Question 63 Chapter 2 of Class 12 Part – 1
63. On 31st March, 2014, the balances in the Capital Accounts of Esha, Manav and Daman after making adjustments for profits and drawings were Rs. 3,20,000, Rs. 2,40,000 and Rs. 1,60,000 respectively. Subsequently it was discovered that interest on capital and drawings had been omitted.
(i) The profit of the year ended 31st March, 2014 was Rs. 90,000.
(ii) During the year, Esha and Manav each withdrew a sum of Rs. 48,000 in equal installments in the middle of every month and Daman withdrew Rs. 60,000.
(iii) The interest on drawings was to be charged @5% pa. and interest on capital was to be allowed @ 10% pa.
(iv) The profit-sharing ratio among the partners was 3: 2:1
Showing your workings clearly, pass the necessary rectifying entry,
The solution of Question 63 Chapter 2 of Class 12 Part – 1: –
|Date||Particulars||L . F
||Dr. ₹||Cr. ₹|
|Esha’s Capital A/c||Dr.||6,250|
|Manav’s Capital A/c||300|
|To Daman’s Capital A/c|
|(Being the interest on capital and interest on drawings omitted, now aduated) (WN)|
1. Calculation of Interest on Capital: For the calculation of interest on capital, Opening Capital has to be ascertained:
|Manav Rs.||Daman Rs.|
|Add: Drawings already debited||48,000||48,000||60,000|
|Less: Profit already credited||45,000||30,000||15,000|
|Interest on Capital @10% pa.||3,23,000 x 10/100= 32,300||2,58,000 x 10/100 = 25,800||2,05,000 x 10/100 = 20,500|
Total Interest on Capital = 32,300+ 25,800+ 20,500 = Rs. 78,600
2. Interest on Drawings: During the year, Esha and Manav each withdrew a sum of Rs. 48,000 in equal instalments in the middle of every month. We will calculate interest on Drawings by Average Period Method, r., for 6 months. Rs. 48,000 x 6/12 x 5/100 = Rs. 1,200 for each.
Interest on Daman’s Drawings = Rs. 60,000 x 5/100 x 6*/12 = Rs. 1,500
Total Interest on Drawings = 1,200+ 1,200+1,500 = Rs. 3,900
*Date of drawings is not given, so interest will be charged for 6 months.
3. Statement Showing Required Adjustment
||Manav ₹||Daman ₹||Firm ₹|
|For Interest on Drawings||1,200||….||1,200||…||1,500||…||….||3,900|
|For Interest on Capital||….||32,300||…||25,800||…||20,500||78,600||…|
|For Profit to be Shared [Rs. 15,300 (i.e., Rs. 90,000- Rs. 78,600- Rs. 3,900) in the Ratio of 3:2:1]||….||7,650||…||5,100||…||2,550||15,300||…|
|Profit of Rs. 90,000 already distributed in the ratio of 3:21 now reversed||45,000||…||30,000||…||15,000||…||…||90,000|
Net Effect (Dr./Cr.)
|6,250(Dr.)||300 (Dr.)||6,550 (Dr.)||…|
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Also, Check out the solved question of all Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution