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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
From the following Balance Sheet of Long and Short, calculate interest on capital @ 8% p.a. for the year ended 31st March, 2025:
BALANCE SHEET as at 31st March, 2025
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Long’s Capital A/c | 1,20,000 | Fixed Assets | 3,00,000 |
| Short’s Capital A/c | 1,40,000 | Other Assets | 60,000 |
| General Reserve | 1,00,000 | ||
| Total | 3,60,000 | Total | 3,60,000 |
During the year, Long withdrew ₹40,000 and Short withdrew ₹50,000. Profit for the year was ₹1,50,000, out of which ₹1,00,000 was transferred to General Reserve.
Calculation of Opening Capital (as on 1st April, 2024)
| Particulars | Long (₹) | Short (₹) |
|---|---|---|
| Capital at the end | 1,20,000 | 1,40,000 |
| Add: Drawings during the year | 40,000 | 50,000 |
| Less: Share of Profit credited (50,000 in 1 : 1) | 25,000 | 25,000 |
| Capital in the beginning | 1,35,000 | 1,65,000 |
Interest on capital @ 8% p.a.: Long = ₹1,35,000 × 8% = ₹10,800; Short = ₹1,65,000 × 8% = ₹13,200.
Note: Of the ₹1,50,000 profit, ₹1,00,000 went to General Reserve; the remaining ₹50,000 was credited equally to the two partners.
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Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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