24 :- Ashish and Aakash are partners sharing profits in the ratio of 3:2. Their capitals accounts have credit balances of Rs 5,00,000 and Rs 6,00,000 respectively as on 31st March, 2025 after the debit of drawings during the year of Rs 1,50,000 and Rs 1,00,000 respectively. Net profit for the year ended 31st March, 2025 was Rs 5,00,000. Interest on capital is to be allowed @ 10% p.a.
Pass the journal entry for interest on capital and prepare P & L appropriation A/c.
Solution :-
WORKING NOTES :-
(i) Calculation of opening capitals of Aashish and Aakash
Opening capital of Aashish = Closing capital + Drawings
= 5,00,000 + 1,50,000
= Rs 6,50,000
Opening capital of Aakash = Closing capital + Drawings
= 6,00,000 + 1,00,000
= Rs 7,00,000
(ii) Calculation of interest on capital
Aashish = 6,50,000 x 10/100 = Rs 65,000
Aakash = 7,00,000 x 10/100 = Rs 70,000