Page 30 - MA-12

1.18 Double Entry Book Keeping (Section A)—ISC XII

Working Notes:

1. Calculation of Interest on Capitals:
Partner Interest on Capitals Total (`)

Karan On ` 2,00,000 @ 10% for 1 year + On ` 6,00,000 @ 10% for 6 months 50,000
Hari On ` 6,00,000 @ 10% for 6 months + On ` 5,00,000 @ 10% for 6 months 55,000
Ashish On ` 3,00,000 @ 10% for 1 year 30,000
Total 1,35,000

2. Calculation of Interest on Drawings:
Partner Interest on Drawings Total (`)

Karan On ` 50,000 @ 15% for 9 months + On ` 90,000 @ 15% for 6 months + On ` 1,00,000 @ 15% for 3 months 16,125
Hari On ` 80,000 @ 15% for 9 months + On ` 80,000 @ 15% for 6 months + On ` 80,000 @ 15% for 3 months 18,000
Ashish On ` 90,000 @ 15% for 9 months + On ` 30,000 @ 15% for 6 months + On ` 60,000 @ 15% for 3 months 14,625
Total 48,750

Illustration 15.
Sachin and Saurabh are partners in a firm. Their profit-sharing ratio is 3 : 2. On 1st April,
2015, their Capital and Current Account balances were:

Partners Capital Account Current Account
` `
Sachin 2,00,000 50,000
Saurabh 1,00,000 20,000

The partners are entitled to interest on capital @ 10% p.a. on monthly basis. They are also
allowed to make withdrawals at any time during the year but they have agreed to charge
interest on drawings @ 10% p.a. also on monthly basis.
The withdrawals of the partners were as under:

Partners 1st July, 2015 (`) 1st January, 2016 (`)
Sachin 10,000 18,000
Saurabh 8,000 4,000

On 1st October, 2015 Sachin took over some old furniture from the firm at a valuation of
` 40,000 and Saurabh introduced into the business some furniture valued at ` 25,000.
On 1st January, 2016 Sachin introduced some stock into the business at a valuation of ` 20,000.
On 1st February, 2016 Saurabh took some stock from the business for his personal use at
a valuation of ` 5,000.
The net profit for the year ended 31st March, 2016 was ` 70,000.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2016 and
Partners’ Capital and Current Accounts.