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Question 38 Chapter 2 of +2-A
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38. From the following Balance Sheet of Long and Short, calculate interest on capital @ 8% p.a. for the year ended 31st March 2019.
| BALANCE SHEET as at 31st March 2019 | |||
| Liabilities | Assets | ||
| Long’s Capital A/c | 10,00,000 | Fixed Assets | 3,00,000 |
| Short’s Capital A/c | 10,00,000 | Other Assets | 60,000 |
| General Reserve | 1,00,000 | ||
| 3,60,000 | 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
The solution of Question 38 Chapter 2 of +2-A:
Calculation of Interest on Long’s and Short’s Capital by Simple Method
Period | Amount of Long’s Capital | Amount of Short’s Capital |
| Capital at the end | 1,20,000 | 1,40,000 |
| Less: Profit already Distributed (1: 1) | 25,000 | 25,000 |
| Add: Drawings During the year | 40,000 | 50,000 |
| Capital at the beginning | 1,35,000 | 1,65,000 |
Interest on Capital = Opening Capital X Rate of Interest
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| Interest on Long’s Capital | = | 1,35,000 | X | 8 | |
| 100 |
Interest on Long’s Capital = 10,800/-
Interest on Capital = Opening Capital X Rate of Interest
| Interest on Short’s Capital | = | 1,65,000 | X | 8 |
| 100 |
Interest on Short’s Capital = 13,200/-
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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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
