# Question 63 Chapter 2 of Class 12 Part – 1 VK Publication

Question 63 Chapter 2 of Class 12 Part - 1 VK Publication

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: –

Rectifying Entry

 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)

Working Notes:
1. Calculation of Interest on Capital: For the calculation of interest on capital, Opening Capital has to be ascertained:

 Particulars Esha Rs. Manav Rs. Daman Rs. Closing Capital 3,20,000 2,40,000 1,60,000 Add: Drawings already debited 48,000 48,000 60,000 3,68,000 2,88,000 2,20,000 Less: Profit already credited 45,000 30,000 15,000 Opening Capital 3,23,000 2,58,000 2,05,000 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.

 Particulars Esha ₹ Manav ₹ Daman ₹ Firm ₹ Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. 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 46,200 39,950 31,200 30,900 16,500 23,050 93,900 93,900 Net Effect (Dr./Cr.) 6,250(Dr.) 300 (Dr.) 6,550 (Dr.) …

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

Chapter No. 1 – Accounting Not for Profit Organisations

Chapter No. 2 – Partnership Accounts – I (Introduction)

Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)

Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)

Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)

Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)

Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)

Chapter No. 8 – Company Accounts (Share Capital)

Chapter No. 9 – Company Accounts (Issue of Debentures)

Chapter No. 10 – Company Accounts (Redemption of Debentures)

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

Chapter No. 1 – Financial Statements of a Company

Chapter No. 2 – Financial Statement Analysis

Chapter No. 3 –  Tools of Financial Statement Analysis- Comparative and Common Size