Question 26 Chapter 2 of +2-Part-1
26. (Interest on Capital/Drawings & Profits given) From the following balance sheet of Rich and Poor, calculate interest on capital @10% p.a. for the year ended 31-3-17.
| Balance Sheet | |||
| Liabilities | Amount | Assets | Amount |
| Rich’s Capital | 20,000 | Sundry Assets | 42,000 |
| Poor’s Capital | 16,000 | Drawings – Rich | 2,000 |
| Profit & Loss Appropriation a/c (2016-17) | 8,000 | ||
| 44,000 | 44,000 | ||
During the year ended 31-3-2017 Rich’s drawings were ₹ 3,000 and Poor’s Drawings were ₹ 5,000. Profits during the year were ₹ 12,000.
The solution of Question 26 Chapter 2 of +2 Part-1: –
| Calculation of Capital as on 1st April 2016 |
||||
| Particulars |
Rich | Poor | ||
| Capital as on 31st March 2017 | 20,000 | 16,000 | ||
| Add: | ||||
| Drawings during the year (Poor) | – | 5,000 | ||
| Rich’s Drawings (3,000-2,000)(WN1) | 1,000 | – | ||
| 21,000 | 21,000 | |||
| Less: | ||||
| Share in Profit (12,000-8,000)(WN2) | (-2000) | (-2000) | ||
| Capital as on 01/04/2016 | 19,000 | 19,000 | ||
| Interest on Capital @10% p.a. | 1,900 | 1,900 | ||
Working Note:
1. Rich’s drawings appearing in B/S Rs.2,000 means that they are still not adjusted out of total drawings of Rs.3,000. Hence, Only Rs.1,000 (i.e. 3,000-2,000) drawings are added back which have already been adjusted from the capital A/c.
2. Just like drawings, profits are also not adjusted to the Rs.8,000 appearing in B/S. So, only profit already adjusted i.e. Rs.12,000-8,000 = Rs.4,000 are to be adjusted for calculating opening capital.
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Chapter No. 1 – Accounting Not-for-Profit Organisations (Deleted from the Syllabus)
Chapter No. 2 – Partnership Accounts – I (Introduction)
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