Sarthaks Test
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Ram and Mohan are partners in a business. Their capitals at the end of the year were Rs.24,000 and Rs.18,000 respectively. During the year 2015-16, Ram’s drawings and Mohan’s drawings were Rs.4,000 and Rs.6,000 respectively. Profit (before charging interest on capital) during the year was Rs.16,000. Calculate interest on capital @ 5% pa. for the year ended 31st March, 2016.

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Interest on capital is calculated on the opening balance of partner 's capital.

Calculation of capital balance at the beginning

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