68 :- Mohan, Vijay and Anil are partners, the balances of capital accounts being Rs 30,000, Rs 25,000 and Rs 20,000 respectively. In arriving at these amounts profits for the year ended 31st March, 2025, Rs 24,000 had been credited to partners in their profit-sharing ratio. Their drawings were Rs 5,000 (Mohan), Rs 4,000 (Vijay) and Rs 3,000(anil) during the year. Subsequently following omission were noticed and it was decided to rectify the errors:
- Interest on capital @10% p.a.
- Interest on drawings: Mohan Rs 250, Vijay Rs 200 and Anil Rs 150
Making necessary corrections through a journal entry and show your workings clearly
Solution:-
WORKING NOTES:-
Calculation of interest on capital
Mohan opening capital = Closing capital – Profits + Drawings
= 30,000 – 8,000 + 5,000 = Rs 27,000
Vijay’s opening capital = Closing capital – Profits + Drawings
= 25,000 – 8,000 + 4,000 = Rs 21,000
Anil’s opening capital = Closing capital – Profits + Drawings
= 20,000 – 8,000 + 3,000 = Rs 15,000
Interest on capital to mohan = 27,000 x 10% = Rs 2,700
Interest on capital to Vijay = 21,000 x 10% = Rs 2,100
Interest on capital to Anil = 15,000 x 10% = Rs 1,500