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From the following Balance Sheet of Long and Short, calculate interst on capital @ 8% p.a. for the year ended 31st March, 2018. 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. |
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Answer» Interest on long term is Rs. 10,800 and on short term is Rs. 13,200Explanation:Calculation of capital at the beginning as on 1.04.17Particulars Long(Rs) Short(Rs)Capital at the END of the year 1,20,000 1,40,000 Less: Adjusted PROFIT (25,000) (25,000) (1,50,000-1,00,000) in 1:1 ratio Add: Adjusted Drawings 40,000 50,000 ∴ Capital at the beginning 1,35,000 1,65,000 Interest on Long term borrowing= 1,35,000 X 8 = 10,800 100Interest on Short term borrowings = 1,65,000 x 8 = 13,200 100 |
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