CUET UG 2025 — Accountancy Partnership

Ram's capital has two components with different time periods:

Initial Capital: Rs. 1,20,000 (from 1st Jan 2020 to 31st Dec 2020)

Time period = 12 months

Interest = $\text{Principal} \times \text{Rate} \times \frac{\text{Time}}{12}$Principal×Rate×12Time​

Interest on initial capital = $1,20,000 \times \frac{15}{100} \times \frac{12}{12}$1,20,000×10015​×1212​ = Rs. 18,000

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Additional Capital: Rs. 50,000 (from 1st July 2020 to 31st Dec 2020)

Time period = 6 months (July to December)

Interest on additional capital = $50,000 \times \frac{15}{100} \times \frac{6}{12}$50,000×10015​×126​ = Rs. 3,750

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Total Interest on Ram's Capital = 18,000 + 3,750 = Rs. 21,750

The additional capital introduced mid-year earns interest only for the remaining 6 months of the accounting period, which is why it's calculated separately from the initial capital that remained invested for the full year.