70 :- Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was the Balance Sheet of the firm as on 31st March, 2016:
The Profits Rs 30,000 for the year ended 31st March, 2016 were divided between the partners without allowing interest on capital @ 12% p.a. and salary to Piya @ Rs 1,000 per month. During the year, Piya withdrew Rs 8,000 and Bina withdrew Rs 4,000. Showing your working notes clearly. Pass the necessary rectifying entry.
Solution :-
WORKING NOTES:-
Calculation of Interest on Piya’s capital
Opening capital = Closing capital + Drawings – Profits
= 80,000 + 8,000 – 18,000
= Rs 70,000
Interest on Piya’s capital = 70,000 x 12/100 = Rs 8,400
Calculation of Interest on Bina’s capital
Opening capital = Closing capital + Drawings – Profits
= 40,000 + 4,000 – 12,000
= Rs 32,000
Interest on Piya’s capital = 32,000 x 12/100 = Rs 3,840