# Question 38 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 38 Chapter 2 of +2-A

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 alreadyDistributed (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

 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/-

Comment if you have any questions.

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. 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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