Question 26 Chapter 2 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 26 Chapter 2 of +2- Part-

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

 

The solution of Question 26 Chapter 2 of +2 Part-1

: – 

Calculation of Capital as on 1st April 2016
  Particulars
A B
  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
  Less:      
  Share in Profit (12,000-8,000)(WN2)   (-2000) (-2000)
  Capital as on 31st March 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.

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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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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