Question:medium

The capital balance of a partner at the end of the year (after adjusting for his drawings Rs. 3,500 and his share in the profit Rs. 2,300) is Rs. 12,000. Interest on capital is payable to him at 5% per annum. What will be the amount of interest on capital?

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A common trap is to calculate 5% on the Rs. 12,000 closing balance (which would be Rs. 600). Always remember: Closing Capital is "polluted" by the year's events; you must find the "clean" Opening Capital before applying interest.
Updated On: May 13, 2026
  • Rs. 660
  • Rs. 600
  • Rs. 540
  • None of these
Show Solution

The Correct Option is A

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