Q.No.37 | Chapter 2 – Accounting for Partnership Firms: Fundamentals | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 37 Chapter 2 of +2-A

37. Following is the extract of the Balance Sheet of Neelkant and Mahadev as on 31st March 2019.

BALANCE SHEET as at 31st March 2019

Liabilities		Assets
Neelkant's Capital	10,00,000	Sundry Assets	30,00,000
Mahadev's Capita	10,00,000
Neelkant's Current A/c	1,00,000
Mahadev' Current A/c	1,00,000
Profit and Loss Appropriation	8,00,000
A/c 2018 −19

During the year, Mahadev's drawings were 30,000. Profits during the year ended 31st March 2019 is 10,00,000. Calculate interest on capital @ 5% p.a. for the year ending 31st March 2019.

The solution of Question 37 Chapter 2 of +2-A:

Calculation of Interest on Neelkant's & Mahadev's Capital by Simple Method
Interest on Capital = Opening Capital X Rate of Interest

Interest on Neelkant's Capital	=	10,00,000	X	5
				100

Interest on Neelkant's Capital = 50,000/-

Interest on Mahadev's Capital	=	10,00,000	X	5
				100

Interest on Mahadev's Capital = 50,000/-

Note: -

In this question, The Balance of the current account of both partners is given, So that’s why the capital account has fixed in nature.
When the capital account is fixed then all the transactions related to interest, profit or drawing are treated in the current account.
So Opening capital and closing capital will remain the same except in the case where capital is withdrawn by the partners so that’s why we simply calculate interest on capital the balance given in the balance sheet.

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Also, Check out the solved question of previous Chapters: -

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
• Chapter No. 3 – Goodwill: Nature and Valuation
• Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 – Admission of a Partner
• Chapter No. 6 – Retirement/Death of a Partner
• Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 – Company Accounts –  Accounting for Share Capital
• Chapter No. 9 – Company Accounts – Issue of Debentures
• Chapter No. 10 – Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 – Financial Statements of a Company
• Chapter No. 2 – Financial Statement Analysis 
• Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
• Chapter No. 4 – Accounting Ratios
• Chapter No. 5 – Cash Flow Statement

 

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