17 , 500
Therefore, the interest on capital for Sunflower is ₹22,950, and for Pink Rose, it is ₹17,500 for the year ending March 31, 2015.
