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in Accounting for Partnership – Basic Concepts by (25.6k points)
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From the following Balance Sheet of Aneesh and Jaya, calculate interest on capital @ 5% per annum, payable to Jaya for the year ending 31.12.05. 

Balance Sheet as on 31.12.2005:

During the year, Jaya’s drawings were Rs. 3,000 and the firm made a profit of Rs. 4,000.

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Interest on capital is payable on the opening capital (i.e. capital on 1.1.05) 

Opening capital = Closing capital + drawings – Net Profit 

Closing capital = Rs. 6000 

Drawings = 3000 

Net Profit during the year = 4000 

P&L appropriation shown in B/S = 2000 

∴ Net profit credited to partners capital = 4000 – 2000 = 2000 

Net profit credited to Jaya = 2000 × 1/2 (ratio being 1:1) = 1000 

Opening capital = 6000 + 3000 – 1000 = 8000 

Interest on capital = 8000 × 5/100 = 400.

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