25:- Naresh and Sukesh are partners with Capitals of Rs 3,00,000 each as on 31st March, 2025. Naresh and withdrew Rs 50,000 against capital on 1st October 2024 and Rs 1,00,000 drawings against profit. Sukesh also had drawings of Rs 1,00,000.
Interest on capital is to be allowed @10% p.a.
Net profit for the year ended was Rs 2,00,000 which is yet to be distributed.
Pass the journal entries for interest on capital and distribution of profit.
Solution:-
WORKING NOTES :-
(i) Calculation of opening capitals of partners
Naresh’s opening capital = Closing capital + Drawings out of capital + Drawings out of profit
= 3,00,000 + 50,000 + 1,00,000
= Rs 4,50,000
Suresh’s opening capital = Closing capital + Drawings
= 3,00,000 + 1,00,000
= Rs 4,00,000
(ii) Calculation of interest on capitals
Interest on Naresh’s capital = 4,50,000 x 10 % x 6/12 + 4,00,000 x 10 % x 6/12
= 22,500 + 20,000
= Rs 42,500
Interest on Sukesh’s capital = 4,00,000 x 10 %
= Rs 40,000