Page No 2.88:
Question 41:
Calculate interest
on drawings of Ashok @ 10% p.a. for the year ended 31st March, 2021, in each of
the following alternative cases:
Case 1. If he withdrew
`7,500 in the beginning of each quarter.
Case 2. If he withdrew
`7,500 at the end of each quarter.
Case 3. If he withdrew
`7,500 during the middle of each quarter.
Answer:
Total Drawings = 7,500 × 4 = ` 30,000
Interest Rate = 10% p.a.
Case (a)
When equal amount is withdrawn in the beginning of each quarter, the interest on drawings is calculated for an average period of 7.5 months
Interest on drawing= total drawing×Rate
of drawing/100×Average month / 12
Interest on Ashok’s drawing =30,000×10/100×7.5/12 =1,875
Case (b)
When equal amount is withdrawn at the end of each quarter, the interest on drawings is calculated for an average period of 4.5 months
Interest on drawing= total drawing×Rate
of drawing/100×Average month / 12
Interest on Ashok’s drawing =30,000×10/100×4.5/12 =1,125
Case (c)
When equal amount is withdrawn in the middle of each quarter, the interest on drawings is calculated for an average period of 6 months
Interest on drawing= total drawing×Rate
of drawing/100×Average month / 12
Interest on Ashok’s drawing =30,000×10/100×6/12 =1,500
Page No 2.88:
Question 42: The capital accounts of Tisha and Divya showed credit balances of `10,00,000 and `7,50,000 respectively after taking into account drawings and net profit of `5,00,000. The drawings of the partners during the year 202021 were:
(i) Tisha withdrew `25,000 at the end of each quarter.
(ii) Divya's drawings were:
31st May, 2020 
`20,000 
1st November, 2020 
`17,500 
1st February, 2021 
`12,500 
Calculate interest on partners' capitals@ 10% p.a. and interest on partners' drawings@ 6% p.a. for the year ended 31st March, 2021.
Answer:
Calculation of Interest on
Drawings
Tisha’s Total Drawings= 25,000×4=1,00,000
Tisha’s Interest on Drawings= 1,00,000×3/100×4.5/12=2,250
Divya’s Interest on Drawings
Date of Drawings 
Drawings 
Time left after Drawing 
Product 
3152020 
20,000 
10 
2,00,000 
1112020 
17,500 
5 
87,500 
122021 
12,500 
2 
25,000 

3,12,500 
Divya’s Interest on Drawings = 3,12,500×6/100×1/12=1,563
Calculation of Interest on Capital
Calculation of opening Capital

Tisha

Divya

Closing Capital
Add; Drawings

10,00,000
1,00,000

7,50,000
50,000

Less: Profit

11,00,000
2,50,000

8,00,000
2,50,000

Opening Capital

8,50,000

5,50,000

Tisha’s Interest on Capital = 8,50,000×10/100=85,000
Divya’s Interest on Capital = 5,50,000×10/100=55,000
Page No 2.89:
Question 43:
Amit and Vijay
started a partnership business on 1st April, 2020. Their capital contributions
were `2,00,000 and `1,50,000 respectively. The Partnership Deed provided as follows:
(a) Interest on capital be allowed @10% p.a.
(b) Amit to get a salary of `2,000 per month and
Vijay `3,000 per month.
(c) Profits are to be shared in the ratio of 3 : 2.
Net profit for the year ended 31st March, 2021 was `2,16,000. Interest on drawings amounted to `2,200
for Amit and `2,500 for Vijay.
Prepare Profit and Loss Appropriation Account.
Answer:
Profit and Loss
Appropriation Account 

Dr. 


Cr. 

Particulars 
Amount ( `) 
Particulars 
Amount ( `) 

Interest on Capital: 

Profit and Loss A/c (Net
Profit) 
2,16,000 

Amit’s Capital A/c 
20,000 

Interest on Drawings A/c: 


Vijay’s Capital A/c 
15,000 
35,000 
Amit’s Capital A/c 
2,200 

Salary to: 

Vijay’s Capital A/c 
2,500 
4,700 

Amit (2,000 × 12) 
24,000 




Vijay (3,000 × 12) 
36,000 
60,000 



Profit transferred to: 




Amit’s Capital A/c 
75,420 




Vijay’s Capital A/c 
50,280 
1,25,700 




2,20,700 

2,20,700 





Working Notes:
WN 1 Calculation of Interest on Capital
Interest on Amit’s Capital=2,00,000×10/100=20,000
Interest on Vijay’s Capital=1,50,000×10/100=15,000
WN 2 Calculation of Profit Share of each Partner
Divisible
Profit = 2,16,000 + 4,700  ` 35,000  ` 60,000 = ` 1, 25,700
Profit
sharing ratio = 3 : 2
Amit’s
profit share=1,25,700×3/5=75,420
Vijay’s
profit share=1,25,700×2/5=50,280
Page No 2.89:
Question 44:
Prepare Capital Accounts of the Partners Ajay and Sanjay from the following information, If their capitals are fluctuating:

Ajay (
`) 
Sanjay 
Capital
on 1st April, 2020 
4,00,000 
3,00,000 
Drawings
during the year ended 31st march, 2021 
50,000 
30,000 
Interest
on Capital 
5% p.a. 
5% p.a. 
Interest
on Drawings 
1,250 
750 
Share
of Profit for the year ended 31st march, 2021 
60,000 
50,000 
Partner's
Salary 
36,000 
..... 
Commission 
5,000 
3,000 
Answer:
Partners’ Capital Accounts 

Dr. 
Cr. 

Particulars 
Ajay (
`) 
Sanjay 
Particulars 
Ajay (
`) 
Sanjay 

Drawings A/c 
50,000 
30,000 
Balance b/d 
4,00,000 
3,00,000 

Interest on Drawings A/c 
1,250 
750 
Interest on Capital A/c 
20,000 
15,000 




P&L Appropriation A/c 
60,000 
50,000 

Balance c/d 
4,69,750 
3,37,250 
Partners’ Salary 
36,000 
– 




Commission 
5,000 
3,000 


5,21,000 
3,68,000 

5,21,000 
3,68,000 








Working Note:
Calculation
of Interest on Capital
Interest on Ajay’s capital
= 4,00,000×5/100=20,000
Interest on Sanjay’s
capital = 3,00,000×5/100=15,000
Page No 2.89:
Question 45:
A and B
are partners sharing profits and losses in the ratio of 3 :
1. On 1st April, 2020, their capitals were: A `50,000 and B
`30,000. During the year ended 31st March, 2021 they earned a
net profit of `50,000. The terms of
partnership are:
(a) Interest on capital is to allowed @ 6% p.a.
(b) A will get a commission @ 2% on turnover.
(c) B will get a salary of `500 per month.
(d) B will get commission of 5% on profits after deduction of all
expenses including such commission.
Partners' drawings for the year were: A `8,000 and B
`6,000. Turnover for the year was `3,00,000.
After considering the above facts, you are required to prepare Profit and Loss
Appropriation Account and Partners' Capital Accounts.
Answer:
Profit and Loss
Appropriation Account for the year
ended 31st March, 2021 

Dr. 


Cr. 

Particulars 
Amount ( `) 
Particulars 
Amount ( `) 

Interest on Capital: 

Profit and Loss A/c (Net
Profit) 
50,000 

A’s Capital A/c 
3,000 



B’s Capital A/c 
1,800 
4,800 


B’s Salary (500 × 12) 
6,000 



Partner’s
Commission 




A’s Capital A/c 
6,000 



B’s Capital A/c 
1,581 
7,581 


Profit transferred to: 




A’s Capital A/c 
23,714 



B’s Capital A/c 
7,905 
31,619 



50,000 

50,000 





Partners’
Capital Accounts 

Dr. 




Cr. 
Particulars 
A 
B 
Particulars 
A 
B 
Drawings
A/c 
8,000 
6,000 
Balance b/d 
50,000 
30,000 



Interest on Capital A/c 
3,000 
1,800 



Commission A/c 
6,000 
1,581 



Salary A/c 

6,000 
Balance c/d 
74,714 
41,286 
P/L Appropriation
A/c 
23,714 
7,905 

82,714 
47,286 

82,714 
47,286 






Working Notes:
WN 1 Calculation of Interest on Capital
Interest on A’s capital=50,000×6/100=3000
Interest on B’s capital=30,000×6/100=1,800
WN 2 Calculation of Commission to Partners
A’s commission = 2% on turnover
=3,00,000×2/100=6,000
Commission to B = 5% on Profits after all Expense including such Commission
Profits after all expense = 50,000 ` 4,800 ` 6,000 ` 6,000 = ` 33,200
B’s commission= Profit after all expenses×Rate of
commission/100+Rate
33.200×5/105=1,581 (approx.)
WN 3 Calculation of Profit Share of each Partner
Profit available for Distribution = 50,000 ` 4,800 ` 6,000 `7,581 = ` 31,619
Profit sharing ratio = 3 : 1
A’s profit share= 31,619×3/4=23,716
B’s profit share= 31,619×1/4=7,905
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