Opening capital is Rs 60,000 and a further Rs 10,000 is introduced on 1 April in a year ending 31 December. Interest on capital is 6 per cent per annum. The interest is:

1. Interest is computed on the opening capital for the whole year and on any addition only for the period it was in the business. 2. On the opening Rs 60,000, interest is Rs 60,000 times 6 per cent, which is Rs 3,600 for the full year. 3. The additional Rs 10,000 came in on 1 April, so it remained for nine months of a year ending 31 December. 4. Interest on it is Rs 10,000 times 6 per cent times 9 over 12, which is Rs 450. 5. Total interest on capital is Rs 3,600 plus Rs 450, that is Rs 4,050. 6. Option A treats the addition as present for the whole year, and option C ignores it entirely. _Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 3 "Accounts of Partnership Firms - Fundamentals", Illustration 6_