Capitals of Kajal, Neerav and Alisha as on 31st March 2025 were Rs 90,000, Rs 3,30,000 and Rs 6,60,000 respectively

75 :- Capitals of Kajal, Neerav, and Alisha as on 31st March 2025 were Rs 90,000, Rs 3,30,000, and Rs 6,60,000 respectively. Profit of Rs 1,80,000 for the year ended 31st March 2025 was distributed in the ratio of 4:1:1 after allowing interest on capital @ 10% p.a. During the year, each partner withdrew Rs 3,60,000. The Partnership Deed was silent as to profit sharing ratio but provided for interest on capital @ 12% p.a.
Pass the necessary adjustment entry showing the working clearly.

Solution:-  

WORKING NOTES :-

(a) Calculation of Interest on Kajal’s capital
Opening capital of Kajal = closing capital + drawings – profits – interest on capital
Let the opening capital be X
                     X  = 90,000 + 3,60,000 – 1,20,000 – 10% of X
                      X + 10X/100 = Rs 3,30,000
Opening capital of kajal = Rs 3,00,000
Interest on Kajal’s capital = 3,00,000 x 12% = Rs 36,000

(b) Calculation of interest on Neerav’s capital
Opening capital of Neerav = closing capital + drawings – profits – interest on capital
Let the opening capital be Y
                     Y = 3,30,000 + 3,60,000 – 30,000 – 10% of Y
                      Y + 10Y/100 = Rs 6,60,000
Opening capital of Neerav = 6,00,000
Interest on Neerav’s capital = 6,00,000 x 12% =Rs 72,000

(c) Calculation of interest on Alisha’s capital
Opening capital of Alisha = closing capital + drawings – profits – interest on capital
Let the opening capital be Z
                     Z = 6,60,000 + 3,60,000 – 30,000 – 10% of Z
                      Z + 10Z/100 = Rs 9,90,000
Opening capital of Alisha = Rs 9,00,000
Interest on Alisha’s capital = 9,00,000 x 12% = Rs 1,08,000